Premium Luxury Vehicles Show Highest Annual Depreciation Rate

NADA Market Report: Replacement Levels and Customer Preference for Latest Models Drive Depreciation

MCLEAN, Va., March 3, 2008 -- NADA Used Car Guide (NADA), the industry standard in used-vehicle valuation and information, reports the premium luxury vehicle segment experienced the highest annual depreciation rate among three-year-old models in 2007, due in large part to consumer preference for the latest new models and high replacement levels.

NADA Official Used Car Guide data, developed by NADA's editorial team and released today, shows premium luxury coupes and sedans held four of the top-10 spots for vehicle depreciation for the year, with a replacement rate of 43 percent on average.

"Luxury vehicle owners consistently demonstrate a strong preference for owning the latest new products in this segment," said Terrence W. Wynne, director of editorial and data services for NADA Used Car Guide. "The changing customer preferences and high manufacturer replacement rate effectively accelerates depreciation of these vehicles, deflating the resale performance of previous models and those competitive models late in their life cycle," he added.

According to the NADA report, the top-10 depreciating three-year old vehicle models in calendar year 2007 were:

  Make                     Model              Annual Depreciation
  Jaguar                   XJ8                     25%
  Mercedes-Benz         CL-Class                   22%
  Kia                      Rio                     22%
  Audi                     A8                      21%
  Lexus                    LS                      21%
  Suzuki                 Verona                    21%
  Volvo                   C70                      20%
  Hyundai                Accent                    20%
  Audi                     A4                      20%
  Audi                     A6                      20%

Wynne noted that the replacement rate directly impacts incentive spending in the luxury segment and compounds the pressure already present on the used-car market based on consumer change in design preference. He said that unreplaced models tend to have the heaviest incentives.

About NADA Used Car Guide

Over a 75-year history, NADA Used Car Guide has earned its reputation as the leading provider of market-reflective vehicle valuation products, services and information to businesses throughout the U.S. and worldwide. NADA's editorial team collects and analyzes over half-a-million combined wholesale and retail automotive-related transaction prices per month. Its guidebooks, Web-based products, analysis and data solutions offer automotive, financial, insurance and government professionals the timely information and reliable solutions they need to make better business decisions. For more information, visit nada.com/b2b.

Source: National Automobile Dealers Association

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