The Depreciation Myth

Recently I’ve been noticing a few comments here and other sites claiming how Saabs depreciate much faster than their competitors. Like others who visit this site, I’m sick of seeing the words “loss-making” in front of Saab’s name. So when I heard people attaching those words to the cars themselves, I decided it was time to research the validity of that statement. I posted this in comments but I think it deserves its own space on the site for the official record.

I know for many of our American readers it’s getting towards tax time and you may not want to crunch any more numbers, but don’t be afraid– I promise you’ll enjoy the results after the break.

Before I begin, the basis for the myth that Saabs depreciate more than other luxury brands is their high MSRP. We’ve discussed this many times, and some have argued that Saab needs to cut their prices closer to the numbers they actually sell at to attract new customers. I’m not going to argue that point here, instead I’m going to show you real advertised internet prices which typically reflect very little markup by the dealer. Using cars.com, the biggest car sales site in the US by far, I took a sampling of Saabs, BMWs, Audis, and even Acuras, as they claim to have the highest residual values of any luxury brand.

Why I’m using advertised sales prices for new cars vs. MSRP is because it gives us a more accurate understanding of what the real prices one can reasonably expect to pay for a car is. In each case I tried to match options exactly, and I have attempted to keep the mileage of the used cars average for a 3 year old car (30-45k). I picked new cars that were never titled and in all cases tried to find the lowest advertised priced ones (non demos) to be as close to actual final sales price as possible. In the case of used cars I did the same, trying to pick the lowest priced examples with average mileage. If the dealer was a used car dealer instead of factory dealer, I used an * to denote the difference. All cars come from the same area (Northeast US), all new and used without asterisks are from manufacturers’ dealers. Here are the numbers.

 

2011 Saab 9-3 2.0T vs 2008 Saab 9-3 2.0T

Essentially the same car, very little has changed. I used the 2.0T FWD as the basis to compare since the 2011 Aeros also use the 2.0T engine and differ mainly in trim only. I chose FWD because XWD wasn’t offered on the 2008 2.0T in the US.

A) 2011 Saab 9-3 2.0T Manual: $26,299

B) 2011 Saab 9-3 2.0T Auto: $26,861

C) 2008 Saab 9-3 2.0T Manual (35,200 miles): $20,495

D) 2008 Saab 9-3 2.0T Auto (34,142 miles): $18,699

E) 2008 Saab 9-3 2.0T Auto (35,453 miles)*: $13,990

[table id=16 /]

 

2011 BMW 328i vs. 2008 BMW 328xi

A) 2011 BMW 328i Auto: $34,525

B) 2008 BMW 328i Auto (35,500 miles): $21,488

C) 2008 BMW 328i Auto* (20,455 miles): $17,995

[table id=17 /]

 

2011 Audi A4 vs. 2008 Audi A4

A) 2011 Audi A4 Auto: $34,283

B) 2008 Audi A4 Auto (26,765 miles): $16,995

C) 2008 Audi A4 Auto* (39,158 miles): $15,990

[table id=18 /]

 

2011 Acura TL vs. 2008 Acura TL

A) 2011 Acura TL Auto: $36,065

B) 2008 Acura TL Auto (26,429 miles): $20,399

C) 2008 Acura TL Auto* (38,680 miles): $14,999

[table id=19 /]

 

Just for kicks, here’s a comparison of a NG Saab 9-5 V6 (2011 Turbo6 and 2010 Aero) vs 2008 Saab Turbo X


A) 2011 Saab 9-5 Turbo6 AWD Manual: $45,605
B) 2010 Saab 9-5 Aero: $35,990
C) 2008 Saab Turbo X (54,235 miles): $24,990

[table id=20 /]

 

Results:

[table id=21 /]

So if you’ve made it all the way through (well done), some things to take away from this study. Saabs are selling not just a little under the competition, but a LOT. While we may not like it, prices are more competitive with VWs and Buicks than Audi or BMW. Do these huge discounts and their high MSRPs deter customers from even looking at Saabs in the first place? There’s a strong case to be made. I realize that these links will eventually disappear in the future, but for the time being (Spring 2011) they serve a purpose.

