AD #2570 – Depreciation Rates Improving, Toyota Pickups to Share Platform, New Material Reveals What’s Behind It

April 9th, 2019 at 11:43am

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Listen to “AD #2570 – Depreciation Rates Improving, Toyota Pickups to Share Platform, New Material Reveals What's Behind It” on Spreaker.

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Runtime: 6:07

0:07 Depreciation Rates Improving
0:44 Vehicles That Hold Their Value Best
1:07 FCA Settles Shareholder Lawsuit
1:45 Hyundai Venue Design Sketches
2:26 Toyota Pickups to Share Platform
3:00 Toyota Teases New Highlander
3:22 Trucks Delayed at Mexican Border
4:17 Supplier Develops New Reveal Material

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30 Comments to “AD #2570 – Depreciation Rates Improving, Toyota Pickups to Share Platform, New Material Reveals What’s Behind It”

  1. ChuckGrenci Says:

    Couldn’t another reason for depreciation rates to improve be due to the fact with the constant increase of new vehicle prices, and the need for those not able to buy new, are creating a higher used car demand (and thus prices). And yeah, the automobile is getting better and better so that does fit the reason stated in the segment.

  2. Buzzerd Says:

    I have found there are 3 main factors that affect resale value. Price increases, product updates and supply. Why would I pay you top dollar for your used widget unless finding a new one was hard or there has been a decent price increase making your used one a deal for me and you. Harley benefitted from this for years. They only made subtle changes to the product most of the time, demand outpaced supply and there were steady price increases. Once demand dropped and new engines started coming out real generally dropped. Same with BMW boxer engined bikes.

  3. Lex Says:

    Looking at the New Ford Ranger platform, it would have made more sense (lower cost) to enclose the rear section of the Ranger in the same way Honda did with the Pilot/Ridgeline clone called the new Honda Passport. This new SUV based on the Ranger could have been called the “Ford Bronco”. This would have saved Ford millions of dollars by reducing R&D, commonized manufacturing and parts for both vehicles. Not to mention, would have sped up the arrival of the New Ford Bronco by years. I believe this new Bronco would have been very well received by consumers looking for a mid-size off-road capable SUV,IMHO.

  4. Kit Gerhart Says:

    Have the prices of new pickup trucks gone up faster than the prices of new cars? If so, that could explain so many trucks being on the “low depreciation” list.

  5. Larry D. Says:

    1 While many probably go used because they cannot afford a new one, there are many Econs-wise consumers that prefer to buy used regardless of their budget, and this is the case not only with me, who drive each of my cars usually less than 5,000 miles every year, but very affluent friends of mine, two income families with combined incomes of 0.5 – than $1.0 mill a year, many of whom have 60 and 100 mile commutes every day.

    In my case the ideal car is a flagship luxury car (usually an S class or a 7 series or a LS460) that is fully depreciated, typically 7-9 years old and with around 100k, which is nothing these days. And even if I keep it 10 years, which I always do, I will barely put another 50k miles on it.

    In the case of my friends with the long commutes, the ideal solution is off lease vehicles that have used 50% of their depreciation and still have low miles. A colleague with a large family did this repeatedly, wanted big SUVs and bought a Landcruiser, a Lexus clone thereof, a Merc GLE and a GLS. He also got a Buick Rainier which proved a lemon and will not buy domestic ever again.

    Even a guy who rose to become the CEO of Westinghouse (he used to be on my school bus in high school) always bought slightly used flagship sedans and save 20-30% of the depreciation.


  6. Larry D. Says:

    4 how would that explain it? Higher priced vehicles depreciate more sharply.

  7. Brett Cammack Says:

    Asset bubble?

  8. Larry D. Says:

    From TOday’s Ward’s email:

    “FCA Links With Tesla to Beat European Emission Fines

    FCA, whose brand portfolio includes Alfa Romeo, Chrysler, Dodge, Fiat, Jeep and Maserati, will pay for the right to count Tesla’s electric vehicles as part of its fleet under a so-called “open pool” option permitted by EU emission regulations.”


  9. Larry D. Says:

    8 from the link

    “…Neither company has commented on the terms of the deal, but the Financial Times report says FCA likely will pay Tesla “hundreds of millions of euros.””

    “you broke it, you bought it”

  10. Larry D. Says:

    9, 8: PS By comparison, Tesla’s biggest profit ever was $312 mill. of course it was only for one quarter.

  11. Kit Gerhart Says:

    6,4 Think about it. Say a new “loaded” truck costs $50K, but a similarly equipped one cost only $40K three years ago. The three year old one will be worth more, and thus deprecate less than if the new one cost only $43K, or something like that.

  12. Kit Gerhart Says:

    I’d think there would be major compromises making the Tundra and Tacoma on the same platform, unless the two will now be the same size. If not, it would seem to be a real stretch calling it the same platform, if there is still a 6 inch difference in width, as with the current ones.

  13. Larry D. Says:

    11 ok.

