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Discussion Starter · #1 ·
<B>Source:</B><BR><I>4Car.Co.Uk<BR>Advice Section<BR>August 1, 2002</I><P>More good news for the XC90 and Volvo:<P> <BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Volvo's forthcoming XC90 sport utility vehicle is expected to have one of the lowest whole life costs in its sector, according to trade experts. CAP Monitor, which forecasts future residual values, reckons that the XC90 will have an image-boosting effect like the 'R' range of the mid 1990s. <P>"It's rugged, well-built and provides something different for the corporate driver", it said. Glass's Guide, which also provides used car price data for the trade, reckons that the XC90 will hold its value pretty well. "It [the XC90] should be worth around 55 percent of its original value after three years/60,000 miles. The car should have a real impact on the Volvo brand in the fleet sector."<P>Depreciation costs are one of the biggest factors on a car's whole-life costs, and drivers of large SUVs like Jeep's Grand Cherokee and the previous-generation Range Rover can expect to lose thousands. Whole-life cost estimator IDS Topcalc reckons that the XC90 will be cheaper to run on a pence-per-mile basis than the Mercedes-Benz M-Class and BMW X5. It reckons the D5 diesel-powered XC90 will cost around 32p per mile to run, compared to 34p per mile for an M-Class and 40p for the X5 diesel.<P>The XC90 goes on UK sale in October, and more than <B>650</B> orders have already been taken.<HR></BLOCKQUOTE><P>-Drew
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by InDy:<BR><B>Source:</B><BR><I>4Car.Co.Uk<BR>Advice Section<BR>August 1, 2002</I><P>More good news for the XC90 and Volvo:<P> -Drew<HR></BLOCKQUOTE><P><BR>True. ALG (the company that sets the residual values for all cars in the US) has told Volvo that when the XC90 comes out, it will have to highest residual value than <B><I>ANY</I></B> SUV that has ever come out, so far. They were very impressed when they drove the car and they decided to award it with the highest residual value ever.<P>Yannis<BR><P>
 

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The XC90 was 'awarded' high residual value by ALG?? Is ALG going to be doling out monies to support their 'award'? Residual value is determined in the real world by how easy and profitable the car is to resell. What you can get the used car guy at the dealership, or a private buyer to pay you for the car. If the car is undesireable or neutrally desirable in the market, it won't have good resale.<BR>If you were to make a forecast of XC90 residual value based upon historical precedent of retained value for upscale Volvo's it wouldn't be a rosy picture. Ask anyone who has tried to resell a 760, or a 780, or a S80, or take a look at a NADA used car guide, or Kelley Blue Book to see how current Volvos fare in resale value.<BR>If you're looking for relatively high residual value, you'd never choose an upscale Volvo unless you're gambling that the XC90 is going to break that mold. <BR>On the other hand, upscale Volvos are great pieces to BUY used specifically because they have lousy resale so you don't need to pay for them. The smart money would say sit it out; see how the car performs in the real world; see how Volvo supports the car in the marketplace (again recent historical perspective with S80 isn't good); have the opportunity to assess how the inital design and build quality is (history says: poor), and if your heart still says "buy", then buy it a year old and let some other unfortunate individual choke down the 15K in depreciation.