One other thing this all means is that the used Saab you bought for a huge percentage off sticker might not be as good a deal as you once thought. If prices stay stable on new Saabs, you might be better off in the long run buying new. And if you’re in the market for a 9-5, you’d be a fool not to snap up one of the remaining new 2010s.

GML
Guest
GML
Which brings us to the next topic…. Instead of causing sticker-shock or looking desperate by slashing prices on every car, why doesn’t Saab just price their cars correctly? Let’s focus on the US, if we can. I know most people from Europe will complain that Saabs are already a steal in the US, but let’s ignore that for a moment. When Lexus began, they sold the LS at a loss to gain market share. I don’t think Saab has to go to that extreme. Just sticker the car at the point they have been selling (assuming they’re making a profit… Read more »
skivt
Guest
skivt

Pricing strategy has changed. If I remember correctly, 3-4 yrs ago MSRP’s were not inflated as much as they are now. Only recently has Saab used higher sticker prices and immediately offered significant rebates. There are two sides here 1- It seems offering big rebates (appr $2,000 initially to $10,000 towards year end) does cheapen the product. 2- consumers love “the deal” . I believe there’s a certain price point when a product starts selling, For Saab, his seems to be around $4000 off current MSRP’s (unscientifically speaking)

Jim
Guest
Jim

My dear dad saw the new 9-5 Aero at the auto show. He thought the car was attractive. Then he saw the $50k price (which he could easily afford) laughed, and bought a BMW. He is a 2 time former Saab owner!! Get with it Saab. From your best friends.

Kikaluka
Guest
Kikaluka

And paid $60k for a comparably equiped BMW? Compared to the Germans the 9-5 is a bargain. Not I only think so, but so does Edmunds.com. I’ll buy a wagon as soon as it hits the market, and keep the $10,000 in my pocket. And I’ll laugh at all the bimmers ;-))

Esone
Guest
Esone

Funny and wise, all at once 😀

rodmylon
Guest
rodmylon

As I understood it every new Saab sold in the US ATM is sold at a loss! The 9-4X will be the only car Saab can sale at a win there, due to the high disadvantage of the krona/dollar exchange rate. So I guess Saab desperately tries to get close to break even on those cars, but have to back down with rebates to move some cars. (I don’t remember exactly where this was brought up, but it was in some Swedish articles before the Geneva show)

eduardo_spain
Guest
eduardo_spain
Interesting work Jeff, I have always felt disappointed whenever I was told that second hand Saabs were not really desired by the potential second hand market clients, which I guess results in strong price devaluation of our cars. Anyway, in my opinion your work also eliminates another myth, the one that indicates that the other luxury car brands provide you more for your money. Every time I have tried to check that out in the end I came to the conclusion that the same car configurarion in BMW, Audit, etc. would cost significantly more. Finally, last year I were able… Read more »
kanundrum
Guest
kanundrum

I also want to state the fact that while all new SAABS coming out look epic (everyone agrees with them looking epic) that people on other forums and Car Buffs just say, oh Ill buy that SAAB used when it drops in price like a tank. Not sure how we start going about keeping good car price value going but it should start soon so that new buyers can come forth with confidence.

charlie
Guest
charlie

A few comments:

1. In the US market, the competitors being Buick and VW is spot on.

2. Not fooling around with option packages will help with depreciation. Standard leather, for instance, is a big deal, as leather is the one thing people really want in a used car.

3. Building technology into the car — the oil analysis — and factory maintenance will also help.

Question about the data: are these CPO cars or not?

