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LukkWhat makes a perfect used car?
Discover why residual values are key to finding the perfect used cars. Plus, learn how to identify the best used cars while minimising portfolio risks.
What makes a perfect used car?
From vehicle design to external market factors, learn what shapes the perfect used car.
Which used cars are most desirable?
Understand how to identify and build vehicles that hold their value on the used car market.
Which used cars are most cost efficient?
Discover why ownership costs influence a car’s desirability – and how to calculate lifecycle expenses.
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Why used-car values are vital across the automotive industry
In simple terms, residual value describes the actual or projected value of a car once it has been used.
Manufacturers use residual values to control price positioning and avoid B2B discounts. Leasing companies rely on them to determine around 85% of leasing rates. Remarketers use them to help decide where to sell a car, and for what price.
So, it’s crucial to design or utilise models that have strong residual value – i.e. will perform well on the used-car market – no matter where you are on the automotive chain.
What makes a perfect used car?
The perfect used car has high residual value, however this can rise or fall due to a great number of factors. A vehicle’s design is one of them, but you must also consider factors like:
- Economic market conditions
- Discounts and government incentives
- New ownership models
- Digital sales
- The rising electric vehicle market
So, a perfect used car must perform on both counts. It must be a great product with a sensible sales and marketing strategy.
Our Car to Market team support manufacturers with strategic residual value positioning up to 4 years before launch. Click below to learn more.
How to identify the most attractive used cars
The most popular used cars are often designed to look classic, to have a wide market appeal. More daring styles and shapes are risky – but can earn success with reasonable volume planning, since limiting the stock of an extravagant model could boost its value.
Importantly, the most attractive used cars match the needs of used-car customers. A vehicle’s technical specifications must meet the segment standards to even be considered an option.
Underequipped cars pose financial risk, sitting unwanted on forecourts. Whereas cars with strengths in practicality, ergonomics and driving performance are more desirable and hold higher residual value.
Quickly identify exact vehicles matches – including price and optional equipment – for 99% of vehicles on the market. Click below to learn more.
What brands are best for used cars?
The best used cars deliver on customer expectations. Those expectations are set by manufacturers in advertising campaigns. They’re also established by the brand’s previous models, and sit in comparison with close competitors.
A brand’s overall residual value performance has a major impact, especially when values for a new model are first projected. A car that fails to meet brand-typical traits may quickly be disadvantaged as the odd one out – but could benefit later on.
Also, different markets may carry varying expectations across models and brands – so there is no one-size-fits-all approach. To see a clear view of the current used-car market, you need easy access to reliable and up-to-date pricing and valuation data.
Which used cars have lowest total cost of ownership?
Compared to new-car customers, used-car buyers are more price sensitive. So, a car’s total cost of ownership is a strong factor in a model’s desirability as a used car.
Accurately calculating the running costs of any vehicle requires complex costing data that covers:
- Depreciation
- Financing and insurance
- Acquisition and utilisation taxes
- Fuel, servicing, wear and tyres
- Much more
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