KBB Value dropping drasticly

Red__Zed

I'm not sure I follow your first paragraph.


How well the Z has held value depends on your perspective of what the car is. It has been weak relative to those expecting it to be a hit car. Your expectations were likely just more reasonable.

Rockhound

Relative to what? That's a very vague statement. ‘Those’ people must be folks who don’t have a good understanding how depreciation applies to a mass-produced vehicle that lacks a strong cult following and forces serious compromises on an increasingly beige-seeking consumer base.

Relative to the German competition in the M3 for example, yes, the Z’s residual is lower in my woefully misinformed example. If we assume that the average transaction price for the 370Z tended to be at a greater discount from MSRP than the M3, which you would likely suggest, then the gap in value retention begins to narrow. If the average transaction price on that mythical 2009 370Z was $28k, that brings the trade value residual up to 61.4% (still assuming the $17.2k trade value) – versus 63.7% residual for the nearly 2x priced M3 (assuming transactions ran close to MSRP for the M3, which you’ve suggested). I guess I just wouldn’t classify over 60% value retention over a five year span as ‘weak’ – regardless of my expectations.

I do get what you’re saying – if someone gets $10k off a $27k Mustang in 2009, and they can trade it for $14.6k, the residual for that individual is an astounding 86%.

It's probably also worth noting that the thought of the Z34 being a ‘hit car’ flew out the window some five years ago. A moderately ‘expensive’ (all relative, of course) Japanese, non-V8, 2-seat coupe launched during a pronounced recession wasn’t ever going to fly off the showroom floor, and it hasn’t. The thought of exclusivity keeping prices up artificially is also rendered moot because the Z isn’t some bespoke, one-off status symbol – even though it may feel that way to many owners. It seems to me that the shock over the Z’s depreciation is based upon wholly unfounded expectations.


My point was this: you’re defending the Mustang’s residual value by arguing that there are huge incentives, and that you can get $10k off a new Mustang. That’s kind of damning with faint praise, if I can use another antiquated cliché to describe it. Cash incentives to move metal can be detrimental on used car values, too – NADA estimates that $1,000 in cash incentive reduces a one-year old used version by $600.

Just as Nissan's recent price-drop on the Z may already be showing a pass-through effect to used Z values.


I work in an inexact science day in and day out. I usually have to normalize against some constant assumption to make meaningful comparisons. Normalizing a chart of one appraisal service’s valuation of cars of the same age with the same mileage against MSRP isn’t the catastrophic blunder you make it out to be, if you approach it with the proper caveats in mind. I mean, I guess it is if you have a different agenda to push. I comprehend that the starting price is important, but as a quick look, I compared against MSRP. Some folks pay MSRP, too - not everyone drives a hard bargain.

I never promoted that table as the gospel for residuals; it just served as a basic comparison tool. You seem very bothered with the Mustang example in particular.


I don't think anyone is suggesting that - I just don't think the data bears out that the Z has experienced horrible depreciation. I think there's some shock in seeing what deprecation looks like when you started near $30k 5 years ago. And for folks who don't intend to sell the vehicle, it is kind of a moot point anyway.

Red__Zed

I think you are imagining a lot of content to my posts that is not there. I'm not "attacking" resale value, nor am I "defending" any car. My point is simply that the depreciation deltas are smaller than your error bars, making it tough to draw a conclusion from the data.

Posting that chart is misleading, the MSRP variance gives on the order of ten percentage points of flex, estimating conservatively. That says nothing of the issues using final production year vs first production year and the like. Those are acceptable items to include, properly qualified of course. You mentioned none of that.

Since you seem to be rustled at the idea of the Mustang doing OK, we will do with the S2000. Take a quick google search to see what 2009 S2000s were selling for--it's very close to what the used ones are selling for...Honda incentivized them very heavily.

All that said, the Z doesn't have terrible residuals for its class of car. I think the performance is surprising for some because other Z cars have had very high residuals, but that in no way makes the Z a "bad" car. A lot of the residual.


Finally, you and others seem to continue to confuse negotiation with mfr incentives. For an easy example, go take a look at pickup trucks. You will literally never pay MSRP. If you went into a GMC dealer for a truck, you'd probably pay 10K less than sticker without negotiating at all. Certain manufacturers utilize this tactic more than others. American companies use it the most--it heavily affects Corvette and Mustang prices on your chart. Lifecycle end incentives affect the S2000. BMW discounts the 335i, but not the M3. It's amazing how the ordering reads almost in line with expected discounts.