Since we are automotive living people here, not just Ford, I found this to be an interesting read.
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With automakers finally starting to reel in their rebates, $4,000 off the price of any new Saturn sounds like a sweetheart deal. The hefty discount brings the starting price of the sexy Sky roadster down to the low 20s, making it one of the cheapest sporty convertibles on the market. And it drops the price of the seven-seat Outlook crossover to the mid-20s, a great price for a well-equipped family hauler.
The come-ons, however, omit one discouraging fact: Saturn is going out of business. Parent company General Motors has pledged to service all Saturn vehicles indefinitely, through other dealerships, but smart car buyers know that the true value of a car also depends on what it will be worth in a few years, if you decide to sell it. And the resale picture has never been hazier.
In addition to Saturn, GM is closing its Pontiac division and streamlining the lineups for Chevrolet and Buick. The company's Saab division may shut down completely, and a little-known Chinese company has purchased Hummer. Crosstown rival Chrysler is likely to kill many of its underperforming models as well. And with a devastating plunge in auto sales over the past two years, Ford, Toyota, Nissan, Hyundai, Volkswagen, and other automakers are also pruning their lineups.
All of that fallout, combined with the usual retirement of aging models, will soon produce a frenzy of clearance sales on cars. Automakers plan to retire nearly 50 models over the next two years, including some of the most popular cars on the market. Some of these cars will be great buys, fully backed by the manufacturers and still popular years from now. Others will end up as soon forgotten orphans, barely worth the value of their sheet metal.
But don't expect the dealer to help you distinguish the classics from the clunkers: They don't want you to know when a model has been discontinued. To keep buyers from demanding fire-sale discounts, in fact, many automakers don't even announce when they plan to stop producing a model. It just disappears from showrooms.
To help identify the best and worst discontinued cars, I asked the analysts at car-research site KBB.com to identify models likely to be discontinued over the next couple of years. For some of these models, the manufacturers have confirmed that the car is being axed; others made the list because of strong indicators that they're being discontinued, such as manufacturing changes or declining shipments to dealers. KBB then predicted the residual value of each of those models in five years--the amount it's likely to be worth, expressed as a percentage of its original list price. The median vehicle has a predicted residual value of 22 percent in five years. The highest residual value is 35 percent; the lowest, 15 percent.
Residuals generally reflect the quality and reliability of the car and the reputation of the automaker. So cars with high residual values tend to be the best-rated cars, whether they're discontinued or not. Residual values don't really matter if you're likely to own a new car for, say, 10 years, or the car's entire life span. But if you think you'll sell the car or trade it in within a few years, or you might want to buy a leased car after the contract expires, then residual values should be a key part of your purchase decision.
Smart buyers weigh price and residual values together: A deep discount might seem like a great deal today, but it will lower the value of the car in the future. Most Saturns, for example, have lower-than- average residual values, and none makes our top 10 list of discontinued cars. A really low price might still make a Saturn an irresistible deal, but a modest discount on a car with a higher residual might turn out to be a better buy.
Getting a good price depends on how much research you do and how effectively you negotiate. Car shoppers should start by researching the fair market value of a car they're interested in at sites like KBB.com, U.S. News's car-ranking site, Edmunds.com, or Intellichoice.com, then try to push the dealer below that price. Meanwhile, here are 10 cars that should top the list for shoppers looking for a good deal on a discontinued car:
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Click on link for the rest of the story.
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With automakers finally starting to reel in their rebates, $4,000 off the price of any new Saturn sounds like a sweetheart deal. The hefty discount brings the starting price of the sexy Sky roadster down to the low 20s, making it one of the cheapest sporty convertibles on the market. And it drops the price of the seven-seat Outlook crossover to the mid-20s, a great price for a well-equipped family hauler.
The come-ons, however, omit one discouraging fact: Saturn is going out of business. Parent company General Motors has pledged to service all Saturn vehicles indefinitely, through other dealerships, but smart car buyers know that the true value of a car also depends on what it will be worth in a few years, if you decide to sell it. And the resale picture has never been hazier.
In addition to Saturn, GM is closing its Pontiac division and streamlining the lineups for Chevrolet and Buick. The company's Saab division may shut down completely, and a little-known Chinese company has purchased Hummer. Crosstown rival Chrysler is likely to kill many of its underperforming models as well. And with a devastating plunge in auto sales over the past two years, Ford, Toyota, Nissan, Hyundai, Volkswagen, and other automakers are also pruning their lineups.
All of that fallout, combined with the usual retirement of aging models, will soon produce a frenzy of clearance sales on cars. Automakers plan to retire nearly 50 models over the next two years, including some of the most popular cars on the market. Some of these cars will be great buys, fully backed by the manufacturers and still popular years from now. Others will end up as soon forgotten orphans, barely worth the value of their sheet metal.
But don't expect the dealer to help you distinguish the classics from the clunkers: They don't want you to know when a model has been discontinued. To keep buyers from demanding fire-sale discounts, in fact, many automakers don't even announce when they plan to stop producing a model. It just disappears from showrooms.
To help identify the best and worst discontinued cars, I asked the analysts at car-research site KBB.com to identify models likely to be discontinued over the next couple of years. For some of these models, the manufacturers have confirmed that the car is being axed; others made the list because of strong indicators that they're being discontinued, such as manufacturing changes or declining shipments to dealers. KBB then predicted the residual value of each of those models in five years--the amount it's likely to be worth, expressed as a percentage of its original list price. The median vehicle has a predicted residual value of 22 percent in five years. The highest residual value is 35 percent; the lowest, 15 percent.
Residuals generally reflect the quality and reliability of the car and the reputation of the automaker. So cars with high residual values tend to be the best-rated cars, whether they're discontinued or not. Residual values don't really matter if you're likely to own a new car for, say, 10 years, or the car's entire life span. But if you think you'll sell the car or trade it in within a few years, or you might want to buy a leased car after the contract expires, then residual values should be a key part of your purchase decision.
Smart buyers weigh price and residual values together: A deep discount might seem like a great deal today, but it will lower the value of the car in the future. Most Saturns, for example, have lower-than- average residual values, and none makes our top 10 list of discontinued cars. A really low price might still make a Saturn an irresistible deal, but a modest discount on a car with a higher residual might turn out to be a better buy.
Getting a good price depends on how much research you do and how effectively you negotiate. Car shoppers should start by researching the fair market value of a car they're interested in at sites like KBB.com, U.S. News's car-ranking site, Edmunds.com, or Intellichoice.com, then try to push the dealer below that price. Meanwhile, here are 10 cars that should top the list for shoppers looking for a good deal on a discontinued car:
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Click on link for the rest of the story.
