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Volkswagen’s new Beetle might not be a scorching performer or ultra-rare, but it is offbeat enough to be in shorter supply than the average vehicle.
updated 8/7/2008 11:25:07 AM ET 2008-08-07T15:25:07

You can't call them "good investments" because they inevitably depreciate. But the models in our ranking of the top 10 vehicles with highest resale value do amount to sensible purchases for the way they minimize the dollar losses associated with owning and maintaining a vehicle.

The models on our list retain a higher percentage of their original purchase price than any other car you can buy. But high gas prices are having a dramatic effect on prices — so much so that in just a matter of weeks, the list of the top 10 vehicles with the highest resale values will look different.

"Economy cars are improving," says John Blair, chief executive officer of Automotive Lease Guides (ALG), a market research firm headquartered in Santa Barbara, Calif. "The outlook for small, fuel-efficient vehicles is much brighter today versus a year ago. And the outlook on SUVs has changed dramatically in the other direction."

Basically, fuel efficient vehicles are gaining value and non-fuel-efficient vehicles are losing value.

So it's no surprise that the car that tops this ranking, the playful Mini Cooper, is one of the most fuel-efficient models on sale in the United States. It will hold more than 60 percent of its value after three years of ownership.

None of the models on our resale honor roll give up more than 15 percent of their purchase price per year through their first three years, based on data from ALG. And as automobile depreciation goes, that's as good as gold. Click on the “slide show” link below for the full list of vehicles with the highest resale values.

Even though rising fuel prices have caused fuel economy to have a greater impact on resale values, most of the models in our ranking don't ask you to sacrifice in the service of fiscal good sense. They are fun and rewarding to drive, each in their own way.

Some express youthful nonconformity, like the Scion xB, Nissan Rogue and Volkswagen New Beetle Convertible, numbers 7, 9 and 10, respectively. The Infiniti G37 Coupe, BMW 1 Series and Audi S5, which rank second, third and tenth, combine sophistication with spirited energy.

Volkswagen's R32, at number No. 5, exudes athletic exuberance. The four-wheel-drive convertible Jeep Wrangler, No. 4, invites rugged adventure.

Even the two top-10 finishers that appear purely practical, Honda's CR-V and Civic Hybrid, are far from pedestrian. They're smartly styled, well engineered and have a refined driving experience. The Civic Hybrid adds technological charm to those attributes.

Smart styling contributes a lot to a vehicle's resale value, says John Blair, chief executive officer of ALG. That's due to fundamental market dynamics: supply and demand.

A model that is uniquely attractive will generate more demand from people shopping for used cars. Naturally, that greater demand pumps up its resale price. Thus, ALG puts a heavy weight on appearance when it estimates the residual value of new vehicles.

Residual value is analogous to resale value, but it's not the same thing. It's the price that a model in average condition is expected to take in when eventually it is sold at a wholesale used-car auction. The retail value of a vehicle — the price a consumer pays to buy it — varies a little from model to model but generally runs about 15 percent above the ALG residual value, Blair says.

The firm's estimates are used by automotive lease writers to determine how much a model will be worth when its lease expires. Our top 10 vehicles with the highest resale value — there are actually 11 models on the list, thanks to one tie — are based on ALG residual values expressed as a percent of the original purchase price. All are current, 2008 models. The ranking excludes specialty cars produced in low numbers.

In addition to a vehicle's styling, its manufacturer's reputation for quality has a big impact on how much value it retains, Blair says.

"The No. 1 influence is certainly a vehicle brand and the perception of the brand," he says. "The used-car buyer is looking for a vehicle that's not going to be a maintenance headache for them. If you have a strong brand, that has a real positive influence on the residual value."

Of the vehicles on our list, the Honda Civic Hybrid, Honda CR-V, Infiniti G37 Coupe and Scion xB all have better-than-average predicted reliability, according to Consumer Reports. "Honda is at the top of that list," in terms of having a sterling reputation for vehicle longevity, Blair says.

Manufacturers affect their vehicle's residual values by carefully managing the supply side of the supply/demand equation. The aim is to meet demand without over-producing, so that discounts aren't needed to sell the excess, Blair says. Honda does a good job of this.

"You need to balance the supply with the demand and have a lot of discipline with the pricing," he says. "Producing too many cars and creating an environment where you have to discount the vehicles is the single biggest thing that's going to erode your residual values."

All of those precepts of value retention apply very clearly in our ranking.

None of the top 10 models are overproduced. In fact, quite a few are offbeat, unique and even limited in supply. For instance, the Volkswagen R32 is a limited edition of the Rabbit, of which only 5,000 will be sold in the United States for 2008.

Even less exotic models on our list, like the, Mini Cooper, Jeep Wrangler, Scion xB and Volkswagen New Beetle Convertible are specialty models in their own right. They might not be scorching performers or ultra-rare, but they are offbeat enough to be in shorter supply than the average vehicle. The same goes for the Honda Civic Hybrid, which is produced in far fewer numbers than the conventional Civic.

Cars like the BMW 1 Series, Infiniti G37 and Mini Cooper reach their pinnacle positions by a combination of brand reputation and desirability, Blair says. "The 1 Series is another example of a nicely styled vehicle with good driving characteristics."

For the little Cooper, fuel-efficiency currently gives a boost to resale value, says Andrew Cutler, a spokesman for Mini. The Environmental Protection Agency rates the base Mini Cooper at 28 miles per gallon in the city and 37 mpg on the highway.

What's more, Mini tries to create an engaging brand experience that makes owners feel like members of a special club. Cutler calls it "an expressive brand personality."

"They then tell their friends how cool it is and invite them to join the club," he says. "This brand experience, coupled with the car's performance, safety and efficiency, keeps customers engaged for a longer period of time than has been seen with other niche vehicles."

No matter how unique, reliable or appealing a vehicle is, the resale value of a particular model always depends on its condition. Even if you don't buy one of the top 10 performers, you can maximize the worth of your car by keeping it in optimal condition.

Michael Calkins, manager of the approved auto repair program for AAA, stresses the importance of routine maintenance and following manufacturer recommendations. "Keep all service and repair records as proof of maintenance when it comes time to sell the vehicle," he says.

And don't underestimate the importance of seemingly small measures, liking washing a vehicle regularly and waxing it twice a year to protect the finish. These work cumulatively to help preserve a car and thus enhance its second-hand value. "Keep the interior clean, and vacuum it regularly to prevent grit from wearing the carpets," Calkins says. "Use floor mats to protect the carpets, including special winter mats in climates where they are justified."

A garage helps prevent sun and weather damage, but if you must park outside regularly, he recommends a protective cover and window tinting, especially in the south.

"Park in places and ways that will help prevent door dings, and have a paintless dent repair technician periodically remove the dings that are bound to happen anyway," Calkins says. "Run your air conditioning at least five minutes every month, even in winter, to circulate lubricant and keep the seals in good shape. Use your parking brake regularly to prevent its cables and mechanisms from seizing."

Whether you own or plan to buy one of the top value-holders on our list or some other vehicle, the effort invested in the little stuff day-to-day will be rewarded when it comes time to sell.

© 2008 ForbesAutos.com

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