Image: BMW 330 Ci
The BMW 330 Ci convertible retains 67 percent of its value after two years.
updated 11/12/2006 4:04:16 PM ET 2006-11-12T21:04:16

The biggest cost of car ownership isn't gas, repairs or even adding that amazing sound system. It's depreciation, the decrease in value that comes over time.

The options you add to your new car will help determine how high a price you can get when you decide to give it up. But no, that doesn't necessarily justify investing in that sound system. Sometimes, just having a brand name that stands for quality — such as Toyota, Porsche or Honda — makes all the difference. Kelley Blue Book, an authority on residual value, says vehicles that best maintain their value are those that are designed and engineered well, and are usually in limited supply and high demand.

That shows in our list of cars that best hold their value. Of the nine cars on the market that depreciate the least, five are low-volume, desirable luxury cars, including the BMW 330Ci convertible and the Porsche 911 Carrera two-door. But you don't have to spend a lot of money to get a car that will retain its value. You just need to buy one packed with value.

Consider Honda Motor's overhauled 2007 CR-V SUV, which the company is bringing into showrooms now. The CR-V has historically been an excellent small SUV, and has received high marks for reliability and safety. The last-generation model had a well-built engine and a nice cabin, and offered a higher level of engineering sophistication than most other $20,000 cars.

As a result, the redesigned CR-V is getting high projected residual values right out of the box. Kelley estimates that a new-model CR-V will retain 65 percent of its value after two years, placing it among the cars with the highest residual values. Consumer Reports and Automotive Lease Guide, another authority on residual-value information, give the CR-V their top ratings for predicted depreciation.

The new CR-V is getting these marks because it is well engineered, but also because it has become the benchmark in its class. Some vehicles, such as BMW's 3 Seriesand Porsche's 911, have such strong images — the two cars are icons — that they appear year after year among the cars with the best residual values. High resale value is one thing that separates the sought-after 3 Series from such arriviste, otherwise-tough competitors as the Infiniti G range from Nissan Motor.

To earn a spot on our list, a car needs to have the best-possible ratings for predicted depreciation from Consumer Reports and ALG. After determining the winners, we contacted Kelley Blue Book to see precise projected residual values for each car.

For each car, we listed its predicted residual value after two, three and five years of ownership. The first two figures will be most important to people who lease their cars, as the average leased car gets returned after two or three years. For people who buy, the five-year figure is the one to study, as the average buyer sells a vehicle after five years.

The difference between a high and low residual value is significant. An average vehicle will retain 35 percent of its value after five years, meaning that a $20,000 new car today will only be worth $7,000 after five years. But a new Mini Cooper will retain 52 percent of its value after five years. To contrast that with the bottom of the pack, some cars hold only 20 percent of their original value after five years.

There are several ways to boost your new car's resale value. Choose a popular exterior color, such as black, white or silver. Opt for equipment that many buyers want, such as anti-lock brakes, alloy wheels, CD players or changers, parking sensors, navigation systems, laser- or radar-equipped cruise control and leather seats. Avoid wild colors and go easy on customization, Kelley says.

But for some of the market's more desirable cars — the BMW and Lexus models of the world — you don't need to do much besides buy them, then sit back in the driver's seat and watch them keep their luster.

Note: The information about ALG's ratings came from the company's Web site. By publication time, ALG had not responded to requests for confirmation.

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