AGTMADCAT
Guest
AGTMADCAT
1) Considering that Buick has moved upmarket lately (Or perhaps returned to where it once was…), I have to agree with that. On the other hand, I doubt there’s much market overlap between boats (Slang for big ungainly US cars with very soft rides and handling) and sprightly Saabs. Looking at Buick’s prices, I have to say that I think the 9-3 should be priced about where they are, perhaps slightly more. I’d like to think that Saabs are a league ahead of VWs in quality and features, and so I’m more hesitant about that comparison. I think Saab is… Read more »
Jim
Guest
Jim

I would also stick up for the Golf GTI. It compares well with the base 210hp 9-3, the car I drive. VW’s quality is nothing to sneeze at. Certain VWs are good cars (essentially an A3 equivalent). Right now, the 9-3 plays in the $20ks class along with upmarket Golfs. (Though you wouldn’t know it, from Saab advertisements). The 9-3 is a great car for the money.

AGTMADCAT
Guest
AGTMADCAT
Absolutely agreed, the GTI is a great little car, and VWs are generally of good build quality. that being said, they still feel like well-built entry-level cars, whereas Saabs feel like well-built mid-range cars (And up – I haven’t spent much time around the 9-5!). Entry-level 9-3s should probably be priced a little bit under fully-loaded VWs, somewhere in the high $20ks. When I was in high school, I had an easy time pointing at the 9-3 and saying “Look, it’s only $4k more than that , and look at how much better it is!” Now that the price difference… Read more »
AGTMADCAT
Guest
AGTMADCAT

Whoops, looks like I can’t use triangle brackets… should have been “Look, it’s only $4k more than that [VW, Toyota, whatever], and look at how much better it is!”

charlie
Guest
charlie

Given that both the Lacrosse and Regal are kissing cousins of the 9-5 and 9-3, I’d be careful about calling Buicks boats.

Yes, when I sit in a buick I can see the small differences that make the additional money of a SAAB worth it. However, I don’t think many other people do.

Alex
Guest
Alex
I don’t agree that Buick is a competitor for Saab at all, while on paper they sit in similar areas their brand images are still extremely different. Buick has seen huge improvements but they are a long way from appealing to the same crowd of buyers that consider brands like Saab, VW, Audi, Subaru or Volvo. GM knows this and has been pushing Buick advertising at hip design oriented stores like Ikea and in hip urban areas but they are a long way from being accepted in those groups. Those brands I mentioned though are the ones that Saab competes… Read more »
OddJob
Guest
OddJob

Now here’s a common mistake at this blog,especially among US visitors (no offense to you charlie, I’ve seen this from many others here). It is not a question what you could get instead of a Saab, just comparing cars by the spec sheet and the final price is ridiculous, You do not get a Saab by buying a similarly specified Buick or VW or Hyundai.

Or as Swade probably would have put it: I want the Saab -doesn’t that mean anything to you?.

RobertP
Guest
RobertP
I’ve always wondered why Saab is trying to fight in the so-called premium market with brands like BMW, Audi, Lexus, etc. As seen, the prices incl. discouts don’t differ that much from Buicks and Volkswagens. It was a GM strategy: they bought Saab because they wanted a European premium brand in the market. Then they started to degrade the Saab brand, by upgrading Opels. The approach was always the wrong way around. They should have ‘degrade Saabs’ and sell them as Opel/Buick/Chevrolet. Like Ford did with Volvo (Ford made it look like Fords inhereted Volvo-technology) and VW does with Audi… Read more »
AJF
Guest
AJF

Right on.
Saab, and many people on this site, seemed to think that Audi and BMW were Saab’s main competitors. But that’s not the case… that’s an aspiration. Through the GM era the competition was/is VW, Acura… and used Audis.
I’ll be interested to see if the new ownership goes upmarket to where the company has always wanted to believe it was or stays generally where it is. I’m okay where it is, it’s more affordable for me.

