Late-model Luxury Vehicles Feel Pressure as 2010 Models Enter Auction Lanes, According to Blue Book Market Report

Owners Swap Luxury Vehicles for Non-Luxury Counterpart on Kbb.com

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Aug 23, 2010, 05:00 ET

IRVINE, Calif., Aug. 23 /PRNewswire/ -- Kelley Blue Book www.kbb.com, the leading provider of new and used car information, today reports that the arrival of 2010 model-year vehicles at auction has put downward pressure on late-model luxury vehicles, as covered in the company's Blue Book Market Report for August 2010.

The used-car market was relatively flat for July 2010 with a 0.2 percent overall increase in values. Among depreciating segments, luxury cars and crossovers dropped more aggressively than their non-luxury counterparts, each depreciating 1.5 percent on average. As 2010 model-year luxury vehicles have started to arrive at auction, the value of 2009 and 2008 model-year vehicles have dropped to accommodate the arrival of these newer vehicles in the marketplace.

With continued weakness in the economy, car shoppers are trending toward vehicles that offer great fuel economy at an affordable price. According to Kelley Blue Book Market Intelligence, luxury owners who are not reconsidering their vehicle's brand are looking toward their car's non-luxury counterpart. The manufacturers with the highest percentage of owners defecting to their non-luxury parent brand are Acura to Honda and Lincoln to Ford at 23 percent each, as seen on kbb.com. Cadillac owners follow with 19 percent of owners interested in Chevrolet, while 16 percent of Lexus in-market owners are moving toward Toyota.

"While this is common in most segments, this phenomenon is more pronounced this year in the luxury segment due to the luxury buyer's preference for the latest and greatest model," said Juan Flores, director of vehicle valuations for Kelley Blue Book. "With fresh luxury vehicles appearing at auctions, demand is skirting away from two- and three-year-old vehicles, putting significant downward pressure on their values."

Leading the luxury segment's depreciation in values are the BMW 7 Series (-3 percent), and the Mercedes-Benz CLS-Class (-3 percent), ML-Class (-4.1 percent), R-Class (-3 percent) and GL-Class (-3 percent). Mercedes Benz depreciation (1.8 percent for the month) has resulted from the aforementioned trend; arrival of 2010s at auction and increased volumes of two- and three-year-old vehicles returning from lease. This has contributed to an increasing supply of vehicles, ultimately lowering transaction prices for Mercedes-Benz products. It should be noted that although Mercedes-Benz is down significantly for the month, they remain up 3.5 percent year-over-year.

The monthly Blue Book Market Report explores the state of the automotive industry by analyzing Kelley Blue Book^® Wholesale Lending Values. The report also discusses developments in residual values on a bi-monthly basis.

If you would like to subscribe to the monthly Blue Book Market Report, please e-mail [email protected]. For more information on Kelley Blue Book and the Blue Book Market Report, please visit www.kbb.com/media.

About Kelley Blue Book (www.kbb.com)

Since 1926, Kelley Blue Book, The Trusted Resource®, has provided vehicle buyers and sellers with the new- and used-vehicle information they need to accomplish their goals with confidence. The company's top-rated website, www.kbb.com, provides the most up-to-date pricing and values, including the New Car Blue Book® Value, which reveals what people actually are paying for new cars. The company also reports vehicle pricing and values via products and services, including software products and the famous Blue Book® Official Guide. According to the C.A. Walker Research Solutions, Inc. - 2009 Spring Automotive Website Usefulness Study, kbb.com is the most useful automotive information website among new- and used-vehicle shoppers, and half of online vehicle shoppers visit kbb.com. Kelley Blue Book's kbb.com also is a W3 Gold Award winner, sanctioned by the International Academy of Visual Arts. Kbb.com is a leading provider of new car prices, used car values, car reviews, new cars for sale, used cars for sale, and car dealer locations.

SOURCE Kelley Blue Book