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The resale value on these cars is horrendous

16K views 43 replies 32 participants last post by  hellsop 
#1 ·
I just had my 2016 Chevy Volt totaled. It has 2740 miles on it. My price was 43,585. NADA guides gives a maximum of 28,350 and Kelley Blue book gives a maximum value of 29,751 for the highest level of options. That's 68% of the value in a year. I knew these cars had poor resale value, but I had no idea it was this bad.

I note that my car has fancy wheels, which added to the price. (I didn't want the wheels, but wanted the car.) Even so, and with a 20% sale, I'm upside down. And I won't know if I'll get any of the $7,500 tax credit (definitely will not get much of it).

I highly recommend gap insurance for these cars.

I'll update this once I get an actual value from insurance.
 
#2 ·
Sorry to hear about your car. Unfortunately the resale value assumes the $7500 tax credit (regardless of whether or not it was claimed). And a typical car loses 50% of its value in three years, with the first year taking the biggest percentage of this drop.
 
#4 ·
Exactly what hiperco said. Rather than looking at your cost to buy the car as being $43585, apply the $7500 federal credit and "real" cost was/should have been about $36085. Also keep in mind that most options add a very very small percentage increase to the used car value. That nav unit that cost $1500 to add when new, only adds about $200 to the used base price. It's a shame that new cars don't hold their value, but if used cars were priced competitive with new car pricing, no one would buy used.
 
#5 ·
Folks keep forgetting to include the $7500 federal tax credit in their calculations. And I wonder if insurance companies factor in any state incentives. When I bought my 2012 and then 2013 Volt's I received a $4000 cash rebate from IL, so right off the bat I took $11,500 off the car's MSRP.
 
#6 · (Edited)
First, be thankful for your life and anyone that was in with you. Be thankful Chevy built the Volt so tough.

Now, what would you expect? It is a 2016! The 2017s have been out a LONG time. 2017s are being discounted 4-6k without any effort whatsoever. Then people can claim the tax credit. Seriously, what is a fair price for your insurance to pay?

And many 2016 owners purchased with the 20% off, plus the tax credit.

A 43k volt @ 20% off is 34.4 minus at least 7.5k from the federal tax credit (leaving out any state incentives or Farm Bureau or anything else) = 26.9k plus taxes...surely you didn't pay MSRP, did you?
 
#8 ·
That's why you buy these cars used. They are more than 1/2 off in 3 years. I paid $18500 for my 2014 with 22,000 miles and all options- retail it was 40K +. But the owner really paid around 30K with the state and Fed rebates. But I have to admit it will probably be worthless in 5 more years.
 
#11 · (Edited)
Sorry, to me, buying used is much worst of a deal. I bought my 2017 with a MSRP of $35,455....my discount from the dealer made it $26,305. Then I got $7,500 from the feds the another $2,500 from state of Massachusetts. This made my car $16,305. This is a brand new car. No way I'll buy a used Volt with less warranty and less tech.

The crazy part is some people claimed $11,000 off too from 20% off Red Tag events. I am not even close to the best deal.
 
#9 ·
Years ago my car was stolen. My insurance paid for replacement including discounts no longer available. Got a bigger check than I originally paid for the stolen car. I now buy cheap insurance that wouldn't come close to replacement. Lower premium over 30 years more than makes up for that payout long ago. You got cheap insurance too.
 
#10 ·
I guess that you should purchase full value replacement insurance for your next automobile or avoid accidents. I never purchase a new vehicle. I bought my 2013 Volt Premium for $20,000 with 10,000 miles on the odometer. I purchased after getting 80,000 miles out of my previous vehicle. If I purchase a replacement used vehicle, it will likely be the last of my lifetime..
 
#13 · (Edited)
The resale value on these cars is horrendous
Let's see. $43,585 less $7500 tax credit less the $3000 Connecticut EV rebate= $33,085 before taking new car depreciation into account.

On average, a new car depreciates 11% the moment you drive it off the lot, and 15%-25% total the first year.

So if we take your price after credits and rebates of $33,085 at an 11% depreciation day one, you are at ($33,085 -$3,639) $29,446. If you apply a 20% depreciation for year 1 ($6617), your car should be worth $26,468.

The fact is, your car depreciated much less than an average car, not worse. You are being offered as much as the car was worth the day you drove it off the lot. BTW, when I bought my Volt back in 2011 I paid $15 extra every 6 months to buy me a brand new replacement Volt in the event it was totaled.

https://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html
 
#15 ·
I look at new cars the same as everything else manufactured today. You can't expect a modern washing machine to last the same 20, 30 or even 40 years that your parents or grandparents washer lasted, so why expect a car today to last that long? I will admit that reliability on modern vehicles is likely on average the highest its ever been, but as some will attest, repairs can be very expensive and if severe enough exceed the value of the car. Most of this is due to complexity as well as how involved a repair is. I think this also plays a big role in how a minor to moderate collision can render a car totaled. Aside from safety being compromised it seems manufacturers are moving more toward the thought that their product should not be rebuilt or repaired after a major incident. Call it disposability if you will.

