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2003 Cadillac CTS, 2005 Cadillac STS4 1SG
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Discussion Starter #1
Recently, me and a freind got into a pissing contest about resale numbers on various vehicles. He is hardcore ''american cars suck, Japanese cars rule''. I try to be a bit more open minded towards cars, and while I realize Japanese cars may be great in many aspects, they lack in other aspects. He was saying our cars lose value very quickly because they are ''crappy american''. So I went to KBB.com and ran several cars against the CTS. All the car I ran are similiar priced, although some might cost more (Euro brands like BMW or Mercedes in which a loaded model nears the 45k-50k range).

I kept several ''control'' variables
1. All cars @ 25,000 miles and in same zip code
2. Excellent condition
3. Similiar options
4. Always opting for the ''loaded'' car when selecting options. This means I selected sunroof in all cars, leather, power seats, premium wheels, automatic transmission, multidisc changer, navigation system, sport/premium packages and higher end models (for example C320 instead of the C230 or Acura TL Type-S instead of regular TL) on all the cars.
5. All cars are in the same segment of the market and all are 4 door (for those that have both sedan and coupe configurations.

Here is what I found:

1. Acura TL $23,000
2. Audi A4 $25,000
3.BMW 330 Sedan $30,000
4. Cadillac CTS $25,000
5. Infiniti G35 $24,000
6. Lexus ES300 $26,000
7. Mercedes C320 $28,000

I rounded all numbers to the nearest thousand dollars.

This just shows that the CTS holds up well compared to other vehicles as far as resale goes. I ran the Cadillac DTS just for the hell of it, and that car takes a HUGE hit in depreciation. This just shows some American cars dont see a huge depreciation compared to the competition. All the cars were in similiar range. Just some interesting info I thought I might share with you guys for those American car bashers bitchin about resale. :highfive:
 

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American cars suffer from poor resale values due to DEALER REBATES and FLEET SALES.

Japanese and German cars enjoy higher resale because these cars are already "Value" priced (meaning the final selling price is not very negotiable)

e.g.

-Amercian car msrp $40,000, after invoice and rebates, $35,000, resale after 3 years: $21,600

-BMW msrp $35,000, no rebates, resale after three years: $21,600

Thus, the BMW has a "PERCEIVED" better resale.

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U.S. Fleet cars are mainly American cars. These vehicles endure above average wear and tear that lowers the resale. Since the Big 3 generates an average of 33% of revenue from fleet sales, the excess wear and tear becomes a determinate in resale value. (source: automotive news)
 

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2003 Cadillac CTS, 2005 Cadillac STS4 1SG
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Discussion Starter #3
Chuck C said:
American cars suffer from poor resale values due to DEALER REBATES and FLEET SALES.
Japanese and German cars enjoy higher resale because these cars are already "Value" priced (meaning the final selling price is not very negotiable)
e.g.
-Amercian car msrp $40,000, after invoice and rebates, $35,000, resale after 3 years: $21,600
-BMW msrp $35,000, no rebates, resale after three years: $21,600
Thus, the BMW has a "PERCEIVED" better resale.
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U.S. Fleet cars are mainly American cars. These vehicles endure above average wear and tear that lowers the resale. Since the Big 3 generates an average of 33% of revenue from fleet sales, the excess wear and tear becomes a determinate in resale value. (source: automotive news)
Japanese might be value priced, but if you go build a similiar BMW 330 or a Mercedes C320, they cost more than a loaded CTS with similiar options would cost.
 

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Recently bought a 2003 CTS 5spd with the luxury package (wood trim, power pass seat, memory seats, etc) Bose, sunroof, splitfolding rear seats. 23,000 miles, new tires. Car looks like it just came off the lot as new. Price I paid? $20,900... From a Cadillac dealer, not third party. KBB stated resale near 27,000k.

KBB is a joke.

Looked at similar models, years and options from Merc C class, and BMW 3series. Average? 26,000 to 27,000k. That's the real truth.

I don't agree that American cars are junk (it's no longer the 80's), but they DO NOT hold value like the Merc's, BMW's or Lexus.

I didn't by my CTS for resale value. I bought it because it's a damn well built car, and it's a blast to drive. And I know it will not have the reliability issues that plague the Merc C-Class.

Wait another five years, and the difference in resale value will become even more apparent.
 

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2005 CTS 3.6 Auto w/ Sport & Luxury Packages
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The biggest impediment for American cars maintaining resale value, as other have pointed out, is the practice of discounting at the dealer. Sure, the sticker lists the vehicle at $39,000 but only a fool pays it. I bought my '05 CTS 3.5 with Sport/Luxury packages new, from a dealer back in June. At the time, GM was killing itself to unload the '05 inventory to make way for the '06 models about to hit showroom floors. Because of GM promotions, I got "employee pricing" which knocked about $6,000 off the sticker, then a GMAC financing incentive which reduced things another $3,000, and finally my GM credit card points which saved me almost $3,500. In the end, I drove off the lot with no money down on a well outfitted CTS for $27,000. Sure, credit back my GM Card earnings and I still paid almost $9,000 less than sticker. With that kind of aggressive discounting, it is not surprise the CTS line does so poorly. There have been a few other threads about this and while '03 and '04 models have decent resale values, the '05 owners are really loosing out thanks to GM's poor business predicament.

