NADA 1 Year Retention Rates: Volt 90%, LEAF 95%

MAY 29 2012 BY STAFF 2

No Deals on 2011s Here

NADA has just released its official used car guide for June, where it lists the trade-in rates for a 1 year old Chevrolet Volt, and a 1 year old LEAF.

Results show that a 2011 Chevrolet Volt is worth $29,325, or 90 percent of its $32,780 sticker price, and a Nissan LEAF is valued at $23,975, or 95 percent of  its MSRP ($25,280).  As a point of reference, the 2011 Toyota Prius was at 88%.  Now, if the math on the Volt and LEAF seem a little off to you, as it did to us, it does takes into account the $7,500 federal tax credit as a reduction to the original selling price.

Maynard Brown, an NADA Guide analyst, had this to say about the credit entering into the equation, “It behaves more like traditional cash incentive versus a finance incentive that  you don’t see.”

Put another way, NADA sees the $7,500 off electric vehicless no differently than it sees the $5,750 GM is currently offering off a new Avalanche (MSRP $36,800).

Buy New Lady. It Is The Only Way to Go!

Looking at how NADA has reached their conclusions on the residual values however, we are off the opinion that NADA just pulled those numbers out of a hat to avoid allowing their system to claim the cars retained 100% or more of their value.

A quick survey of the used car market, shows the cheapest (non damaged) 2011 Chevrolet Volt to be about $32,000, and the cheapest LEAF to be $25,000, both well over their base NADA retention price, with the average listed resale price being $5,000-$6,000 (respectively) higher.   We can give some slack to NADA that a listed price is clearly not the selling price, but in this case, the gap is far to wide to bridge.

The analyst does expect these retention rates to drop fairly quickly into the future, “I definitely believe as supply comes in and we get more transactions, the Volt  is going to drop sooner, mainly because it starts at a higher price point.”

Fuzzy math or not, one thing is for sure, if you qualify for the $7,500 federal credit, buying new is still the way to go! (sub)

Categories: Chevrolet, Nissan


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2 Comments on "NADA 1 Year Retention Rates: Volt 90%, LEAF 95%"

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Personally, I believe the Volt and LEAF will not drop faster than other ICE cars after the first year. I think the ‘value’ end of the cars that qualify for the credit will be the leaders in residuals (if you count it this way) for several years.

The dollar spread is quite large during the first year, larger still going into years 2 and 3. So, those not qualifying for all (or part) of the $7500, but want an EV, will not discount the credit to the MSRP so handily if it is not available to them…and with limited used supply for several years, I think that stabilizes the residuals for at least a few years.

Then you also have a likely expiration of the $7500 credit itself in the next 24 months, which changes the metric again.

Hard to say what elimination of the US 7500$ tax credit would do to resale values. One would think that it would increase used car values…but if the market gets scared that the car won’t exist without the credit it could have the opposite effect.