Wednesday, February 20, 2008

Resale Value Revisited

In writing yesterday's post on the Moochfest, I was reminded of another interesting phenomenon in the auto market. We discussed this idea at the shop today, and I think it is so important that both of our blogs will likely touch on it this evening . Actually, I think that this phenomenon is less of a phenom and more of a vestigial hangover from 100 years of mass market car making: the meaning of "resale value".

(A Stark Contrast in 1972)

How many times have you heard, "I only buy "such-and-such brand cars" because they keep their value." Such a dignified reason has almost become synonymous with the Consumer Report winning Japanese automakers. In fact, the sanctimony of resale-value-reasoning has almost shamed many buyers today into making a choice between boring cars that are a "smart buy" and guilty pleasures that are "lemons".

This value spectrum is one-dimensional. It assumes that all car design and all companies are equal and that the resale value is predicated on product longevity and standardization alone. Though every buyer who has a soul knows this NOT to be true, somehow we still fool ourselves into believing this bunk. Let me explain.

Did you ever make a model as a kid? Did it sit around in your parent's attic or in your life until long after your spouse had ceased trying to making you throw it out? ..........Did you ever think that Maisto might have made a better one that you could buy for $30 that would last longer?

Did you ever build something in school like a shop project or clay pot? How long has that stayed in your life? Can you see it from where you are reading this blog? ..........Did you know that K-Mart sells functional and affordable homewares?

The point is that when you are personally invested in a project - when you make something or take part in its creation - its subsequent value becomes distanced from its product longevity and standardization. Of course, in most cases this doesn't mean that the product can fail (i.e. the clay pot ought to hold water), but it decidedly shifts the "value balance" in favor of personal investment and away from standardization.

This difference in value or "resale value" when it comes to cars has taken on an almost religious character when it comes to die-hards such as the Local Motors team or some of its followers. Take for example the exchange of posts from Jalopnik regarding the Factory Five GTM that is also called out by our Vehicle Engineer Blog:

When reflecting on the homebuilt supercar, one self-avowed Lotus Motorcar lover stated:

"BY KARMAVORE AT 02/18/08 03:25 PM

One of the better looking original kit-car designs. I don't think I'd build one though because I'd be afraid the resale would be awful...."

To which was sharply responded:

" BY 79TA AT 02/18/08 08:34 PM @karmavore:
No such performance car should be bought for "resale." Leave that sort of thought for the soulless commuter cars.

'nough said!

Clay pots: 1 K-Mart: 0


ThomasClein said...


ThomasClein said...

The auto manufacturers are in the throes of retooling which has been on going for years. Retooling is necessary because of new models etc. Trump has already taken credit for that expenditure which traditionally runs into the billion category. I'm surprise Trump hasn't already contracted John Meacham to start his greatness.
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