Residual values for minivans, large SUVs, and large- and mid-size utility vehicles will rise in 2008, despite fuel prices hovering above $3 per gallon, according to Black Book. Increases from 2007 to 2008 for these segments are minivans up 7.8 percentage points, followed closely by luxury SUVs, up 6.2 points; full-size utility vehicles, up 4.4 points; and mid-size utility vehicles, up 3.6 points.
“Contrary to the cost of fuel, there continues to be the desire by many consumers to have the comfort and versatility, while still maintaining some truck ruggedness and towing capabilities of the SUV market,” said Ricky Beggs, VP and managing editor of LBlack Book. “The minivan segment has quite a few less players to compete for the type of buyer who wants the car ride, with room to carry seven and doors on all corners.”
Conversely, some segments have seen their residual values go down for 2008, notably near luxury cars (down 1.1 point), followed by entry level cars (down .8 point), and premium sporty cars (down .3 point).
“The struggles in the stock market often affect the high priced luxury and sporty cars, sometimes considered the toys of the auto industry,” Beggs said. “The lower level entry cars that are falling slightly can be attributed to more competition, with more players in the competing segment.”
Overall, projected residual values of leased vehicles are rising as 2008 models begin to hit dealer lots, according to Black Book. This increase should help make lease payments more competitive with other traditional consumer finance methods and increase the penetration of leases during the 2008-model year.
The average projected residual value for 2008 models is $19,804, or 49.19 percent of its value. In 2006, vehicles had an average residual value of 47.31 percent, while 2007-model-year vehicles had an average residual value of 46.71 percent.
“Given the current active state of the used-car market and the solid Black Book residual projections, this is a very good time for automotive retailers and automotive finance organizations to increase the lease penetration of their existing portfolio,” Beggs said. “While we don’t see lease penetrations going as high as they did in the late-1990s, we do predict the industry will have a much higher lease penetration this year.”
Originally posted on Auto Rental News