While low interest rates and big manufacturer rebates are key drivers in attracting new vehicle shoppers, one often overlooked consideration is the cost of depreciation. Canadian Black Book tracks and compares vehicle depreciation to determine the winners of its "Best Retained Value" awards each year, which were announced earlier this month.
"Depreciation is the single largest expense of owning a vehicle, more than gas, maintenance or insurance," says Brian Murphy, vice-president of research and editorial at Canadian Black Book.
To illustrate the importance of understanding depreciation and retained value, consider that two different new vehicles both purchased today for the same price could be worth significantly different amounts just a few years from now, even if they were driven the same number of kilometres and were in comparable condition.
While depreciation affects all car owners, it is an especially important consideration for those who finance their vehicles and plan to sell or trade them in. It is possible that your vehicle could be worth less than what you owe on your auto loan – commonly referred to as "negative equity". In fact, approximately 30 per cent of trade-ins had some negative equity, according to data from J.D. Power.
Savvy shoppers looking to research potential depreciation costs can consult the Future Value tool on CanadianBlackBook.com that provides an estimate of how quickly any new vehicle model will depreciate. We've also featured our favourite deals this week chosen exclusively from Canadian Black Book's list of 2017 "Best Retained Value" award winners.
2017 Jeep Wrangler
The Jeep Wrangler held a greater percentage of its initial retail purchase price after four years than any other compact SUV, retaining 82 per cent of its original MSRP, according to Canadian Black Book. This marks the seventh consecutive year that the Wrangler has received the “Best Retained Value” award. Its strong residual value performance has been driven by high demand for the vehicle as well as the timelessness of its body style. The current generation Wrangler has not undergone a significant redesign since its introduction in 2007, with the exception of an upgrade to interior components in 2011 and a powertrain refresh in 2012.
Customers who want to get behind the wheel of an iconic Wrangler can take advantage of a limited time “No Payments for 90 Days” payment deferral promotion.
2017 Jeep Wrangler Unlimited Sahara
- MSRP: $40,245
- Manufacturer incentive: $500 (after tax)
- Estimated dealer discount: $2,300
- Freight, PDI, government fees: $1,935
- Cash purchase price before tax: $39,380
- Finance for 96 months at 3.49 per cent for $533 per month including tax (includes a $500 incentive and assumes zero down payment)
- Lease for 60 months at 3.99 per cent interest for $488 per month including tax (includes a $500 incentive, assumes an 18,000 annual kilometre allowance and zero down payment)
2017 Toyota Tundra
True to the brand’s outstanding reputation for reliability and superior build quality, it is no coincidence that eight Toyota vehicles received “Best Retained Value” awards this year. Reliability is a major factor in determining a vehicle’s future value, as low repair costs and infrequent visits to the mechanic usually signal a hassle-free vehicle ownership experience that commands a premium in the used car market. Customers who are curious to know just how reliable a Toyota product can be should check out BBC’s Top Gear episode where Jeremy Clarkson puts Toyota’s claim that its Hilux pick-up (international version of the Tacoma) is virtually indestructible to the ultimate test.
The 2017 Tundra offers a $2,000 after-tax incentive for cash purchases and attractive 1.99 per cent interest for leasing and financing.
2017 Toyota Tundra 4x4 Double Cab SR 4.6
- MSRP: $38,505
- Manufacturer incentive: $2,000 (after tax)
- Estimated dealer discount: $1,750
- Freight, PDI, government fees: $1,900
- Cash purchase price before tax: $36,665
- Finance for 60 months at 1.99 per cent interest for $765 per month including tax (assumes zero down payment)
- Lease for 48 months at 1.99 per cent interest for $519 per month including tax (assumes a 20,000 annual kilometre allowance and zero down payment)
2017 Audi A7
Featuring distinctive styling cues and a sloped roofline that provides hatchback functionality, the Audi A7 is the leader in the luxury segment for the second year in a row when it comes to retaining initial value. The overall body design of the A7 has remained consistent since its introduction in the 2012 model year, with only a slight facelift to the headlights and taillights in the 2016 model year.
Customers who have a 2017 A7 on their shopping list will also benefit from a $3,000 manufacturer incentive currently, regardless whether you decide to pay cash, finance or lease. Interest rates for both finance and lease were also recently enhanced.
2017 Audi A7 3.0 TFSI Quattro Progressiv Tiptronic
- MSRP: $75,950
- Manufacturer Incentive: $3,000
- Estimated dealer discount: $2,500
- Freight, PDI, government fees: $2,235
- Cash purchase price before tax: $72,685
- Finance for 60 months at 1.9 per cent interest (as compared to 2.9 per cent in January) for $1,436 per month including tax (includes a $3,000 incentive and assumes zero down payment)
- Lease for 48 months at 1.9 per cent interest for $1,002 per month including tax (includes a $3,000 incentive, assumes a 20,000 annual kilometre allowance and zero down payment)
2017 Dodge Challenger
Featuring a retro look reminiscent of the Challengers from the 1970s, the current-generation Dodge Challenger leads the sports car segment when it comes to retaining initial value. The Challenger’s strong resale value can be attributed to its timeless muscular look, which has not seen much change since the vehicle’s introduction in 2008. However, a number of interior and technological enhancements were made throughout the years.
The 2017 Challenger also qualifies for a limited time “No Payments for 90 Days” payment deferral promotion, in addition to a $500 rebate available to all customers.
2017 Dodge Challenger SXT
- MSRP: $32,345
- Manufacturer Incentive: $500 (after tax)
- Estimated dealer discount: $300
- Freight, PDI, government fees: $1,935
- Cash purchase price before tax: $33,480
- Finance for 96 months at 3.49 per cent interest for $453 per month including tax (includes a $500 incentive and assumes zero down payment)
Andrew Tai is CEO of Unhaggle.
Prices and incentives effective as of February 28, 2017. Manufacturer incentives and pricing calculations are based on Ontario customers and subject to availability of inventory. Dealer discounts shown are estimates for illustrative purposes only, may vary by region and are given at the discretion of individual dealers. Please note that while every effort is made to ensure the information above is accurate at the time of publication, pricing, incentives and discounts are subject to change or discontinuation at any time. Consult your local dealership for details.