Lexus Reigns Supreme In Residual Value Once Again
Those that want to purchase a luxury vehicle that holds its value over time won't do better than a Lexus.
Holding the Line
The results of the J.D. Power 2022 U.S. ALG Residual Value Awards were announced recently, and the fact that Lexus once again tops the luxury vehicle segment should come as no surprise. Regardless, it is notable and a boon for owners, as the residual value awards predict which vehicles are projected to hold the highest percentage of their manufacturer's suggested retail price following a three-year period of ownership.
Photos: Lexus
Superior Design
"Accurately forecasting residual values in the auto industry is a key factor in assessing an estimated $225 billion lease portfolio of vehicles in the United States," said Eric Lyman, vice president of ALG. "The brands and vehicle models that rise to the top demonstrate that they score well across the award program’s criteria, including manufacturers’ superior design and quality."
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Important Consideration
Value retention is a key factor in the lease cost of a vehicle and measures success in terms of long-term quality and design, as well as the overall desirability of automotive brands and their models. It is also a vital component to vehicle shoppers as it helps forecast a vehicle's resale value once they sell or trade in the vehicle for a new one, consistently cited as an important purchase consideration by shoppers.
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Strong Averages
In that regard, Lexus once again beat out all of its competition, though it only came out on top in one individual segment category as the Lexus NX ranked as the best premium compact utility vehicle. Otherwise, it was strong results across the board that drove the brand to the top of the pack.
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Strong Continuity
"The achievement of Lexus speaks to an impressive, industry-leading continuity of residual value across its entire lineup," Lyman said. "It's like a decathlete who wins only one of the 10 individual events but scores enough points in each of them to stand atop the podium."
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Weighted Averages
For the 2022 model year, 19 different brands won awards across 29 segments. J.D. Power evaluates 284 models in an analysis of used vehicle performance, brand outlook, and product competitiveness. Eligibility for a brand award requires a manufacturer to have model entries in at least four different segments. To account for differences across trim levels, model averages are weighted based on percentage share relative to the entire model line.
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Accurate Forecasting
Numerous variables affect the actual residual value of a vehicle over a multi-year lease term. Examples include mileage, quality/reliability, options, and feature sets, weather, and macroeconomic environment. Since these factors need to be taken into account in order to accurately forecast residual values, the more granularity and greater the understanding of the effect of each variable, the better-equipped manufacturers and lenders are able to maximize profitability. The combination of J.D. Power insights and data with the deep experience of ALG in residual values allows for even more accurate end-of-lease forecasting capabilities.
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