After the onset of the coronavirus (COVID-19) pandemic and supply chain interruptions, the auto industry has seen extreme shifts. Used car prices have hit historic highs, which means trade-ins are more valuable than ever. Unsurprisingly, SUVs and crossovers top the list of the highest trade-in values.
Supply is down and demand is up meaning high trade-in values
The automotive market has drastically changed over the last year. Supplies of new vehicles have been slowly dwindling in the face of supply chain interruptions and shortages. This has driven pricing up across all markets.
This trend represents a sudden and unexpected reversal from the previous years, which saw near-record surges in inventory. In 2019, dealerships were struggling to house more than 4,000,000 unsold cars. Overflow lots piled up with unsold units.
The 2019 inventory surge was surpassed only by one triggered in 2007. The American recession caused a historic dip in car sales, and inventory piled up. In an interesting divergence, current low inventories coincide with a period of increased buying, driving demand and value even higher.
These cars are holding their value better than the rest
There are some clear market leaders when it comes to trade-in/resale value. American brands top the list of cars with the best value retention over the last three years. Trucks and SUVs have held their value better than other segments, in part because of their popularity.
The GMC Canyon holds its value well for a midsize pickup truck. It’s not as well-selling as the F-150 but holds its value a bit better. The price point and capability of the Canyon make it a practical choice in its class. The Dodge Challenger’s popularity means it depreciates little.
Off-road capable vehicles pull in high trade-in values. The Jeep Wrangler stands out among rugged SUVs for its high-value retention. The record-breaking Kia Telluride is another high-value model in this segment. The Subaru Crosstreck, Forester, and Outback all boast low depreciation rates.
Some popular models haven’t retained much value
For years the Nissan Leaf dominated EV sales through the end of 2019. In Hawaii, the Leaf represents more than 60% of all EV sales. Despite its staying power in the segment, the Nissan Leaf suffers from poor resale value. Edmunds cites poor resale and trade-in values as a con of EV ownership.
BMW X3 is the only crossover to make the top 10 worst trade-in values. The crossover segment is the second fastest-growing in the industry behind EVs. The popularity of crossovers makes them easy to resell and makes for higher trade-in values.
Luxury sedans have taken the worst hit to value retention. Of the 10 lowest trade-in values today, nine represent this segment. Sedans have been steeply declining in popularity for years. Many automakers have limited or ceased production of anything smaller than a crossover in response to these sales trends.
At the end of the day, trade-in value represents a car’s overall appeal on the previously owned market. Practicality, popularity, and price all affect how well a car will sell to a second owner. With demands high and supplies low, trade-ins are worth more than ever and sell in record time.