Homeowners have learned that some home improvements pay off handsomely, returning every dollar spent when the time comes to sell.
Similarly, car buyers are finding that optional safety features — stability control systems and side curtain air bags, for instance — can do more than just keep the family safe. Along with options like CD changers and leather upholstery, the extra-cost safety equipment can help owners get a higher price when it is time to sell or trade in the car, according to companies that track resale values.
“Safety equipment seems to be gaining in strength in terms of being an important feature,” said Jack R. Nerad, the executive market analyst at Kelley Blue Book, a publisher of car pricing guides.
When considering which options might return the greatest percentage of their cost, the trick is to look ahead and figure out which features will become standard equipment in three or four years, said Jesse Toprak, the senior analyst for Edmunds.com, an automotive Web site.
For example, Mr. Toprak said, he would not buy a minivan without side-curtain air bags, because in a few years all new minivans will probably have them as standard equipment; without that safety feature, a used vehicle would be less desirable. Likewise, he said, it would be a mistake not to purchase electronic stability control on a vehicle that costs $25,000 or more because it, too, will be standard on more vehicles.
But some options may bring a richer payback. One standout is a diesel engine. In 2005, a shopper who anted up for a Mercedes-Benz E320 CDI, the diesel version of the midsize E-Class, paid $575 more than the buyer of a gasoline E320. Today, the diesel model brings about $5,000 more than the gasoline version when it is sold, said James Clark, a senior manager in the consulting unit of Automotive Lease Guide, which forecasts the residual values used in setting auto lease terms.
A diesel-powered Volkswagen Jetta also commands a premium over its price as an option (about $3,500 on a three-year-old car, compared with $1,200 when new), and the gap may even be greater in light trucks, he added.
Technology features may not provide a good return when selling a used car, Mr. Clark said, because they become quickly dated.
While navigation systems may keep families on course and DVD players keep children from open revolt during a long trip, neither is a good financial investment, according to Automotive Lease Guide. After 60 months a rear-entertainment system that cost about $1,200 on a midsize sport utility may be worth only about $350. That navigation system will be worth about $450 of the $1,750 it cost, the company estimated.
On a 2005 Chrysler 300C, a navigation system cost $1,895. At trade-in, it would net the owner $506 more than a vehicle without it, according to Edmunds.com.
Less fancy items that hold their value better include air-conditioning — figure $700 back on a $1,000 price — and cruise control, which would return about $175 of a $200 cost.
Even if safety items often don’t hold their value as well as some luxury features, Consumer Reports recommends buyers add the optional safety equipment. Rob Gentile, director of car information products for the magazine’s Web site, said that while consumers tend to focus on the options they can see and enjoy, the safety features are proven lifesavers.
“When you are going to sell it on the open market people are going to want and expect these safety options,” he said.
Loading an economy car with fancy or expensive features hoping to make it more valuable is not always a good idea, experts warned. Buyers in those segments are usually looking for inexpensive transportation without frills, Mr. Gentile said.
No matter which options are chosen, consumers cannot expect to recover all of their costs. So they should pick items that they would enjoy or that make them more secure. The value of options will depreciate just like the overall value of the vehicle, Mr. Nerad said.
Source: New York Times, 9/23/07
