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new car versus used

It's no secret that "retro" is a driving force in modern pop-culture. It affects everything from fashion design to the entertainment industry, and many points in between. But did you ever consider that it could be having an effect on the used-car market, too?

Old is New
For instance, in some cases residual values of late-model used cars have plunged to an all-time low of 50 percent of the MSRP in less than three years. Yet concurrently, certain models from the late '80s and early '90s have actually experienced a leveling-off or even an increase in value. This contrarian effect has occurred despite an outpouring of incentives (to buy new vehicles), such as quicker new-model turnarounds and the accompanying marketing glitz or good-old-fashioned financial perks, like rebates. What is causing this trend reversal?


One of the main reasons for retro's success today is the fact that many people look back nostalgically to a less complicated time, and find comfort in embracing what they perceive as having captured the essence of that.


When it comes to the products they choose, they want something that won't be rendered obsolete or unserviceable quickly. It should have a clean, timeless style, and be of the simplest construction possible for its suited purpose, so as to be considered durable and useful in the long-term. The latter aspect is the basis for our discussion here, rather than the styling issue. That's a matter of individual taste, anyway; but the durability factor is quantifiable, and therefore of great interest.

Two-Sided?
It's certainly arguable that many new car models are suspect in this area for a number of reasons. It's no secret that not only has there been a drop in materials quality, but also an across-the-board increase in vehicle complexity. Some of these technologies have been a bit like a two-edged sword.


For example, systems involving supplemental restraint (airbag), anti-lock braking, traction control, automatic climate control, collision avoidance, navigation, multi-speed automatic transmission, and vehicle security, while offering added convenience and safety, can be quite costly to maintain and repair. This fact has a direct impact on the residual value of the vehicle. Oddly enough, the more of these systems incorporated in the vehicle, the less residual value the vehicle will have against the original MSRP.


One technology that all new vehicles have, regardless of make or model, is the OBD II, and acronym for a drivetrain and emissions management system that, when spelled out, means On Board Diagnostics—Phase Two. Implemented on all passenger cars since 1995, and light trucks since '96, that are sold in the U.S.A., this system proved to be a quantum leap in capability and complexity compared to the previous OBD I and earlier management systems.


Such a complex system is needed in order to further reduce vehicle emissions, especially during warm-up. Also, to ease repair expense issues, some self-diagnostic features have been incorporated that are common in function for all OBD II vehicles (a commonality welcomed by repair technicians). That's the good news.

Continued on Page 2

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