Alex
Guest
Alex
It’s tricky, in many ways Saab’s main competition is still Audi but unfortunatly Audi’s main competition is not Saab, I read somewhere that the majority of former Saab owners who went to a luxury brand, went to Audi. That doesn’t mean Saab’s products are held in the same regard as Audi’s, unforunately not the case, it just means that the type of person that looks at Saab also looks at Audi. You point it out perfectly by mentioning VW and used Audis as the real competition for Saab, basically people who want Audi’s but can’t afford them look at VW,… Read more »
Kevin
Guest
Kevin
But pricing and depreciation is still a factor – and certainly hurts sales of at least one new Saab from my vantage point. My 2006 Saab 9-3 Convertible (with 50,000 miles) stickered at $40,215 and is now worth only about $11,000 (depending on evaluation). I never consider a car a financial investment – but at just 27% of its original value in 5 years, it’s resale is low enough to where I consider it a better investment to just keep and maintain the car then to sell it or trade it in for a new Saab and take on another… Read more »
Kikaluka
Guest
Kikaluka

This is great info, well done. Just getting the facts right, I think Saab should more focus on that in advertising.

Toby
Guest
Toby
Well the Jag XF is selling pretty well here in the uK and guess what they are known for (other than being great cars?)-depreciation. Depreciation is not a factor for premium cars choices, to be precise its a fact of life and must be overlooked-if you want the nice new car you just have to deal with losing a chunk of cash over the years on residuals-fact. I have often been baffled as to how some german kit avoided such a tag-being that they too were £40,000 cars that halved their value in 4 years…I guess its a lable thing-you… Read more »
DFF
Guest
DFF
I have owned eleven Saabs in the past forty years (99s and OG900s) and presently own three OG900s. At first I bought them new, but as prices increased I realized that used represented a better value than new and have bought only used for many years. Fortunately there are used car dealers in my area that specialize in Saabs, including one that sells only Saabs. (There is even a salvage yard in upstate New York that stocks only Saabs.) The reason that i continue to repair and restore my twenty year-old cars is that neither Saab nor any other maker… Read more »
rune
Member
DFF, last summer, many people here complained loudly when MY10 9-5 arrived in the US without a sunroof. (I think Swade even conducted a poll) Personally I do not recall ever having sat inside a Saab equipped with a sunroof. The closest I’ve come is taking a picture of my wife sitting inside a 9-3 convertible (the independence edition no less 🙂 ). So I sympathise with your plight in that regard. I love leather though. The leather in my 9000 from 1997 is a bit worn, but still gives the car a nice feel. If Saab are able to… Read more »
DFF
Guest
DFF
Rune, Many years ago I purchased a Dodge on special order through the dealer to the factory with a combination of engine, transmission and suspension that must have made the car almost unique. That was and I believe still is a fairly common thing to do. With today’s computers and the internet and with Saab’s flexible assembly line it should be possible for a dealer to take a deposit and order up a car to the customer’s specification from the factory and have it delivered in a few weeks, at least to a large market like the U.S. Doing that… Read more »
rune
Member
DFF, do you mean something like this: http://www.saab.co.uk/gb/en/start#/buy-own/customize-your-saab/build-your-saab/ I believe Saab used to offer this in the US as well. As I understand it, there are some extra costs (government taxes) associated with each configuration offered, so that is why you’re seeing such a limited choice at the moment. A small manufacturer like Saab can’t push many configurations, because there are too few units sold to divide the costs. (again, this is my understanding of the situation, someone else is bound to comment) And yes, it is neat being able to choose the options relevant to you. 🙂 (but I… Read more »
900_S
Guest
900_S
I’m totally with you, DFF. My 900 S has cloth seats. I can’t stand leather and I don’t really see the appeal. However, I understand leather is to be expected in a brand like Saab, and is highly sought after in general. There is a bit of a stigma against cloth seats, it seems… which might be why Saab doesn’t provide them as an option, because they’re “cheap looking” is what I hear most often. Whether it’s because of that stigma, or it’s more expensive to offer the options side-by-side (or both), I don’t know. It would be nice to… Read more »
Jason Powell
Guest
As far as resale values go, have you checked to see what has changed in the last 6-10 months? I know when we first started replenishing our inventories, you could go to the auctions and get a 9-3 for really cheap in my mind, but in the last 3-4 months those prices have shot up. If a 2008 9-3 auto sells for around $23000-24000 in Canada and originally had an MSRP of say around $40000, that is really not that bad and would mean that a true residual value in my mind should be closer to 50%. I’m not sure… Read more »
Bernard
Guest
Bernard

