spwolf

i still dont understand how do you think that they are raising the resale value by buying new Corollas? Since it is best selling car in the class, it should have lesser resale value if everything else is equal, simply because there are more of them on the road.

But it has great resale value, so thats not it :-).

Sulu

That makes absolutely no sense at all. Even the cars with the highest resale values eventually lose their value until they are worth almost nothing, given enough time. Unless you are talking about the short-term -- say 4 years from when Mom buys it new to when Daughter sells it -- the Corolla will be worth almost nothing, and certainly not enough to "buy the newest Corolla with the least money out of pocket".

The best deals in used cars are certainly NOT cars with high resale values, but with a good balance of low resale value (good used car price) and good used car reliability. A gently used Ford Focus (2~3-year old) may be a much better used car value than a Toyota Corolla.

chikoo

I realize what I am saying does not make much logical sense, the very same way the dollar has retained its value even when America is bankrupt.

Consider this. There are far more money minded people than there are enthusiasts. Those are the people that Toyota caters to. What they want is a vehicle that takes them from point A to point B with no fuss and no personality. What they also want is the least cost per mile for the length of ownership. This can be achieved two ways.
1. Haggle the price down to the lowest when buying a reliable vehicle. Those are the ones who stay at the dealerships for the full day playing the game of "ask my manager" with the salesman.
2. Sell the vehicle at max value when they want to move to a new car. This ensures that they have to pay the minimum out of pocket difference.

To sell the vehicle at max value, you HAVE to keep up the hype of high resale value. If as an owner you do not do so, you will end up selling your own vehicle at a lower price.
Buyers who will buy the used car are also looking for good investment + reliability once out of warranty. Once again, it helps that there are more people who want to make safe investments rather than live like an enthusiast, and take chances on new entrants.

Sulu

You still do not know what you are talking about. No one buys a Toyota (or most other cars) as an INVESTMENT. Cars are commodities and are expenses, not investments.

Even a Lexus is not an investment, unless you are talking about an LFA, and they may take a few years yet before they appreciate and become an investment.

chikoo

Well then go ahead and explain why Corolla has high resale value.

mmarshall

Very simple. Same as for most other cars. Supply and demand as a USED car. No more...no less. The higher the current demand for a used car model, and the less the current supply, the higher, in general, the average transaction price will be. It's one of the oldest laws of economics.

I have to agree with the other posters here who do not consider the purchase of most cars an "investment", when depreciation is taken into account. A few old classics, muscle-cars, and exotics may (?) continue to appreciate (gain) in value and be considered an investment, but with most cars (including Corollas), you can virtually guarantee depreciation.

Sulu

A car's resale / residual value is the measure of the market value of the used car. At some certain time in the future (measured from when a new car first shows up on the dealer's lot), there is greater value in the used Corolla then there is in a used Ford Focus of the same age. High value cars are more likely to be in high demand (but if the market value is so high, demand may suffer as people shop for lower-value / lower-priced used cars, which may affect the market value of the higer-value car).

You cannot truly measure the value of a new car based upon the manufacturer's suggested retail price; there are many factors that go into setting a MSRP, including the perception and image that the automaker's marketing department wants it to achieve (e.g. buying a premium brand). You can, however, better measure the value of a used car (or a new car that has been sitting on the dealer's lot for a very long time), when marketing no longer has as much sway.

Comparing the used Corolla with the used Focus of the same age, there is greater value in the Corolla. The Corolla is much more likely to still be running "like new" than the Focus, and so much more likely to have more years of life left in it than the Focus; the cost to maintain the used Corolla will more than likely to be less than the cost to maintain the used Focus, so buyers are more willing to pay more to buy the more reliable car.

For a used car, look at this equation:

higher sale price (higher resale value) + lower maintenance costs (e.g. Corolla)
= lower sale price (lower resale value) + higher maintenance costs (e.g. Focus)

And...

The worth of the American dollar right now is not only a measure of how well you, chikoo, think the economy is doing at this particular point in time. I happened to hear it explained this morning in this fashion:

The American dollar is in a race with the Western European Euro, the Canadian Dollar and other currencies. All economies are not doing so well; they are all slowing down, BUT the American economy is slowing down SLOWER than the other economies, so that the American economy is (still) in the lead. That is reflected in the American dollar -- better than its competitors.

chikoo

Ya'll are talking definitions about residual values, supply vs demand but are failing to do understand how they come about. But that is alright. If everybody understood this then it wouldn't be such a specialized field.

mmarshall

No....we're not failing anything. We understand exactly how residual value comes about. The popularity of used cars is not determined by people who want to buy them as "investments", except for the occasional classic or exotic that might (?) appreciate. A used vehicles's popularity is determined by its reputation, how much it appeals to the average car-buyer, and how much that car-buyer is willing to spend for it (or a dealer is willing to give you in trade).

We're also off the thread topic.....the latest Mazda3.

FastTags

Its not so much as the materials, it the look itself. Corolla is absolutely hideous, and I am not the only one who thought so at the dealership last weekend. Civic does look much better, I don't mind the interior design as much as the Mazda or Corolla.

FastTags

not true I love new cars. I had 2014 GS350 and now We purchased a 2014 Accord coupe (which I like the interior but no the ride quality) and the new 2015 Civic this Monday. whether its #1 or #100 seller doesn't change the fact that those cars are hideous looking. People will buy civic, corolla simply because its #1, not because they like it.


Accord is definitely in the $20,000 range and it looks great IMO, interior and exterior. Hyundai sonata is in the $20,000's and looks great.......Ford fusuion looks great too.. You cant even put Mazda 3 with a fusion. The interior of Mazda 3 you have to see it, it looks nothing like the pictures. We did not drive the one with the screen, not sure if it made a difference.

FastTags

I don't think Chikoo is actually means that people buy car as an Investment. He did not say that, I think what Chekoo is trying to say is that some people will buy Corolla simply because its a smart decision and a good over all value: good resale value, lower residual etc......

All cars loose value, there is nothing new here, some cars loose it less than others, and those are usually are: HONDA and TOYOTA brands.

Sulu

Styling preference is subjective and very personal; just because you (and coincidentally, others shopping for the Corolla at the same time you did) do not like the interior of the Corolla does not mean that everybody else will agree with you.

You seem to like Honda. Personally, I do not like the 2-tier instrument panel in the Civic. To me, it is another in a long line of Honda "me-too" gimmicks, right up there with their sea of same-sized buttons on the last-gen Accords and Acuras; and now their dual-screen display, 1 of which is a touchscreen and the other controlled by a mouse. I refuse to drive a car that is too full of show-off gimmicks.

While I do not mind the outside styling of the new Civics, I personally think the Accord's rear end looks FAT.

To each his/her own. I accept the fact that we each have our own (differing) opinions on the looks of cars, and I will never try to persuade someone that their opinion about the look of a car is wrong.

bitkahuna

iTrader: (20)

just curious, what do you drive?

bitkahuna

iTrader: (20)

chikoo, what you say makes perfect sense.

as you say, one reason influencing corolla sales is people know when they come to sell it the trade value will typically be higher than competing models.

regardless of sales volume, it's higher because used car buyers expect cars like corollas and civics to be more reliable than other models and are willing to pay the premium and the demand for them is high.

and so you get an endless chain of buyers, sellers, used car buyers, and repeat buyers.

it's an awesome well earned reputation toyota (and honda) have.

very simple.