Resale Value

vahobaco · 01-20-2010, 05:02 PM

Just talked to SmartUSA about their lease rates. These are the residual values they are using for their 45,000 mile/36 month leases

Pure: 46%
Passion: 47%
Passion Cabriolet: 43%

So Daimler is predicting the fortwo is going to be worth less than 50% of its value in 3 years. That seems shockingly low. For comparison, the Mini Cooper still holds 52% of its value after 5 years.

The Passion Cabriolet, in particular, seems to be the worst in the industry. Why is that?

prm1177 · 01-20-2010, 05:24 PM

Two seater econoboxes are few and far between.

**jwight** · 01-20-2010, 05:49 PM

Just a guess, but smart really has no idea of the resale value - those figures are still being established and they are guessing on the low side to cover themselves. I'm not into leasing but can't the residual value (as well as the initial price of the car) be negotiated?

Brabus007 · 01-20-2010, 06:13 PM

Buy a new car, and then tell them you want to trade it in, and you will find out what the car is really worth, and not what you just Over Paid for it...<:-((
(remember the car is still sitting in their lot. You have not moved it yet)

Alan Smithee · 01-25-2010, 05:38 PM

Quote:

Originally Posted by vahobaco

So Daimler is predicting the fortwo is going to be worth less than 50% of its value in 3 years. That seems shockingly low. For comparison, the Mini Cooper still holds 52% of its value after 5 years.

You are confusing residual values with resale value. They are not necessarily one in the same. For instance, December BMW FS lease residuals for MINIs range from 50% (JCW cabrio) to 63% (base coupe) for 36 month terms at 15k miles/year (50% for 48 months on the base coupe; much lower than you stated as resale value). Actual resale value may exceed that, but so may actual resale value for the smart. It's too early to tell for the smart, as the car has only been on the market for 24 months.

Financial institutions set residual values at a point where they can be sure to sell the vehicle at a profit after receiving back at the end of the term (even more conservatively set now, since many were caught with their pants down over the last couple years), so "resale value" will typically be higher than residual values.

That said, I don't expect great resale values from the smart unless gas prices spike again. It is a niche product with a very limited audience, not to mention a very short warranty.