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The annual awards seek to bring attention to how people should consider the changing worth of their vehicle over the lifetime of their loan

Ask the average Canadian car owner to name their biggest automotive expense and the vast majority will get it wrong. While many assume it's fuel, insurance or maintenance and repair costs, only 2 per cent will correctly identify depreciation as the greatest expense associated with car ownership.

In order to get the most out of their their dollars, Canadians need to consider how the value of their vehicle will change over the lifetime of their loan, something Canadian Black Book is trying to call attention to in hosting its annual Retained Value Awards.

Now in its 11 th year, the annual event celebrates vehicles, brands and categories that retain the highest percentage of their original MSRP after four years. Top honours for the 2014 model year, announced on Tuesday, go to Toyota in both the car and truck and crossover/SUV category, while Porsche takes the crown for luxury vehicles. Toyota also came out on top in nine individual categories, leading all other manufacturers for the 11th consecutive year.

The 2014 Jeep Wrangler held 91 per cent of its original MSRP. The small-size pickup category, led by the Toyota Tacoma, retained 73 per cent of its value as an entire segement. The next strongest categories are the full-sized luxury crossover/SUV, led by the Chevrolet Tahoe, and full-sized pickup, led by the Toyota Tundra. Each segment retained 61 per cent of original MSRP as a whole.

The Chevrolet Tahoe topped the full-size luxury crossover/SUV category.

Toyota vehicles also led the subcompact car (Prius c), compact car (Prius v), mid-size car (Camry), full-size car (Avalon), luxury car (Lexus GS), minvan (Sienna), mid-size crossover (FJ Cruiser) categories.

The Toyota Camry led the mid-size car category.

"[Toyota] produces vehicles Canadians inherently see as desirable, both new and used, and that brand also has a reputation for quality, reliability and durability, so that helps a lot," said Brian Murphy, the vice-president of research and editorial at Canadian Black Book.

Murphy explains that the Retained Value Awards hope to bring attention to an element of car ownership that suffers a dangerous lack of understanding. He says that many Canadians only learn that they're in a negative equity situation upon trading it in – when their vehicle has depreciated to a value that is less than the outstanding balance of their loan.

"Most consumers are probably somewhat in the dark about it; they just assume all vehicles go down by a fixed amount each year, but if that were the case, my job would be a lot simpler," he said. "Every vehicle ages at a different rate."

2018 Canadian Black Book Best Retained Value Award Results: Overall Brand Awards

SegmentBrand
CarToyota
Truck/Crossover/SUVToyota
LuxuryPorsche

1st2nd3rd
Sub-compact CarToyota Prius cToyota YarisKia Soul
Compact CarToyota Prius vToyota MatrixHonda Civic
Mid-size CarToyota CamrySubaru OutbackHonda Accord
Full-size CarToyota AvalonDodge ChargerChrysler 300
Entry Luxury CarMercedes-Benz CLA-ClassVolvo XC70Lexus ES350
Luxury CarLexus GS SeriesAudi A7Mercedes-Benz E-Class
Premium Luxury CarPorsche PanameraMercedes-Benz S-ClassMercedes-Benz CLS-Class
Premium Sports CarChevrolet CorvettePorsche BoxsterPorsche Cayman
Sports CarDodge ChallengerBMW 2 SeriesMazda MX-5
Small PickupToyota TacomaHonda RidgelineNissan Frontier
Full-size PickupToyota TundraGMC Sierra 1500GMC Sierra HD
MinivanToyota SiennaHonda OdysseyKia Sedona
Full-size VanRAM ProMasterMercedes-Benz SprinterNissan NV Vans
Compact Commerical VanRAM VanFord Transit Connect
Compact Crossover/SUVJeep WranglerNissan XterraToyota RAV4
Mid-size Crossover/SUVToyota FJ CruiserToyota 4RunnerToyota Highlander
Full-size Crossover/SUVChevrolet TahoeToyota SequoiaChevrolet Suburban 1500
Compact Luxury Crossover/SUVMercedes-Benz GLK-ClassAudi Q5Range Rover Evoque
Mid-size Luxury Crossover/SUVPorsche CayenneLexus GX460Lexus RX350
Full-size Luxury Crossover/SUVMercedes-Benz G-ClassLand Rover Range Rover SportLand Rover Range Rover

According to Murphy, the proliferation of negative-equity car owners began after the financial crisis of 2008, when the average loan term jumped from its previous average of five years.

"More than half of Canadians are financing their car for 84 months or greater, that's seven years-plus, and they remain in a negative equity position for so much longer," he said. "J.D. Power's latest research showed that more than 30 per cent of Canadians now have negative equity when trading their vehicle in."

This year, the market average for value retention after four years was 53 per cent, with 2014 vehicles surpassing last year's contenders by 2.5 per cent. While retained value increased over all, however, there is a wide range in retention between categories. Subcompact vehicles, for example, only maintained an average of about 40 per cent of their original value over four years, while small pickups retained 73 per cent during that same period.

The eight-year reigning champion, the Jeep Wrangler, shattered the all-time record this year, with the 2014 model holding onto 91 per cent of its original value.

The 2014 model of the Jeep Wrangler held onto 91 per cent of its original value.

"Generally speaking, electric vehicles don't do very well in retaining their values, and certainly the smaller subcompact cars don't do well either," said Murphy, adding that the rapid pace of electric vehicle innovation has deemed earlier iterations obsolete much sooner than industry averages.

"Probably the most important factor, however, is the brand, because over time certain manufacturers have certain habits with respect to pricing and how they spend their incentive dollars on new vehicles, how they handle vehicles at the end of lease, things like that," Murphy said.

The lesson Murphy hopes Canadians take away from the Best Retained Value Awards is the importance of taking a longer view when purchasing a new vehicle, rather than going with instinct alone.

"Buying a car is really an emotional decision, but I just urge people to consider whether the vehicle will continue to meet their family's needs over the seven or eight years they're financing it," he said.

Murphy advises Canadians to consider the car they will need at the end of their financing term, not what they desire at the beginning, before making a decision. He adds that those certain they want to sign a seven-plus-year loan should take this list into strong consideration before making a decision, while those anticipating any major lifestyle changes during that period should maybe consider leasing a vehicle for a shorter term instead.


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