In what ways does resale value effect GM? Does a high resale value allow them to sell the car for more? Does it allow them to market their products as having a high resale value?

 

Higher resale value's biggest asset to GM is that it entices more people into your cars because they will not lose as much money when it comes time to trade them in. GM gets a lot of flack because resale value has been poor on many GM models since 9/11 due to the increasing number of incentives they've offered.

However, when you consider what you PAY for a GM car versus the competition, versus what you GET when its time to trade in 3-5 years later, GM does pretty well. Sure, when your $24,000 G6 is worth $10,000 when you trade it in 3 years later (purely making up #s here), the customer is mad their "$24,000 car" lost $14k in 3 years. In reality, that G6 may have really been purchased for as low as $20k when you factor in a $2k rebate and a $2k markup (this assumes you purchased that G6 for invoice). So in reality, you LOST $10k, but the average consumer feels they lost $14k.

So now, compare it to a $24k Accord. Lets say the Accord has a $1,000 rebate, and a $1,500 markup. So in reality, they pay $22,500 instead of $24,000. If they get $12,500 for it at trade time 3 years later, well...that's the same $10k loss overall as the G6, but the consumer sees only an $11,500 loss because that's the difference between MSRP and trade value. So then, the customer feels like their Accord has better resale value, and buys another

Rebates are great to get people in the door, but are hurting "resale." I think its rather amusing, but it does hurt GM. In my own experience? GM resale is fine. In 2003, I bought my 2001 Grand Prix for $13,900 with 22k. New it sold for about $24k with its options. Now, average retail is still $11,200! So, retail to retail, I lost $2,700 in 2 years and almost 40k miles! Can't beat that Now, if I trade it in, average trade is $9,700 for my car...so now I've lost $4,200. That's still about $2k per year to drive 20k per year. You better believe I'm not complaining $2k per year is cheap!!!

Now, if I had bought my GP brand new, my $24k car probably sold for around $20k back in 2001, based off the $2,500 rebate that was their top at the time IIRC, and assumes I got $1,500 off the sticker. Now, its worth $9,700. So, if I had bought it new, I got 5 years of use and 60,000 miles for $10,300...or, again, $2,000 a year

So, in the end...don't tell me GM resale sucks On a Malibu, maybe...but there's many GM cars that do well (Grand Am GTs and Grand Prix GTs/GTPs stick out in my mind as doing VERY well).

 

High resale value also keeps a person from being upside down on their loan, so they can buy a new car sooner.

Most published resale value ratings are skewed, because they factor in MSRP as the selling price, don't include rebates, and "Predict" the future selling price. Personally, I had a much easier time selling a 5 year old "Unpopular" Z28 Camaro than my 5 year old "Popular" Jetta (still for sale).

However, I will say Honda resale value is at just plain stupid levels. I've entertained buying a Honda commuter type car on a couple of occasions and it always makes more sense to buy a new one because people get 90% of the original price for their 2 year old used one. At the same time I was selling my Camaro for $7200, one of my inlaws crashed their mid-level prelude of the same vintange and got over 12k for it from the insurance company.

 

I will agree...here in the Northeast, Honda resale is just plain stupid. I have noticed in the past year though that the insane prices people would pay for 100k+ mile Hondas has dropped significantly...

Maybe they finally realized Honda does NOT = "They Never Break"???