Why do SUVs have higher resale values than cars?

[Andrei28]

Pansin ko, malaki pinagbago ng price ng mga used SUV kesa cars. Mas mataas nga acquisition cost ng SUVs pero compared sa car na almost kapareho lang ang price nung brand new, malaki difference. Ex. 1998 honda accord is only 350k (only 50k higher than a 1998 civic) while a 1998 crv is 480k. How come SUVs have higher resale values?

[ghosthunter]

Its a simple matter of supply & demand. Small SUVs are in demand in the second hand market because the operating cost is almost the same as a large sedan while providing good interior space & comfort.

As for the difference in 2nd hand large sedans vs compact cars (accords vs civics), there are less people wanting a used large sedan because owning a large sedan often equates of prestige. Prestige cars are usually newer models, not used cars.

[AlbertB]

Andrei,

It could be market forces and market development. The Philippine market is so enamored with SUVs that resellers/sellers of second-hand SUVs dictate their price. A drop in market desire for SUVs will surely dictate a drop in price.

Factors of desire by the Filipino market in SUVs are, among others:
1. Size: the bigger the better. Also since most SUV buyers are male, it exudes the alpha character driving or owning an SUV, machismo being one. In addition, here, the sense of bigness means space--and seats--for the family as well, particularly so when going on out of town trips or vacations.

2. Sturdiness and rigidity to withstand Philippine road conditions. SUVs are seen as more appropriate for this market: SUVs have higher clearances for floods, suspension and chassis can take ruts and rough roads.

There could be several more factors but surely Honda CRV strike balance between the two class categories of sedans and sports utility. Definitely, Honda is a market developer introducing CRV, which is an innovative category back then.

If it were straightforward by the books, a sedan's book life--and as programmed for model change or obsolescence--is only 5 years. An SUV's may be more than 5 years. Note how many 10-yr old SUVs are around than sedans.

Doing the math, for a 5-yr depreciation a P1M sedan devalues 20% of its brand new price every year. That is P200K per year. While a same-priced brand new SUV, which perhaps at a 6-yr depreciation devalues at a rate of only 1/6 or ~16% its brand new price every year. That would only be ~P166K a year!

This SUV "value" can be diluted when market forces dictate some change. For instance, if the crossover utility category (SUV, sedan, wagon) of vehicles becomes highly acceptable and proliferates the market (with Innova, the new Adventure launch this year, and other mid-priced Jap, Korean players), brand new prices for SUVs might change (compact to sub-compact) or the playing field can be changed.

Toyota is good with changing the game. It is gaining success at bringing SUV market play to new planes by introducing the Fortuner as in between two-category vehicles but more inclined toward an SUV than a sedan. Honda CRV is more inclined toward the sedan category.

Cheers!

[nicolodeon]

You can also add the "image factor" - even if the SUV you just got is a 2nd hand unit, you would always look cooler and "mukhang ma-pera" in that over a 2nd hand car. Not unless though, your 2nd hand car has a female name on it, comes from Bavara, has a feline on the hood, has a prancing horse on it's fanny or has raging a bull up-front.

[pajerokid]

Well explained, AlbertB.

In my personal opinion, think of SUVs as your Maongs. They bare aging much much better than sedans as most full size SUVs change models every ten years compared to sedans who are lucky to get past 4. Yung mga CRV and RAV categories I think average 6 years.

[amboy]

simply put... more people would want to own an SUV than a car... hence more demand than supply... so higher prices for SUV's.

[oldblue]

Pansin ko, malaki pinagbago ng price ng mga used SUV kesa cars. Mas mataas nga acquisition cost ng SUVs pero compared sa car na almost kapareho lang ang price nung brand new, malaki difference. Ex. 1998 honda accord is only 350k (only 50k higher than a 1998 civic) while a 1998 crv is 480k. How come SUVs have higher resale values?

CRV & Rav4 lang naman ata ang may high resale value na compact suv. others like sportage, vitara, terrano bagsak presyo din.

[wren]

CRV & Rav4 lang naman ata ang may high resale value na compact suv. others like sportage, vitara, terrano bagsak presyo din.

yup, Honda and Toyota generally have very high resale values, pero yung iba hindi rin, especially yung mga American full-sized SUVs, paglabas pa lang sa dealer's lot, half of it's value wala na.

[niky]

I was going to ask that. In my experience, the only SUVs with a high resale value are diesel Japanese 4x4 and the RAV4 and CRV. 4x4 resale value is usually overblown, merely because of the putative tax the government puts on them, thus there is a premium on secondhand 4x4.

Landcruisers and Patrol 4x4s are crazy expensive secondhand... but remember, they were crazy expensive to begin with.

Tama yun sa large sedans. There's not much prestige in a secondhand Accord, thus prices are almost the same as a secondhand Civic... which you don't buy for prestige anyway. Plus there's the mindset that the running costs of secondhand midsized sedans are too high... though this is only partially true... compared to secondhand compacts.

Also, most people who buy secondhand SUVs don't care as much about running costs as those buying secondhand cars. Don't know how long CRV matic prices will hold up, with the rising cost of gas, though... ??? Strange, though, how the halo effect extends to secondhand SUVs that are less desirable... like the gasoline powered Landcruiser (guzzly!) and the CRV AT.

[trup]

i think because they last longer