By Chris Chase
Automotive Lease Guide (ALG) published its 2020 Canadian vehicle residual value awards in January, naming Toyota and Porsche its top brands for this model year.
These annual awards recognize the vehicles that ALG’s industry watchers predict will hold their value best as they age; the company calculates residual value (also known as resale value) predictions based on the actual values of three-year-old models in the used vehicle marketplace.
The brand awards typically are given to manufacturers whose vehicles sell based on desirability, instead of discounts and incentives designed to attract shoppers away from competitive automakers. This year’s awards recognize Toyota’s reputation for durable, reliable vehicles, and Porsche’s long history of making some of world’s best-loved performance cars.
Toyota and Porsche displace last year’s ALG brand residual value award winners, Subaru and Land Rover.
Typically, multiple models from each winning brand will earn individual residual value awards, and that holds true this year. Six Toyota models and two from Porsche make the list for 2020.
Toyota dominates in the truck/SUV categories with the RAV4, Highlander, 4Runner and Sequoia SUVs, and the Tacoma and Tundra pickups; the Sequoia and the pickups are repeat winners from 2019. Toyota’s upscale Lexus brand adds the UX subcompact SUV.
Porsche’s 911 sports car and Macan compact crossover make the list for 2020 after the brand was shut out last year.
Other repeat winners include Subaru’s Impreza, WRX and Crosstrek, Honda’s Accord and Fit, the Mercedes-Benz S-Class, Land Rover’s Discovery and Range Rover Sport, the Honda Odyssey, and the Mercedes-Benz Metris and Sprinter vans.
Why are residual values important?
In the auto industry, “residual value” is a fancy term for what the rest of us call a car’s resale value, or the amount for which you could realistically expect to sell a vehicle a given number of years after it was purchased new. When you lease a new car, the monthly payment is determined based on the vehicle’s projected value at the end of the lease term. Your three or four years of lease payments cover the cost of depreciation. All else being equal, a car that is expected to depreciate less — or carry a higher residual value at the end of the lease term — should be less expensive to lease.
Used vehicle dealers use residual values, too, to decide on asking prices for the cars and trucks on their lots.
Why aren’t there more electric vehicles in the list of winners?
Electric vehicles are gaining acceptance in the marketplace, but there’s only one EV — the Audi E-Tron SUV — among this year’s ALG residual value awards. That’s partly because EV demand has not peaked. The technology is still evolving, and public charging infrastructure is limited. Once EVs can reliably travel as far as internal combustion-powered cars and trucks and public charging infrastructure is more common, we’ll see electric vehicle residuals begin to rise.
ALG 2020 Canadian Residual Value Award winners – Cars
Honda Fit – Subcompact car
Subaru Impreza – Compact car
Honda Accord – Mid-size car
Nissan Maxima – Full-size car
Subaru WRX – sports car
Audi E-Tron – Electric
Mercedes-Benz A-Class – Premium compact car
Audi A5 – Premium mid-size car
Mercedes-Benz CLS-Class – Premium full-size car
Mercedes-Benz S-Class – Premium executive car
Porsche 911 – Premium sports car
ALG 2020 Canadian Residual Value Award winners – Utility vehicles
Subaru Crosstrek – Subcompact utility vehicle
Toyota RAV4 – Compact utility vehicle
Honda Passport – Mid-size utility vehicle, two-row seating
Toyota Highlander – Mid-size utility vehicle, three-row seating
Toyota 4Runner – Off-road utility vehicle
Toyota Sequoia – Full-size utility vehicle
Lexus UX – Premium subcompact utility vehicle
Porsche Macan – Premium compact utility vehicle
Land Rover Range Rover Sport – Premium mid-size utility vehicle, two-row seating
Land Rover Discovery – Premium mid-size utility vehicle, three-row seating
BMW X7 – Premium full-size utility vehicle
Toyota Tacoma – Mid-size pickup truck
Toyota Tundra – Mid-size pickup truck
Honda Odyssey – Minivan
Mercedes-Benz Metris – Mid-size commercial van