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Chatham Parkway Subaru

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Savannah, GA 31405

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Subaru Wins Residual Award

What does this award mean to someone who owns a Subaru?

It means that when you buy a Subaru you know that it will hold its value. The residual is what the bank is expecting to be able to sell a car for at the end of a lease, if you turn it in. So when you lease is over and you drop the car off at the dealership and buy a new one, the leasing company needs to have an idea what they will get for the car at the auction. Banks that lease automobiles don't sell them retail, so they need to get the money back for the vehicle somehow. They generally will send them to an auction. The lease is based on what the bank thinks they can get for the car on the open market at the end of the lease. See the details of the Residual Value Awards below and more information on how a lease works at the bottom of the page.


12/2/2009

ALG Announces 11th Annual Residual Value Awards

Santa Barbara, CA, December 2, 2009 -ALG, a subsidiary of DealerTrack Holdings, Inc. (Nasdaq: TRAK) and the industry benchmark for residual values and depreciation data, today announced its 11th annual Residual Value Awards, honoring the vehicles in each segment that are predicted to retain the highest percentage of their original price after a conventional three-year period. 

This year's awards are based on 2010 model year vehicles.  For the eighth year, ALG has also included awards for the brands with the highest overall predicted resale values among all mainstream and all luxury vehicles.  The awards are derived after careful study of segment competition, historical vehicle performance and industry trends.  The list of winners can be found on www.alg.com.

Subaru of America has won the Mainstream Brand Residual Value Award for the first time, jumping over perennially strong Honda.  Subaru also received individual segment awards for the Forester in the Compact Utility Vehicle category and the Outback in the Midsize Utility Vehicle category. 

"Subaru combines distinct product attributes, such as standard all-wheel drive and the wide use of turbo charged boxer engines, with a rugged but practical brand positioning to generate fierce loyalty among its buyers," said James Clark, General Manager of ALG.  "Subaru also has been restrained with incentives over the past year, and its three core models have all been recently redesigned, helping it to move from second place to first this year." 

Acura, a division of American Honda Motor Company, has won the Luxury Brand Residual Value Award for the second consecutive year. 

Mr. Clark commented, "Acura has taken a different tack than most luxury brands , and its decision to stick with front-wheel drive platforms and smaller engines has served it well in the current uncertain times.  Acura's outstanding reliability, simple packaging schemes and value pricing with low incentive levels were major factors in its repeat finish at the top of the luxury market this year."

Honda, the runner-up for the Mainstream Brand Residual Value Award, received three segment Residual Value Awards, for the Fit (Entry Compact Car); the Accord (Midsize Car); and the Odyssey (Minivan). 

Toyota Motor Sales, USA also won three segment awards, for the Sequoia (Large Utility Vehicle); the Tacoma (Compact/Midsize Pickup); and the Prius (Hybrid/Alternative Powertrain).  In addition, Toyota's Lexus division - the runner-up for the Luxury Brand Residual Value Award - received two segment awards, for the Lexus LS (Luxury Car) and the Lexus RX (Near Luxury Utility Vehicle). 

BMW was the only other winner of more than one segment award, for the Mini Cooper (Sporty Car) and the BMW 1 Series (Near Luxury Car). 

Among domestic manufacturers, the only winner was Ford, for the F-150 (Fullsize Pickup). 
 
Other segment winners included the Nissan Maxima (Fullsize Car); the Audi S5 (Luxury Sports Car); the Mazda 3 (Mid-Compact Car), and the Range Rover Sport (Luxury Utility Vehicle). 

Mr. Clark concluded, "We continue to believe that residual value is the best metric for evaluating the overall strength of an automotive brand, and we congratulate all of the 2010 winners for their successful products and marketing strategies."

Summary of 2010 Residual Value Award Winners

Mainstream Brand:  Subaru of America


Luxury Brand:  Acura, a division of American Honda Motor Company, Inc.

Entry Compact Car:  Honda Fit
Mid-Compact Car:  Mazda 3
Midsize Car: Honda Accord
Fullsize Car:  Nissan Maxima
Compact Utility Vehicle:  Subaru Forester
Midsize Utility Vehicle:  Subaru Outback
Large Utility Vehicle:  Toyota Sequoia
Minivan:  Honda Odyssey
Compact/Midsize Pickup:  Toyota Tacoma
Fullsize Pickup:  Ford F-150

Sporty Car:  Mini Cooper
Near Luxury Car:  BMW 1 Series
Luxury Car:  Lexus LS
Luxury Sports Car:  Audi S5
Near Luxury Utility Vehicle:  Lexus RX
Luxury Utility Vehicle:  Range Rover Sport

Hybrid/Alternative Powertrain: Toyota Prius

How a lease works...

Below is a representation of how an auto lease works. The bank looks at how much the car cost in the first place (MSRP). In this case it is $25,000. For the ease of this example we are showing a residual of 50% which would make residual $12,500 and the payments based on the other $12,500.

If this is a 36 month lease you would then take the $12,500 of payments and divide that by 36 to give you a payment + interest.

If you leased a Subaru, the Residual Value Award significant is that after 3 years Subaru vehicles are worth more than other vehicles, whether you lease or take out a loan. Where some vehicles are worth 50%, a Subaru might be worth 55% or 60%. Which means your payment amount is less in a lease. In the case of the $25,000 car below a 60% residual would mean your lease payment would be based on $10,000 instead of $12,500.

If you purchased a Subaru, you know your vehicle is still a highly sought after asset, and you will get more for it when you look to trade it in for a new one.


If you have more leasing questions be sure to contact us...

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