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by fbarrese:<BR><B>The XC90 was 'awarded' high residual value by ALG?? Is ALG going to be doling out monies to support their 'award'? Residual value is determined in the real world by how easy and profitable the car is to resell. What you can get the used car guy at the dealership, or a private buyer to pay you for the car. If the car is undesireable or neutrally desirable in the market, it won't have good resale.<BR>If you were to make a forecast of XC90 residual value based upon historical precedent of retained value for upscale Volvo's it wouldn't be a rosy picture. Ask anyone who has tried to resell a 760, or a 780, or a S80, or take a look at a NADA used car guide, or Kelley Blue Book to see how current Volvos fare in resale value.<BR>If you're looking for relatively high residual value, you'd never choose an upscale Volvo unless you're gambling that the XC90 is going to break that mold. <BR>On the other hand, upscale Volvos are great pieces to BUY used specifically because they have lousy resale so you don't need to pay for them. The smart money would say sit it out; see how the car performs in the real world; see how Volvo supports the car in the marketplace (again recent historical perspective with S80 isn't good); have the opportunity to assess how the inital design and build quality is (history says: poor), and if your heart still says "buy", then buy it a year old and let some other unfortunate individual choke down the 15K in depreciation.</B><HR></BLOCKQUOTE><P><BR>With all due respect, I think that your theory is "out to lunch". You latch on to specific "negative" historical models tin order to claim that Volvos are residual nightmares. You want residual nightmares? Try Cadillac, Saab, etc. <P>Do you know how ALG sets residuals values for a model that is brand new? They drive the car, they evaluate it much like a car analyst would. According to your "logical" theory, future Volvo models should be doomed in their infancy because certain models have not fared well (and that is debatable) in the past. It does not matter though that the car that is most related to the XC90 (the Cross Country) is the one of the most OVER-rated models on the auction block. Ever since the XC came out (MY1998), do you have any idea how it does at AUCTIONS (not at private sales but...AUCTIONS)??? During the first two years of any model year XC, that car brings in CRAZY money...and that is when the biggest depreciation is supposd to occur. Try to go and buy a used 2001 XC at the auction. As a dealer, we are buying them (with about 17000 to 18000 miles) at $31,995!!! Which means that as a used car on the lot it will probably bring about $33,995 to $34,995 And we sell the 2002 NEW XCs at about $37,000...that does not seem like a depreciation nightmare, does it?<P>ALG drove the XC90 and they were impressed with it unlike they were with any other SUV. Sure, the future will show if they were right or not. But as an initial assessment, their view of the XC90 can only be a positive fact among the MANY other positive facts that surround this car.<P><BR>Yannis<BR><P>
 

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That there are cars that deliver worse residual value than Volvos does not make Volvos good ‘investments’ any more than cars that provide vastly superior residuals make Volvos bad ‘investments’. As a depreciating asset, any car is a negative ‘investment’, some more negative than others, (such as upscale Volvos). On the other hand, bread and butter Volvos have historically delivered respectable residual values. <BR>Your rebuttal makes my point precisely. The only current Volvo model (Cross Country) that doesn’t need to be spiffed to sell through on the new car showroom, is an easy sale used. As long as demand is higher than supply this will always be the case with any car. As soon as the bloom is off the rose and you’ve got one car more than there are customers for that car, it’s a different story, because residual values are set in the cold harsh reality of the marketplace. The Ford Motor Company, or any Volvo dealer wouldn’t guarantee residual values to XC90 customers because there would be no market basis on which to do so. (It might make for a compelling assurance program to help recapture lost customers however.)<BR>Lets examine very recent Volvo history on the subject. Before market release, the S80 was the most promising vehicle that Volvo ever offered. Its launch was filled with accolades and positive publicity, much like the XC90. The market reality quickly changed that situation. In very short order it was clear that the car was fraught with numerous, and significant design and build quality defects. Volvo’s response, to walk away from the customers who bought these cars and reduce warranty exposure, short-circuited car sales and consigned this car to residual hell. According to Yannis’ advice, it was only the first 42,000 units that were afflicted. That was two full model years in North America that doomed the car to an early demise, and paying retail customers rode the residual roller coaster down the toilet. <BR>If a customer is compelled by residual value as a significant purchase motivation, they need to be willing to gamble their 40K+ that recent history won’t repeat itself. To offer otherwise is wholesale speculation without foundation.<BR>Customers should buy the car for what it brings to the table, and how it meets their needs, but understand that it will have birthing problems that will inconvenience them, and the manner in which Ford supports the car will ultimately dictate the satisfaction of their ownership experience.<BR>The smart money says: wait it out.<BR>