I still love GM, and I revel in the fact that I bought my CTS for a song, but if I wanted to unload the car in two or three years I would probably be screwed. Luckily, I am one of those people who will drive a car until the wheels fall off, so my CTS is a part of me until one of us dies. I just ran KBB on my car with only 5100 miles and they came back with a private party sale value of $29,470. If I paid sticker on the car, losing $10,000 in six months would be a crime and I would be screwed. As it is, I might be able to sell the car and make some profit, if I could bear to part with it.

Ultimately, GM's financial condition will hurt long term resale value because they are throwing product out the door as fast as they can to meet shareholder expectations, with no regard to their end consumers. Having been a GM shareholder in the past, I can understand that practice, most businesses protect shareholder value above all else, but as an end customer, I am slightly disappointed by such a shortsighted practice.

Do not be fooled, even though the CTS is a real competitor, if not a superior machine compared to some of the marques like BMW, Mercedes, and Audi it will not have the same resale value because we lack the cachet of the "I got screwed on the front end, so I will make anyone buying from me take it in the a$$ on the backend" mentality. Ask anyone who paid sticker for a BMW 330ci and got smoked off the line and to top end by a CTS 3.5 who's car should have higher resale. The fact that they were openly raped across the hood before the deal closed makes them unwilling, if not completely incapable of admitting the truth, that the CTS is one of the best cars on the road in its niche. GM's internal business issues just blur the case and make it difficult to establish anything.
 

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Discussion Starter #6
I guess I was wrong :(
 

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From the estimates I've read on the web, my CTS is taking a nasty hit on depreciation. I'd lose a lot more equity than I'd be comforatable with if I traded it in right now, and I think this is a big problem for GM.

When people go to trade in their current GM vehicles and see how little they're worth, they're going to think pretty hard about buying another GM vehicle again. I know lots of GM owners who are so upside down they've sworn never to buy GM again. Personally, if I ever get a mainstream GM vehicle again I'll be leasing so I don't have to worry about the back end.
 

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MikeB066 said:
Ultimately, GM's financial condition will hurt long term resale value because they are throwing product out the door as fast as they can to meet shareholder expectations, with no regard to their end consumers. Having been a GM shareholder in the past, I can understand that practice, most businesses protect shareholder value above all else, but as an end customer, I am slightly disappointed by such a shortsighted practice.
I'm not sure I agreee with what you're saying here...Shareholders would actually prefer if GM was operating like Toyota. Toyota is actually making money (as opposed to GM).


GM's 1 year stock chart (terrible performance for shareholders)::(




Toyota's 1 year Stock Chart (Toyota shareholders are very happy).:bouncy:
 

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Silver CTS,

Let me start by saying that you are completely correct that Toyota has managed to improve shareholder value while GM shareholders suffered. This is not going to be a "you're wrong, I am right" rant, you bring up a good point, one often overlooked when comparing auto makers. It comes down to different corporate decision making.

Toyota has focused their efforts on edgy technologies like the Prius, and bland autos like the Camry. Occasionally, Toyota engineers sneak something like the Lexus IS350 through, but the core of the Toyota empire rests on their fuel efficient family autos, with the small truck market coming in second.

On the other hand, GM chose maximum returns for their shareholders so they were manufacturing as many SUV's and full sized trucks as possible because they made more money on them. That money was critical for delivering the $2/share dividend that shareholders came to expect. Everything was sailing along swimmingly for GM until gasoline costs rose and then the Hummer H2 or Tahoe V8 did not seem like such a good idea. The cash cow at GM died when gasoline crossed the $2.50/gallon mark, hence the need to give away their cars.

GM has tried its hand at outside the box designs like the Aztec, the SSR, and so on, without the success Toyota saw because the Prius appeals to the people who want to help the environment and have the money to afford to spend more on a car to hopefully save less on gas over the vehicle's lifetime. Nothing GM has on plate fits that bill, although they are aggressively researching options along those lines, nothing is ready for market.

GM made the mistake of believing that they could sustain the business model they were familiar with, sell SUV's and trucks at a premium, make a little money on the high end cars, and try at best to break even on the commodity cars. That model does not work in the face of increasing healthcare and pension costs, rising gas prices when their cars are anything but fuel efficient, or consumer demand for something better. This is a rehash of the mid-70's all over again.

Toyota on the other hand, being a Japanese company, has a very different system as a foundation so the auto union worries that are killing GM are less of a concern. Toyota has been marketing cars that make money and reaping huge profits from their SUV lines on top of that. caters to the civic and frugal consumer, etc. Most of all, the divident Toyota pays its shareholders is a pittance compared to what GM hands out. Everyone was afraid that the Japanese would buy and conquer America in the late 80's before the Japanese stock market crash. Well, we were right to be afraid because some of their business practices really are proving better than ours.

