Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Resale Values for Detroit Vehicles Go Up

November 29, 2007

After big cuts in how many vehicles they're building, the three Detroit automakers are starting to see increases in estimates of how much their new models will be worth as used cars, USA Today reports.Buyers are willing to pay more for a new car if they believe it will have retained more of its value when it comes time to trade it in or resell it in three or five years. Strong resale values also help lower the cost of auto leases. If an automaker knows a car will be worth more when it's traded in after the lease expires, it can offer a lower monthly rate.Ford Motor, along with Japanese automaker Nissan, shows particularly strong growth in estimated three-year residual values of 2008 models, Jairam Nathan, a Banc of America Securities analyst, says in a new report. Ford introduced smaller models, such as its Edge crossover, while abandoning slow-sellers, such as the Freestar minivan and the old Taurus sedan, which was being sold mainly into rental and corporate fleets. Nathan's figures, based on Auto Leasing Guide (ALG) data, also show used car values up at General Motors and Chrysler.But while they are showing improvement, domestic brands haven't caught up with most import brands on resale values, according to Kelley Blue Book and ALG.According to USA Today, while Autodata reports that GM, Ford and Chrysler sales have slipped 5.7 percent, 13 percent and 3.5 percent, respectively, for the first 10 months of this year, lower fleet sales — where overproduced cars often end up — have been cited as a key reason.
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