What You Need to Know About Sports Cars and Resale Values

So you have a little extra money, and while putting it in the bank would be practical, it just wouldn't be fun. Something shiny, low and red in the driveway — now that would be fun.

Unfortunately, cars make better lifestyle than financial investments. Overwhelmingly, they lose value rather than appreciate.

Depreciation tends to happen whether you're buying or leasing a car, because in both scenarios you're paying for the amount of money the car loses over the time you own it. If you lease it, your payments are calculated on that depreciation. If you buy the car, you get the remainder back in resale value.

But those fun sports cars you dream about do better than most, says Matt Walker, manager of operations and marketing for Automotive Lease Guide in Santa Barbara, Calif. Sports cars and sporty cars retain an average of more than 50 percent of their original value over three years.

ALG tracks wholesale vehicle values, mileage and options at 97 percent of used-vehicle auctions across the United States. These residual values are based on wholesale prices to dealers, and not what you could get selling the car yourself. ALG starts with this data and adds in predictions of economic effects and year-to-year improvements on individual models in order to predict future residual values.

Residual values for the redesigned Porsche Boxster were not available, so 2004-model-year residual values were considered instead. In cases like this, ALG calculates the residual values starting with outgoing model's sales price data from auctions. When new models are introduced, numbers are revised to reflect increased popularity. In the case of brand-new models, residual values are estimated from a variety of factors including category, manufacturer reputation and market "buzz."

At the other end of the spectrum, cars that lack buzz and sell at discounts when new depreciate the fastest. Unpopular and aged models also typically fall into this category.

Many of the sports cars that hold their value well are exotics that few can afford. But because comprehensive projected residual-value data is unavailable for exotic cars, they were excluded from consideration in the above list. And as with any type of vehicle, some brands hold their value better than others. Here's a quick look at what kinds of sports cars do better than others:

• Rare exotic cars do best, sometimes losing as little as 5 to 10 percent of their value over three years.
  
  

For 2005, the Mini Cooper and Cooper S (pictured) are available in a brand-new convertible body style.

• Beyond exotics, the best cars are those that are the newest on the street. Sports cars are fashion statements. "In this market, it's all about who's new," Walker says. In other words, sports cars hold their value better for the first few years and then drop more quickly than other cars.
  
  
• In general, convertible models depreciate more slowly than their hardtop siblings; however, the reverse scenario tends to be true when a car is above a certain performance level and price. Used-car buyers may still pay more for convertibles, but the original prices of convertibles at the high end of the market are so much higher than coupes that, as a percentage, coupes may do better. Among high-performance machines that may actually see track time, like Porsche 911s and Chevrolet Corvettes, coupe versions have more credibility.
  
  
• Production numbers also play a role. Both Chevrolet and Porsche build far more convertibles than coupes in their Corvette and 911 lines, respectively, so that makes coupes harder to find in the used-car market. Other lower-production body styles bear this out: The Subaru Impreza WRX wagon holds its value better than both the Impreza WRX and Impreza WRX STi sedans.
  
  

By shopping during winter months, price-conscious sports-car buyers may find themselves a better deal.

• In general, sports cars are more prone to seasonal and economic trends than other types of cars. Buyers want rather than need them; many are the household's third vehicle, and most affluent buyers pay cash. Therefore, the common trend for most sports cars — even those equipped with front- and all-wheel drive — is their values rise in the summer and fall in the winter.
  
  
• Up to a point, performance options prop up values. For example, the Mini Cooper S Convertible holds its value longer than its less powerful counterpart, the Cooper Convertible. In addition, the Audi TT quattro all-wheel-drive model holds more value than the front-drive version. But this trend, like the one with convertibles above, goes only so far. Among world-renowned sports cars like the Chevrolet Corvette and Porsche 911, base models that start out costing less and performing well retain the most value.
  
  
• While automatic transmissions improve resale value for all other kinds of vehicles, they're neutral overall for sports cars; manual transmissions do better in some sports cars, automatics in others. This depends, in part, on the original cost of the transmission option.

Are Exotic Sports Cars a Sound Investment?

Many car buffs harbor dreams of finding a sports car that will gain rather than lose value. The reality is, this doesn't actually happen with new cars. The Ferrari 360 Spider is a perfect example. When it sold as a new car in 2001, it stickered for $161,475, according to the National Automobile Dealers Association. NADA's projections show this car's current worth at $177,500.

Compared with common sports cars, the resale value of exotics like Aston Martin's DB9 tend to be affected more by vehicle mileage.

Perhaps this is where dreams come from. But what these numbers don't show is that buyers originally had to pony up more than $220,000 to take one of these cars home, according to Keith Martin, editor and publisher of Sports Car Market, so selling it now would still cost them money. Given this dealer markup, even the rarest exotic cars lose value, Walker says. That's because dealers, who sell a lot more cars than their customers, "aren't dumb," he says. If they see a car that will sell for more than its sticker price, they will sell it for more.

Mitchell Katz forecasts exotic-car values for Premier Financial in Woodbury, Conn. Premier leases low-volume exotic cars for 60 months on an open-ended lease-to-own basis. Consequently, his estimates differ from statistics gathered elsewhere.

Three-year residual values for the cars Katz quoted — including new models such as the 2005 Ford GT and models from custom manufacturers like Panoz and Saleen — ranged from 45 to 60 percent. This is about midpack among the cars we examined, but on the upside, he says high-end exotics have been largely immune from the most recent recession. Katz says exotics hold their value well because the cost of buying them new also rises quickly. For example, if you bought a new Lotus Elise today for its sticker price of $39,985 and then sold it in three years, the person looking to buy it from you might have to pay $46,000 for a new one, so even your original price of $39,985 would look like a discount to the buyer. But like the Ferrari 360 Spider, Elises are currently selling with big markups, so you would still end up losing money.

One reason it's difficult to compare resale values for exotic cars with mere mass-market sports cars is mileage. Because exotics rarely serve as a vehicle used for daily transportation, few rack up the average 15,000 miles per year. Most of these cars log only 2,500 to 5,000 miles per year, and the mileage an exotic car has factors much more heavily in its resale value compared with ordinary cars.