2008 4 cylinder 9-3s would have probably sold new well below 40k in Canada (excluding taxes), which makes the depreciation numbers even better.

aeroottawa
Guest
aeroottawa

Agree – and I think prices will only continue to firm up as the supply of used Saabs here in Canada starts to dry up as a result of the fact that virtually no cars were sold from late 2009 and through 2010. Already the number of used Saabs advertised for sale on Autotrader here in Ontario has dropped from an average of about 300 a year ago to around 250 today.

Romac
Guest
Romac
Interesting article, but I thought depreciation figures were calculated on what you were offered to trade in your car, not the sticker price at the dealer. E.g. (UK) 9-3 SportWagen 9-3 Vector Sport TiD 120bhp (1st reg December/2006) – I bought it Aug/2009 with 46k miles for about £9k*. Now (March/2011) with 80k miles it’s worth about £4k trade in, but they are stickered at around £7k. So: I’d lose 55% as it stands at the moment. Against the sticker price it would be: 22%. Big difference. As others have said – it’s a fact of life with cars! *£9k… Read more »
Jason Powell
Guest

Romac,
Even if you took trade in pricing or auction pricing, I can tell you personally that those figures have gone up as well. With little to no inventory available in some parts of the world, dealers are paying more for Saabs then they did a year ago. Obviously, it depends on the dealer, but for the most part, a Saab dealer will be your best bet for trade value.

Peter, Sweden
Guest
Peter, Sweden

With all the hitech-equipment that’ll be loaded in the new 9-3 it’ll be extremely interesting to see the pricing. Will they be able to squeeze the pricetag below the 9-5 even?

theSandySaab
Guest
theSandySaab
Snapshot LA: Just returned from LA were I spent a while mystery shopping for a Saab at one of the main dealers. I was surprised to see a rather large number of 2010 models, both 9-3s and 9-5s. Now, admittedly they were all the “wrong” models, no 9-3 aero, no 9-5 with HUD or moon roof, but with very low prices, anywhere from 10-15ks under MSRP, plus another 1k loyalty discount available. This made for example a base 9-3, sticker at 35k selling for 24k, or 299/month, zero down. Amazing value!!! Still, it seemed the Saabs were moving slowly, unfortunately.… Read more »
Anders
Guest
Anders

In Sweden many premium brands have enormous depreciation, much because of the leasing system. After three years an OG Saab 9-5 has about the same price as a for example a three-year-old Ford Focus. While the OG 9-5 has lost 60 percent of so of its value the Focus has perhaps lost 40 percent. Both cars cost around SEK 100,000 (circa € 11,000 or $ 16,000) after three years, so you get a fairly new premium car very cheap in Sweden.

Toby
Guest
Toby

Good Point-it has some benefits-you can a great car for comparitively little.

JTB
Guest
JTB
I recently bought my first Saab (a 2010 93x) in the US and it has become quite a conversation piece among friends and co-workers for the exact same reason I bought it, it is different. BMW, Lexus, and Acura have a stranglehold on the market (at least where I live), with MB, Infiniti, Cadillac, and more recently Audi making big gains. I think it is simply unrealistic to think that Saab will ever match these numbers, especially with so many other makers trying to break into the entry luxury arena. However, I think there is an untapped luxury market that… Read more »
DAVID
Guest
DAVID
Jeff, Great article, however, AutoTrader.com is the biggest car sales site in the US. They get around 16 million unique visits a day, over 2 million more than cars.com. Combine that with their sister companies: AutoTrader Classic, AutoTrader Latino, Deals on Wheels, Manheim Auto Auctions and Kelly Blue Book and there is no comparison. AutoTrader.com also has a feature called Trade-in Marketplace, where you can get an instant offer for your trade in. You can then trade it in your car or redeem the final offer for cash. Not sure cars.com can do that. Anyway, I will say I like… Read more »
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