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by fbarrese:<BR><B>If a customer is compelled by residual value as a significant purchase motivation, they need to be willing to gamble their 40K+ that recent history won’t repeat itself. To offer otherwise is wholesale speculation without foundation.<BR>Customers should buy the car for what it brings to the table, and how it meets their needs, but understand that it will have birthing problems that will inconvenience them, and the manner in which Ford supports the car will ultimately dictate the satisfaction of their ownership experience.<BR>The smart money says: wait it out.</B><HR></BLOCKQUOTE><P>Yes, the open market will dictate the eventual resale value of this vehicle but, if I understand correctly, ALG sets a residual value for the purposes of those who are going to lease the vehicle or else how would you know the proper residual on a newly introduced vehicle?<P>For those leasing, a higher residual is definitely good if your not going to buy it at the end.<P>Pat<P>
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Iceman:<BR><B> Yes, the open market will dictate the eventual resale value of this vehicle but, if I understand correctly, ALG sets a residual value for the purposes of those who are going to lease the vehicle or else how would you know the proper residual on a newly introduced vehicle?<P>For those leasing, a higher residual is definitely good if your not going to buy it at the end.<P>Pat<P></B><HR></BLOCKQUOTE><P>Pat,<BR>Automotive Lease Guide is a company in Santa Barbara, CA. that sets lease residuals as a guide for lenders. You are correct that if your intention is leasing without consideration for buying, then higher residuals are beneficial to the extent that the lender/dealer passes along the benefit. Many manufacturers have sponsored lease deals that artificially boost residuals to lower monthly lease payments. An explosion of these types of programs 3-4 years ago have served to lower residual values, and used car prices, and increased used car inventories and depreciation. That is why manufacturers are currently preferring to offer 0% interest deals, because it helps turn lease customers into retail customers, and then the resale value is solely the retail customer's problem.
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by fbarrese:<BR><B>That there are cars that deliver worse residual value than Volvos does not make Volvos good ‘investments’</B><HR></BLOCKQUOTE><P>Who said that normal cars are "good" investments? <P><BR> <BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR><B>Your rebuttal makes my point precisely. The only current Volvo model (Cross Country) that doesn’t need to be spiffed to sell through on the new car showroom,</B><HR></BLOCKQUOTE><P><BR>That's where you are wrong. Do you know what the current (actually for the last few months) lease rate for the XCs is? Well below 2%. Each unit leased, costs VFNA <I>a ton</I> of $$$. XC is one of the best selling models for Volvo, so far. Why still support it?<P> <BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR><B>Before market release, the S80 was the most promising vehicle that Volvo ever offered. Its launch was filled with accolades and positive publicity, much like the XC90. The market reality quickly changed that situation. In very short order it was clear that the car was fraught with numerous, and significant design and build quality defects. Volvo’s response, to walk away from the customers who bought these cars and reduce warranty exposure, short-circuited car sales and consigned this car to residual hell. According to Yannis’ advice, it was only the first 42,000 units that were afflicted. That was two full model years in North America that doomed the car to an early demise, and paying retail customers rode the residual roller coaster down the toilet.</B><HR></BLOCKQUOTE><P>The S80 never had a strong residual value to begin with. Actually, this was our main complaint (as Retailers) that Volvo never used a high residual in order to present more attractive leases. Volvo played this "game" (of artificially high residual values) very well in 1996, 1997 and 1998 with disastrous results for the 1998 models (because that was a record year for Volvo sales and the actual model year lasted more than 18 months). Volvo could also come up and take the already high residual value that ALG will assign to the XC90 and boost it up another 2-3 points...but that would be idiotic and would only hurt Volvo and the leasing customers. Every time there is a product on the market with an artificially high residual value, then it is impossible to get these customers a few months before their is up into another car. So, you end up (possibly) losing the customer to another brand and you end up with a car that you already have been hit for thousands of dollars (residual support).