Back on topic, Toyota is pretty reluctant to discount their vehicles and as a result, their resale value beats most GM equivalents. The question is not whether they are better cars or even better companies, it comes down to how the end consumer perceives them, somethine the Japanese appreciate a lot more than many Americans.

Respectfully,

M
 

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Great discussion, I'd just like to add one more thing to the mix. I think that when you try to compare among various competitors, you need to look at the rate of depreciation using actual purchase cost versus present re-sale value. As has been pointed out, Mercedes/BMW/Toyota don't discount very heavily whereas GM is infamous for unrealistic MSRP which then gets dropped substantially by the perpetual rebates and incentives the company offers.

I'd be interested in seeing the various RATES of depreciation as this would tell us more than absolute changes in price between MSRP and re-sale value. Heck, if we use MSRP, my CTS depreciated 11% the moment I shook hands and accepted the employee price on my vehicle (37k sticker, 33k out the door). Edmunds tells me that my car should sell for around 27.5k private sale. That would be a 27% hit based on sticker but a 16% hit based on actual purchase cost. Makes a big difference. If I had paid sticker, I really took a bath. I think that relative resale values can only be measured by the delta between actual cost and present value. I'm sure the money guys will chime in on this...

BTW, I think we all need to rate our cars "excellent" in every survey we get. That's part of the trick to keeping your values up. I've seen Toyota owners live through hell with their gremlins and still talk in glowing terms about their cars. All the buying public will know is what JD Power was told. That's a huge part of the re-sale equation- how much lipstick can the pig can wear ;)
 

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aeromass said:
I don't agree that American cars are junk (it's no longer the 80's), but they DO NOT hold value like the Merc's, BMW's or Lexus.

I didn't by my CTS for resale value. I bought it because it's a damn well built car, and it's a blast to drive. And I know it will not have the reliability issues that plague the Merc C-Class.

Wait another five years, and the difference in resale value will become even more apparent.
Exactly what reliability issues would you be referring to? My C320 has about 15k miles on it now, i've only had to bring it in once for a power glitch on the rear window.

I know a few people with the current gen. C-class and a couple with the old one, I've heard no gripes or whines from them, and let me tell you- I see their cars in their driveway every day, not something they could say about my 8k mile CTS.

The build quality in my Mercedes is far better than the CTS, there are NO squeaks or rattles in it, and to be honest, I bag the shit out of that car and I feel very comfortable doing it. I rarely bag on my CTS simply because it doesn't feel as strong and it seems much easier to **** up.

Sorry guys, but you will not win any arguement that a CTS is more reliable or is better quality that a 3 series or a C class. Both my CTS and C320 are equiped relatively the same; sport packs, 6 speeds, s/roof, full leather, etc... The Merc. cost me about ten grand more, but it feels like its worth easily 10 grand more than my CTS. Go drive one for a day or two on an extended test drive and you will see how tight and perfectly correct the germans make their cars.

Like I always say, I still like my CTS; but cadillac has to bring it up more like 10 notches before it will be able to compete directly with the big boys - they are in the right direction with this CTS, so we'll see how things go.
 

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Discussion Starter #12
haute_heir said:
Exactly what reliability issues would you be referring to? My C320 has about 15k miles on it now, i've only had to bring it in once for a power glitch on the rear window.
I know a few people with the current gen. C-class and a couple with the old one, I've heard no gripes or whines from them, and let me tell you- I see their cars in their driveway every day, not something they could say about my 8k mile CTS.
The build quality in my Mercedes is far better than the CTS, there are NO squeaks or rattles in it, and to be honest, I bag the shit out of that car and I feel very comfortable doing it. I rarely bag on my CTS simply because it doesn't feel as strong and it seems much easier to **** up.
Sorry guys, but you will not win any arguement that a CTS is more reliable or is better quality that a 3 series or a C class. Both my CTS and C320 are equiped relatively the same; sport packs, 6 speeds, s/roof, full leather, etc... The Merc. cost me about ten grand more, but it feels like its worth easily 10 grand more than my CTS. Go drive one for a day or two on an extended test drive and you will see how tight and perfectly correct the germans make their cars.
Like I always say, I still like my CTS; but cadillac has to bring it up more like 10 notches before it will be able to compete directly with the big boys - they are in the right direction with this CTS, so we'll see how things go.
I agree, i mean we have to give cadillac an A for effort, maybe a B- for execution. I mean they went from nothing to something pretty darn good. I mean pre 2000, what was cadillac?? No magzine paired Cadillacs with Euro cars in tests etc. I still want to see what they come up with for the next generation CTS. I sat in teh new DTS today, and WOW the interior materials are way better than the 2000-2005 model! The new Escalades interior looks spot on also. Lets see what Cadillac comes up with next.
 

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All I ask for is no shotty attempts at an i-drive system. I don't like that, it gets poor reviews on BMWs and I feel that it takes away from driving a car, not to mention the ugly dashboards it creates (very reminicent to Toyota Echo). I could see Cadillac getting witty and doing something 'unique' like that to keep with the trend....
 
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