I think this mentality of everything being disposable today is really what drives the value of used products down. Similar to electronics, that iPhone you paid $700 for (or someone else, if you got it subsidized) is only worth a couple hundred after 2 years as a trade in. That's about a 70% loss of value. Sound familiar? It's really not limited to just cars however because a car is such a major purchase for so many people it's a bitter pill to swallow when you consider the tens of thousands that evaporate in such a short period of time.
 
#24 ·
I look at new cars the same as everything else manufactured today. You can't expect a modern washing machine to last the same 20, 30 or even 40 years that your parents or grandparents washer lasted, so why expect a car today to last that long?
Yahbut that washer/dryer cost $400 in 1960. If I were paying $3200 (the same price adjusted for inflation to today) for a washer/dryer set, I'd expect them to last 40 years too. Now you're paying about $700 for the same feature set.
 
#17 ·
I'd say it's vital to obtain either GAP insurance or new car replacement to cover the difference between price paid (-rebate) and depreciation (especially with EVs).

An aside, I saw a 2015 Leaf on eBay with 18k miles selling for $8900. That has to sting for the person who paid $30k for it.

-DJ
 
#18 ·
GAP insurance or new car replacement to cover the difference between price paid (-rebate) and depreciation (especially with EVs).
If you have a loan, the tax credit(s) should be used to pay down the principle, unless you want another $7500 loan. Although if the interest rate is right, maybe the extra $7500 loan works for some people.

I hadn't thought about gap insurance not covering the credit, but it makes sense. Why would an insurer cover that? Another careful point to consider.
 
#21 ·
Depreciation=Buy $ less ($7.5k+State Rebate $) less 20%/yr.

If you trade cars every few years you will generally take a hit, regardless of the car. In the OP's case it looks like a forced sale due to the car being totaled. Having gap or replacement value insurance is the key here if you want to replace with a new Volt, though not all insurance companies offer it. The alternative is to buy a used Volt with the insurance $ as those will be in the same price range as the OP's resale value.

When looking at the Volt, many fail to take into account the very substantial federal and state discounts that effectively reduce the initial purchase price in the resale market. For the OP, the resale market recognizes that—given the $10,500 in tax credit/state rebate "discounts"—the new car is effectively being sold at $33,085, not at $43,585. The OP made the mistake of thinking the $10,500 was depreciation, leading to the sensational (but incorrect) headline.
 
#22 · (Edited)
GAP insurance is a good idea when financing any new vehicle. The financing depreciation schedule is always linear but the actual depreciation drops faster and then levels out. The nature of vehicle depreciation is, BTW, a good reason NOT to pay cash for a new vehicle. You can think of leasing (or buying) as a form of insurance. Compare two situations. In one case you buy the car with cash. In one case you lease it (with GAP). Two weeks later the car is totaled. In which situation do you suffer the larger loss? (Don't forget to include sales tax paid).

Unfortunately having a reliable vehicle that you like totaled will always result in a loss. The insurance payment is based on used vehicle prices, which includes a discount on the assumption that the transaction involves a less than desirable copy of the vehicle.
 
#27 ·
So when you don't have enough money to buy a car, you borrow the money, pay more for compounding interest, then pay even more for gap insurance in case the car is totalled and you don't have enough in the insurance settlement to get a replacement car. So if the car does not get totalled, that gap insurance was just flushed down the toilet. What about just putting what you would have paid for gap insurance in the bank and using that money if the accident happens? I understand the desire to transfer risk to the insurance company, and I'll do that for the required car insurance and for homeowners insurance, but gap insurance seems like a real hit or miss stretch. How many cars does the average person total in a lifetime?
 
#28 ·
Ditto on frugal parents not using appliances like dishwashers. My mom's Norge gas clothers dryer lasted like 40 years and the chest freezer the same.

On appliances, I was told by the saleman that the reason they don't last like they used to is energy efficiency standards. Running small components hard rather than running oversized components easy. Refrigerants - CFC 12 worked great at low pressure but the modern replacements at like 300 psi?

Longest lived thing I have now is my lawnmower. Craftsman that's going to be on its 33 season. I'd like to replace it for a self propelled but the thing won't die.
 
