Do Auto Awards Identify Future High Resale Value?
Last updated November 2019
An intrinsic problem when ranking anything is that “best” is usually subjective. How can you independently determine a small set of winners when there are 2,500 new vehicles available for sale in the U.S. each year? Is there a way to objectively measure which is best?
A common denominator for judging vehicle quality—from an entry subcompact Mitsubishi Mirage to a luxury Porsche to a large GMC SUV—is checking its “retained value.” That’s the amount a car can be sold for used, say, three or five years after it goes on the market.
If auto awards are given only to the “best” models, then it’s reasonable to expect those cars will retain their resale value better than lesser unrecognized vehicles.
“Resale value is very important because a vehicle is an investment and you pay a lot of money for it, so you don’t want it to depreciate too quickly,” says Ricardo Rodriguez-Long, president of the Hispanic Motor Press Foundation, whose award seeks vehicles that will minimize costs for a value-conscious Hispanic family with two kids.
J.D. Power says there’s a link between its quality and performance award metrics and residual value. “Vehicles that score better in our studies end up being worth more on the secondhand market,” says Sargent. “Part of that is real, and part of that is image, because people believe a Toyota is high quality because it does well in our studies.”
How well do the awards programs predict retained value?
We assembled all of the retrievable model-year 2010 through 2014 vehicles declared “best” by the 14 awards we studied—1,892 cars and trucks—and looked at their percent retained book value 36 and 60 months after they were sold new. We obtained these data by buying J.D. Power’s Custom Historical Used Car Guide dataset.
Because different categories of cars and trucks tend to depreciate and retain their book value at different rates, we compared each award-winning vehicle only against the range of percent retained values achieved within its own vehicle segment, as classified by J.D. Power. So the percentage retained value of the Acura MDX, a luxury midsize sport utility vehicle, was judged against only other luxury midsize SUVs, not against compact SUVs, large SUVs, or Italian supercars.
We defined vehicles with the best retained value as those that made it to or above the top 75th percentile of retained value for its category—the equivalent of a C grade or better in school and a fairly big and easy target for a “best” anything to hit. At the other end, we defined “worst values” for each category as those vehicles with resale value falling at or below the bottom 25th percentile.
The table below reports which awards did best:
- Forty percent of Automobile’s Automobile of the Year and MotorTrend’s SUV of the Year picks kept a high percentage of their resale value compared to their peers—much better than the 25 percent that would have done so just by chance.
- Three other awards were similarly better-than-pure-luck at picking the best, with 30 percent of Popular Mechanics’ Top 10 Cars for Automotive Excellence Award winners maintaining high resale value, 29 percent of Car and Driver’s 10 Best Cars, and 28 percent of J.D. Power’s Performance Award winners.
- But we also found awards sometimes recommended models that turned out to have very poor resale value: Most of the awards made at least some whoops picks. However, three awards stood out by recommending no worst values—Green Car Journal, NACTOY Truck of the Year, and MotorTrend SUV of the Year.
- It’s unreasonable to expect awards to perfectly predict good future resale value, but they should at least select more truly best- than worst-value winners. Only two did that: 40 percent of MotorTrend’s SUV of the Year winners were best values and none were worst values, while 29 percent of Car and Driver’s 10 Best Cars made it into the best-value club, compared to only two percent of its recommendations that fell into the worst-value dumpster.
- Net scores for the rest ranged from 25 percent (which is break-even with chance and thus provides no true added value) to -25—meaning you can do a better job picking the best by throwing darts at a list of models you might buy.
Of course, poor performance here doesn’t necessarily signify a lousy award. “Best” labels should also be determined by desirable intangibles like buzz, styling, power, technology, performance, quality, safety, and pure driving fun.
How Well (or Poorly)
|
On average, percent of times award would have led you to a vehicle with... | |
|---|---|---|
| Best retained value within its category | Worst retained value within its category | |
| MotorTrend SUV of the Year | 40% | 0% |
| Car and Driver 10 Best Cars | 29% | 2% |
| Green Car Journal Green Car of the Year | 25% | 0% |
| NACTOY Truck of the Year | 25% | 0% |
| Automobile Magazine Automobile of the Year | 40% | 20% |
| Automobile Magazine All Stars | 23% | 4% |
| J.D. Power Performance Award | 28% | 13% |
| Popular Mechanics Top 10 Cars Auto Excellence | 30% | 16% |
| Consumer Reports Top 10 Picks | 20% | 10% |
| Edmunds Buying Guide Top Recommended | 20% | 13% |
| J.D. Power Quality Award | 21% | 16% |
| Hispanic Motor Press Award | 16% | 13% |
| NACTOY Car of the Year Award | 20% | 20% |
| U.S. News Best Cars for the Money | 15% | 16% |
| ConsumerGuide Best Buy | 12% | 13% |
| Kelley Blue Book Top Expert Rated | 18% | 21% |
| The Car Book | 6% | 18% |
| MotorTrend Car of the Year | 0% | 20% |
| MotorTrend Truck of the Year | 0% | 25% |