by Mary Wisniewski
Here today, gone tomorrow. That’s the way of life. And Pontiac, Saturn, Saab and Hummer are some of the latest brands that have made, or will make, grand exits from General Motors Corp., as the manufacturer strives to become a more agile — and profitable — operation.
But even with these brands’ adieus, guidebook execs believe resale values can hold their own. Why? Honored warranty work and continued service. In other words, the manufacturer continues to support the discontinued brands.
“There are still dealerships that can service and do warranty work,” says Ricky Beggs, managing editor of Black Book, a company that publishes vehicle valuation guides. “That keeps the brands from being destroyed.”
Also buoying values? Dealerships still want the retired goods. “Dealers aren’t running from these brands at all on the wholesale side,” says Beggs. “The values aren’t out of line with competing lines.” He says this trend is evident as the G6’s value is holding 65 percent, while the Saturn Aura is maintaining 73 percent and the Chevy Malibu is holding 71 percent at auction. Beggs also points out that the G6 was a fleet-only car this past year, which hurt its value about 4 percent to 5 percent. Other guidebook execs share Beggs’ forecast.
Continued service is a primary reason why the values will hold up, says Eric Ibara, director of residual value consulting at Kelley Blue Book, a prices and values guide. Another specific reason why Pontiac values are holding their own? The swift action GM took in halting Pontiac production, and the consequent incentives it provided dealerships. These two actions depleted inventory quickly on dealers’ lots, a result that should help their wholesale values, explains Ibara.
Finally, Ibara says former Pontiac dealers will continue to go to auction to buy the brand, as they are used to carrying them on their lots. In particular, he predicts that values for the G8 and Solstice will hold up well as both are unique cars. If the Pontiac brand values suffer at all, harm would most likely occur to the G6 model. But so far, so good.
“The [Pontiac] prices held up pretty well [by 2009’s end],” says Tom Webb, Manheim’s chief economist. However, Webb noticed a slight dip for Saturn’s values, and credits this to how a used Saturn typically sells better at dealerships, rather than at auction. Regardless, all used-vehicle segments are in line or above pre-recessionary levels, says Jonathan Banks, senior director of editorial and data services for the NADA Used Car Guide, at the NADA’s February conference.
Some Confusion
For Hummer and Saab, the value retention story paints a slightly different picture than the Pontiac and Saturn brands as their leaving GM tales are fresher.
Saab’s residual values, for one, are a bit uncertain because of its on-again, off-again selling story, which was recently concluded by its sale to Spyker Cars. “I’m waiting to see where the dust settles,” Ibara says. “So far we haven’t seen a major shift in consumer preferences based on ownership changes.”
Another Saab concern is that it’s a “cult brand, in a way,” meaning its values may react differently, maintains Beggs. Factors influencing value include volume and what competitors are going away. Overall, Beggs says Saab buyers are loyal.
Meanwhile, the value of Hummer, whose sale to a Chinese heavy equipment maker collapsed this winter, is influenced by the price of gas. Ibara notes its value took a hit back in 2008 when the price of gas
spiked. However, Beggs notes that it is a unique niche vehicle that some people will always want. And like the other GM discontinued brands, Hummer will still have warranties honored by GM, and current Hummer owners will continue to receive service support and spare parts.
Other Influences
Outside factors influencing all vehicles’ values are the economy’s health, consumer confidence and fuel prices. But one of the most predominant factors affecting the worth, and currently buoying residual values over this past year, is the limited supply of used vehicles. “Overall, lack of supply is what has helped the market maintain the value,” says Beggs.
