Cars that lose value fastest

Forbes.com - Hannah Elliott

Buyer beware: These vehicles retain less than 20% of their value after five years.

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High-end sports cars and SUVs like the Audi A5 or BMW X5 are fun to drive, but they don't make a lot of sense to buy from a value standpoint, right? Wrong. Actually, they are both segment leaders when it comes to resale value, each retaining roughly 40% of their original purchase price after five years of ownership.

The cars that do lose their value quickly are more humdrum (the Kia Sedona and Lincoln Town Car), or are made by a manufacturer in dire financial straits (the Chrysler Sebring and Dodge Grand Caravan). While the general wisdom is that new cars lose up to 20% of their value the moment they're driven off the lot, and about 65% after five years, the Sedona, Town Car, Sebring and Caravan each lost more than 67% of their value after just two years--and a whopping 82% after five years.

History Repeating

A model like the $28,980 Durango or $21,245 Kia Sedona finding a spot on our list isn't just a onetime anomaly. Along with the $46,525Lincoln Town Car, these three vehicles were on our worst-resale-value list last year, as well.

This year, the expected residual value for a Durango after five years is just 18% of its original price; for the Sedona, owners can expect to get back 15% of the initial MSRP. The Town Car's not much better. It retains 32% of its value after two years, 26% after three years, 22% after four years and 18% after five.

Part of the reason these vehicles, especially the trucks (Dodge Ram, Mitsubishi Raider) and SUVs (Saab 9-7X, Dodge Durango), make the list is simply because of their segment. Gas prices and the economy affect what people drive, and when gas prices rise, the value of a gas-guzzler goes down.

"If we're painting it with broad strokes, I'd say SUVs are going to depreciate at a little higher clip than probably sub-compacts or hybrids or standard sedans, especially as we're going into Obama's 35-mile-per-gallon standard in 2016," says James Bell, an automotive market analyst for Kelley Blue Book. "I think the American public better start to get ready to look at small cars not as a curiosity, but as a reality."

An Educated Choice

Bell knows firsthand how consumer perception and, ultimately, gas prices, affect the resale value of gas-sippers. In 2003, he bought a brand-new, $26,000 Toyota Prius, drove it for 42,000 miles, and sold it two years later at a loss of just $2,000. (That kind return on investment isn't normal, at least these days--Kelley Blue Book lists the 4-year resale value of the 2010 Toyota Prius at 55% of the original MSRP.)

Bell says the foresight to make a similarly wise purchase and subsequent trade can come largely from reading analysis by the likes of JD Power & Associates and Intellichoice.com. Most importantly, he says, make an unemotional decision before entering the showroom about what car you want and how long you expect to own it.

"It's well worthwhile to do that after you identify what kind of vehicle you like because of its looks or its fuel economy or its dealer network," Bell says. "Stop and look at it very rationally and economically, because that's where the real winners can be found."

In some cases, he adds, buying the car that costs a little bit more than its competitor may pay off--if the first car has a higher resale value. "Just saving that extra $20 a month over the course of three years, you may not recoup that when you go to resell [the car]."

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