Nine rides that hold their value
Used-car prices are soaring due to supply and demand issues in Canada and the U.S.
The truck traffic on Highway 401 reveals a massive, if obscure, migration from north to south.
Thanks to a shortage of new vehicles right now, Canada is being strip-mined of its used cars and trucks to help alleviate demand in the United States. And that means Canadian consumers will pay more for their next used vehicle.
The phenomenon has always been around, with exports of used cars fluctuating with the currency exchange rate. What’s different now is that the need for Canadian vehicles is acute due to a “perfect storm” of supply-and-demand issues.
The onset of the COVID-19 pandemic last year forced automakers to close assembly plants temporarily. However, when the factories reopened, demand for cars skyrocketed as buyers with government cheques in hand looked for a way to get around that didn’t involve transit.
At the same time, the microchips used by the auto industry were diverted during the shutdown to other consumer goods that became more popular during lockdown, such as student laptops and 5G smartphones.
Analysts expect the worldwide semiconductor shortage to last until well into 2022. In the meantime, the world’s automakers are slated to lose $61 billion in sales revenue, with some assembly lines sitting idle waiting for microchip deliveries.
The turmoil has prompted car shoppers to take a second look at the used auto market. Consumer demand has driven up the average used car price in the U.S. by a whopping $7,583, or 32.7 per cent, in June compared to one year ago.
Exceptional demand and higher prices in the U.S. have fuelled Canadian vehicle exports southward, boosted by an 80-cent dollar. More than 39,000 used vehicles were trucked to the U.S. in May, compared to 15,000 a year earlier — a 160-per-cent increase in export activity.
“Stretch your current vehicle out until November. The model year will change over, and demand will drop seasonally from December to February,” advises George Iny, president of the Automobile Protection Association consumer advocacy group. “We expect the winter price drop to be small this year, but you’ll have a better chance of finding something you like.”
If you need to buy a car or truck now, it’s good to know which models retain their value best so that you won’t lose thousands of dollars in depreciation when the market corrects itself. Here are the top cars and trucks that hold their value well after four years, according to Canadian Black Book.
No. 1: Toyota Tacoma
Toyota’s Tacoma midsize pickup truck scored the overall highest retained value — 87 per cent after four years — of any car or truck sold in Canada. It’s dominated its category for more than 12 years, the longest winning streak since CBB began tracking vehicle depreciation.
No. 2: Jeep Wrangler
The Jeep Wrangler retained 82.3 per cent of its original manufacturer’s suggested retail price (MSRP) four years later, making it the second-best retained value ride in Canada. Its high value speaks to the Jeep’s unique features — buyers love that they can remove the doors and even fold down the windshield — and the iconic styling of this historic nameplate that harks back to the Second World War.
No. 3: Porsche 911
In addition to trucks and SUVs, sports cars have sway with consumers with discretionary funds. The venerable 911 tied with the Wrangler for second place with an equal 82.3 per cent retained value after four years (like all the vehicles on this list, CBB examined the value of 2017 models today). In addition to its high-performance character, Porsche scores very high in annual J.D. Power dependability surveys.
No. 4: Chevrolet Corvette
Strong emotional appeal sometimes trumps a practical buy, which helps explain why the Chevrolet Corvette scores so well in retained value. Aficionados recognize the C7 Corvette as a sports-car bargain, which has led to big price increases for used examples.
No. 5: Toyota 4Runner
The second-best sport utility vehicle in terms of retained value is the Toyota 4Runner, a predictable result given that it rides on the frame
of a truck — the aforementioned Tacoma — which gives it true all-terrain capability expected of the class. This ain’t no car-based crossover, in other words. And the market is willing to pay a premium for the 4Runner’s rugged character, combined with the mechanical dependability synonymous with the Toyota brand.
No. 6: Porsche 718 Cayman
The Porsche 718 Cayman, the coupe version of the convertible Boxster, is a more affordable model when compared to the lauded 911. Like the other Porsches on this list, it is painstakingly assembled to provide excellent mechanical reliability, something the marketplace is happy to pay for in addition to the exhilarating drive.
No. 7: Toyota Tundra
Toyota’s full-size Tundra pickup successfully emulated the Detroit Three’s bestselling trucks, even if it sells a fraction of their numbers. The used-vehicle market has awarded the Texas-built Tundra the highest resale value of the bunch, a strong indication of the truck’s dependability.
No. 8: Porsche Macan
Porsche’s compact Macan sport utility skews more sport than utility, which appears to be the desired formula for its audience: motorists who want to drive an all-weather performance machine that sticks to paved roads better than it does to gravel paths. Smaller and lighter than its big-brother Cayenne, it successfully marries the best of both worlds — sports-car-like performance with the utility of a five-door wagon that can safely transport its riders and cargo through any weather.
No. 9: Ford F-250 Super Duty
The Ford F-250 is a fitting example of a domestic product that depreciates slowly because it can do anything, from picking up the kids after school to hauling a cabin cruiser. Consumers are willing to pay for versatility that delivers during the week and on the weekends.