Resale valuation for the 2013 Nissan Leaf is expected to average 35 percent of its sticker price after 36 months compared to 40 percent previously set by Kelley Blue Book (KBB) for 2011/2012 models.
According to Automotive News, which interviewed Eric Ibara, KBB’s director of residual value consulting, post-lease residual values and wholesale auction prices have dropped because of a few factors.
These include the fact that the Leaf’s price was slashed by Nissan for 2013, and gas prices are now consistently less than $5 per gallon. Another main factor is previous wholesale prices for for electric cars is perceived by Kelley as softening.
“Demand for a new Leaf is driven by vehicle enthusiasts, early adopters, people who are concerned about the environment,” Ibara said. “But when it comes to a 2-year-old used electric vehicle, practical considerations greatly outweigh the novelty of new technology.”
Market prices, as one knows from economics 101, are essentially a factor of variables leading to supply and demand, and as for supply, the market appears pretty well stocked of clean used Leafs.
Included are cars sent early to auction are those that some car rental companies bought on contract, but then decided to shed when they were not being rented enough to keep them in inventory.
On the other hand, Enterprise Holdings, owner of Enterprise, Alamo and National rental fleets, said while it had trimmed its Leaf fleet, it intends to restock to the several hundred unit count it had when 2014 Leaf models come out.
Other factors not as clearly spelled out by Automotive News include that the Leaf is a short-range car that no one is going to rent for a cross country tour, or the like, which is a core profit maker for rental companies. Enterprise said it discovered people would rent the car where infrastructure was in place, and not for multi-day trips. That they “didn’t rent it for vacations” as AN put it should come as no surprise. The car is hardly capable of multi-day vacation trips. Perhaps some of those single day rentals were just people wanting an extended test drive before deciding to purchase?
Further, since this entirely new class of car began, setting residual values, and by extension, resale values, was known to be a challenge. Underwriters had to do their best statistical analysis and project a future for an un-tried vehicle. It was more a guesstimate than usual.
Electric cars like the Leaf and Volt both had conservative estimates placed at the time, and Pike Research had predicted values should rise, but at this point, that appears to have been incorrect.
Further still, while future electric car resale value estimates may prove accurate, variables affecting actual resale value are in flux, and the prospect of leasing an electric car at an attractive price has already been seemed by some as a prudent choice over purchasing.
Concerns with the Leaf include the fact that all battery cars do lose some range over time, new technology may rise up sooner than with “mature” internal combustion tech.
As we noted in our 2013 Leaf review posted today, “Some people choose leasing to hedge against future range loss and technology improvements.”
Today’s news can therefore be interpreted as either a reason to hold off, or not. If the market for used Leafs is indeed softening to only 35-40 percent of sticker, perhaps purchasing of one these clean, low-mileage used Leafs may be a smart decision? Or, as others are, one can sit back and hold off, erring on the safe side. Or, again, they may lease, and not have to worry about used car values in three years.
Given 2013 Leafs are indeed less expensive and better than they were during the first two years, their fundamental value proposition is in ways better. How to proceed or not depends on what deals may be found, and one’s own needs, wants, and risk tolerance.