    I think a bigger reason would be that cars get discounted more so they can sell, while trucks are more popular and sell with a smaller discount. So a car would seem like it depreciated a whole lot (comparing the MSRP with the used sale price, but not the actual transaction price to the used sale price) compared to the truck.

  14. Larry D. Says:

    Top gear likes the Gladiator, gave it a relatively very high grade in its review, 8/10:

    “The Jeep Gladiator is probably not the truck you need – it’s the truck you want”

    Separately, Ward’s mentioned the Glad for having one of the best interiors or something.

  15. John McElroy Says:

    Depreciation reflects the amount of value a vehicle loses every year. It’s expressed as a percentage of the transaction price. So rising car prices do not necessarily translate into lower depreciation.

  16. ChuckGrenci Says:

    You’re right John, however increased demand for used cars would/could affect depreciaton; no?

  17. DanChester Says:

    I might be wrong, but I seem to recall that original Nissan Titan was developed on a shared platform with the current U.S. market Frontier. If so, Toyota’s plan to commonize its two pickups is not a first.


    17) You are right. It was on the F-Alpha platform which was used on the Frontier, Xterra, Pathfinder, Patrol, Armada, QX56, and NV van.

  19. Lambo2015 Says:

    15 I think people are talking about two different scenarios.

    1) The higher the MSRP you would think would also mean a greater loss in depreciation of the same car years later, however cars are expected to last 10 years and go over 200k miles with ease which should decrease that loss over a longer period.

    2) When you could buy the average Corvette for 25k and then we see a huge jump where the average price of a new one goes to 65K those older Corvettes that should only be worth 5K can now fetch almost their original MSRP.
    That’s an exaggerated case but the new models being more expensive will make the older models value increase. Consumers can say I want a truck but I cant afford to spend 45K so they settle for a used one. This drives up the used values as that market demand increases. IMO

  20. Kit Gerhart Says:

    17, 18. That’s not a good sign for Toyota, as both Nissan trucks have been consistently worst-in-class by most accounts.

  21. Kevin A Says:

    John, Great show. It could have used more comments from Larry D. though. :> … like yesterday … NOT

  22. Larry D. Says:

    21 Do YOU have any comments other than badmouthing other commenters? Do you have anything to actually CONTRIBUTE to this forum other than biting their ankles? I thought so.

  23. Larry D. Says:

    15 Right, but improved quality, reliability and especially durability and consequently the increased longevity should slow down the depreciation considerably.

    Back when cars lasted 10 years, they were fully depreciated well before 10, but now that they live 20 and 30 years, at 10 they are worth much more.

  24. Larry D. Says:

    100% contrary to the still strong trend towards Pickups and all kinds of ‘SUV’s, real and mostly fake, the average US fleet fuel economy continues to rise, and STRONGLY so.

    100% credit to the TESLA revolution and strong sales of their models, especially the mainstream, mass-market Model 3.

  25. Larry D. Says:

    Further proof of the “TESLA Factor” from the above article:

    “All segments except vans posted year-over-year gains. Luxury cars continue to show the most improvement, averaging 48.3 mpg (4.9 L/100 km) in March.”

    Obviously a big chunk of these ‘luxury cars’ were Teslas.

  26. Lambo2015 Says:

    24 With many manufacturers going to a forced induction like a large portion of the Ford “eco-boost” products, engines are getting smaller and more efficient. According to Honeywell 49 million vehicles will be turbo charged in 2019. Its also predicted that by 2020 70% of light vehicles worldwide will have a turbo. In just the US it was 21% in 2014 and will be 38% this year. So not 100% credit to Tesla but sure a large portion can be associated to EVs.

  27. Kit Gerhart Says:

    The turbos seem to do more for EPA numbers than for real world mileage, but that’s what’s being counted here.

    Not surprisingly, Tesla would have a big effect on the numbers for “luxury cars,” since Wards, presumably, counts a Tesla 3 as a “luxury car.”

  28. Lambo2015 Says:

    27 Yea the EPA numbers I’m sure are with the most conservative type of driving turbos can be good depending on how you drive. Funny that they used to be mainly for adding power to an already sufficient motor. Now they put in a undersized motor and turbo it to give it adequate power. I should have bought stock in the turbo manufacturers a few years back.

  29. Kit Gerhart Says:

    28 I have a turbo from before they were popular, a 1989 Dodge Caravan. Chrysler used turbos in the ’80s, as a way to break the 100 hp barrier for their front drivers, before they had V6s. Mine has the lowest specific power of any gas turbo I can think of, 150 hp from 2.5 liters.

    My turbocharger is Garrett AiReserch. They have been bought and merged multiple times. I don’t know if they still make turbochargers in their current life.

  30. Lambo2015 Says:

    29 Yeah Garrett Industries was the largest manufacturer until Honeywell turbo technologies passed them.
    According to this article;
    The turbo industry will be worth 31.6 Billion by 2025 and the largest automotive turbo use will be in HEVs.