#29 ·
I got gap insurance for each of the 3 brand new vehicles I purchased in my life, and it got used 2 of the 3 cars.

2 vehicles were in one of those previously mentioned minor/moderate accidents that were expensive to repair and put the vehicle at or above the 'totaled' line.

Gap covered the 2 to 5k difference in value, due to the high milage they were driven. So the few hundred or whatever that gap insurance cost, saved me several thousand.

I drive 25-30k miles a year. Perhaps if you drive significantly less, it might help keep the value of your vehicle higher, but really gap is comparitively cheap and you never know when somebody is going to plow into your car.

My brother thought he had gap, but didn't and got stuck with several thousand difference when he got rear ended. He got screwed and it wasn't even his fault.


Now with my 2013 volt, I did not get the gap insurance, but I did get the best extended warranty offered that covers me to like 115k miles, simply because the volt is not a car you can drop off at your local repair shop and expect them to have the tools and knowledge/experience to fix it.

I get the peace of mind that I will get a free loaner and no repair deductibles, of course at the extra cost I paid up front.
 
#31 ·
You can get a loaded brand new 2017 Premiere Volt in MA right now for $24K after rebates. That's what I'm paying for mine. $40K sticker less $8k incentives under the Drive Green program, and $10K for fed and state combined. The final cost for an LT is $17,055. The retail price is irrelevant at this point.
 
#34 ·
Sorry to hear about your accident... you didn't say, but I assume that the car sacrificed itself for you and you didn't get seriously injured.

Until you hear from the insurance company... its all just conjecture. The insurance company must put you back where you were... so, they will have to pay what it will cost to put you back in a 2016 with ~2700 miles. For example, a quick search on Cars.com turned up a 2016 Premier with 60 miles for $29,876. So, if they use that comp., you would get $29,876.00 plus sales tax, less your deductible.

I hope things work out for you and you don't have to fight with your insurance company.
 
#36 ·
GAP is free with a lease because you don't own the car, the bank does, thus the bank has GAP coverage on their leases.

ALWAYS get GAP if you are financing a car and the amount financed is greater than 75%. A good GAP will cover you up to 150% of the car's determined value (determined by insurance company based on market value in your zip, not on Blue Book). Plus good GAP always pays your Ins Co's deductible.

Or don't buy it and if your car is stolen or accident and totaled you'll be paying for a car you no longer have.
 
#37 ·
A great reason to avoid them new. With a little patience, used cars with under 10K miles show up with at a substantial discount when you look for them. You would be surprised how many 2017s pop up with just a few thousand miles selling for under $30K.
 
#38 ·
I've bought one new car in my life, and never again. I lost 50% in 1.5 years. The only reason I could see to buy a car new is that it's a brand new model/update with something I "can't live without". Realistically, aside from knowing you're the first owner, you're really only paying a premium just to have a warranty and a loss of 40% or more in 2 years can more than justify buying used and if having a reasonable warranty is important, splurging for an extended warranty for just a couple thousand more. It's definitely a better way to minimize initial depreciation cost and still get a reasonably new car.
 
#39 ·
I disagree. My new goal is to increase earnings while cutting spending so I can always buy new cars and not worry about even 100% depreciation as I drive the car away. I put 20-30k miles on my commuter per year, so I am fully aware that I am destroying the value of my car as I drive it. I really don't intend on trading it in for any decent value when I'm done with it. Statistically, unless you carry an unlucky charm, you are better off putting the money spent towards extended warranties in the bank and using it for future repairs.
 
#40 ·
You situation may be different from most. I think those who complain more about severe depreciation are mostly those who put low miles on a car and trade in every 3-4 years for a new model. I'm in the group that drives it until the wheels fall off, so depreciation really doesn't impact me since I'll have well over 200K and sometimes 300K on a car before I get rid of it and at that point it's needing enough non-routine repairs, usually suspension, mounts, or other rubber components that it's more ready for retirement than rebuilding.

The only reason for my comment earlier about buying a new car is that I did trade it in and was disappointed to find that my 30K new car only allowed 16K at trade in and that was after renegotiating a few times. Granted I had a LOT of miles on it (46K) for being only a couple years old.

As for the comment about the extended warranty, I think that depends on what make/model. In my case, the new car was a Mini Cooper S, fortunately I never had to worry about the extended warranty and didn't purchase one but it did see a number of trips into the service department all covered under manufacturer warranty and after browsing the Mini forums it quickly became apparent that extended warranties were definitely a very wise purchase. In the case of a Volt, they're probably not the best purchase decision, but with the Mini, when you discover the engine is notorious for self-destructing by ~80K miles at a repair cost of about $3500, the warranty definitely starts to make sense.
 
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