Resale Values of Luxury Cars

When you are searching for a new car, whether you plan to lease it or purchase it in the hopes of trading it in for something even newer after a few years, it's important to at least consider potential resale value. This means choosing a vehicle that is known for reliability and quality. While those two criteria don't always have to mean a luxury vehicle, the reality is that luxury cars generally retain more value than less expensive vehicles.

Why are Luxury Cars More Valuable?

The largest factor in determining resale value of luxury cars is customer perception. This means that the general public's opinion that certain brands - BMW, Lexus, Mercedes-Benz, Porsche - are high class and high quality. This is supported by a strong demand for these cars in the used car market, which also helps keep values high. As well, these cars usually have excellent ratings in performance, safety, and durability.

The quality of the actual car, then, coupled with the public's perception of the car, determines much of the resale value, but another factor is availability. Luxury cars are usually produced in smaller numbers than more economical brands. Not only does this make them more difficult to acquire, but it also makes them worth more when being sold used. In this case, it's a basic supply-and-demand scenario: fewer vehicles produced means a greater demand for those which are available.

There are, however, some luxury cars that are high-quality vehicles, but don't have luxury-car resale values. Two examples are Jaguar and Saab, which are technically luxury brands, but have resale values that are substantially lower than most other luxury vehicles. This is due to public perception of the brand, as well as other factors.

It's a common misconception that a fully loaded car has a significantly greater resale value than one with fewer options. In fact, that options bundle really doesn't affect value all that much with a used luxury car. Why? Because the options that are so spiffy and new at the time of purchase are old news by the time a car is put up for resale. Also, a person driving a Porsche probably isn't in need of the latest video camera parking aid. Or any parking aid at all, unless you include a valet.

What Else Influences Resale Value?

Right now, one of the most significant factors influencing resale value of any car is fuel economy. Gas prices may not be as exorbitant as they were a couple of years ago, but fuel still isn't cheap, and luxury cars can't always be filled with the "cheap stuff." A BMW with great fuel economy is worth more than one that doesn't go terribly far on a tank of gas, new or used.

If you own a luxury vehicle and want to resell it, remember to keep it well tuned. A car in good condition is always more valuable than a rarer vehicle that can't be driven. You may also want to consider having it appraised before you list it for sale.

If you are looking to buy a luxury car, consider leasing one instead. By leasing a car you get all the newest bells and whistles, without having to worry about depreciation, and since luxury cars retain greater resale value, turning it in and getting a new car at the end of your lease should be relatively hassle-free.