<BR> <BR> <BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR><B>If a customer is compelled by residual value as a significant purchase motivation,</B><HR></BLOCKQUOTE><P>Come on, what percentage of finance or cash customers are "motivated" by such factor? Sure, you will want to know (and that is still a small percentage) how well a car holds on to its value but that is where it ends. Car buying is an emotional decision. You are catering to your emotions not to your long term financial stability. Otherwise very few people would be buying NEW cars...<P>At Volvo, they have decided that it is a smarter choice to support the rates rather than boost the residuals. In this way, more people are leasing, even those who are normally buying up their cars and trading them every 4 years. You show them (through the numbers) that it is more advantageous for them to lease and us (as Retailers) are having a better chance at repeat business, especially now that the reliability of the newer models is back to what people expected of Volvo. <P>There is also one new business development that will do even more to restore people's faith that the newer Volvos are better; that will take place fairly soon but it is something that I cannot talk about right now. <P><BR>Yannis<P><P>
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by fbarrese:<BR><B> <BR> That is why manufacturers are currently preferring to offer 0% interest deals, because it helps turn lease customers into retail customers, and then the resale value is solely the retail customer's problem. </B><HR></BLOCKQUOTE><P><BR>That is not what Volvo is doing. They are offering rates as low as 0.02% (0% for all intents and purposes) but ONLY WITH LEASING (for the reasons I explained on the previous response to you).<P>Yannis<BR><P>
 

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<BR>Yannis:<BR>Whatever that "business development" is, pls keep us posted. My Volvo store (of choice) is over 2 hours away, so I'm not a frequent visitor.<P><P>
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by kullenberg:<BR><B><BR>Yannis:<BR>Whatever that "business development" is, pls keep us posted. My Volvo store (of choice) is over 2 hours away, so I'm not a frequent visitor.<P></B><HR></BLOCKQUOTE><P><BR>I will. It's just better that I do not say anything, at this time. I am sure that when the appropriate time comes I (or George) will let you all know.<P><BR>Yannis<P><P>
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by GrecianVolvo:<BR><B> <BR>I will. It's just better that I do not say anything, at this time. I am sure that when the appropriate time comes I (or George) will let you all know.<P><BR>Yannis<P></B><HR></BLOCKQUOTE><P>Lets just hope its free servicing like Audi.<P>Pat<P>
 

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Yannis,<BR>It's a very interesting rebuttal technique you have to quote sentence fragments out of context and attempt to spin them into something other than what was said. My points were simply:<BR>1.) Cars are disinvestments. <BR>2.) Upscale Volvos have historically suffered greater than average depreciation.<BR>3.) The same company that ran away from S80 problems and customers has amply demonstrated by their actions that they don't know how to properly support an upscale customer or vehicle.<P>If you wish to see ALG's assessment of Volvo residuals, take a look for yourself at their website: <A HREF="http://www.alg.com/news-information.asp?page=news_alg_RVA" TARGET=_blank>http://www.alg.com/news-information.asp?page=news_alg_RVA</A> <BR>Under the heading “News and Information >> Awards” click to download the press release and also to see the Wall Street Journal Story. <BR>What their report shows is that after three years, luxury cars retain on average 49% of their value. Above average are MB, BMW, Acura, Lexus, Audi. Below average are Cadillac, Infiniti, Jaguar, Lincoln, Saab, and VOLVO. <BR>There are many other reference sources of car resale that you could look at including NADA, and Kelley Blue Book, that will amply support the position. <BR>Facts, not car dealer spin.
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by fbarrese:<BR><B>Yannis,<BR>It's a very interesting rebuttal technique you have to quote sentence fragments out of context and attempt to spin them into something other than what was said.</B><HR></BLOCKQUOTE><P>Why? Don't you like this? And it is not a "rebuttal technique" (sic); it is the simplest way (without including all the...<I>tiring</I> details of the entire paragraph). I definitely do not spin them into something else. That is your perception, if you don't like it there is nothing I can do.<P> <BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR><B>If you wish to see ALG's assessment of Volvo residuals, take a look for yourself at their website. What their report shows is that after three years, luxury cars retain on average 49% of their value. Above average are MB, BMW, Acura, Lexus, Audi. Below average are Cadillac, Infiniti, Jaguar, Lincoln, Saab, and VOLVO. <BR>There are many other reference sources of car resale that you could look at including NADA, and Kelley Blue Book, that will amply support the position.</B><HR></BLOCKQUOTE><P>OK...this is interesting! Have seen the story, have seen their awards, etc. And? What is the point? Sure, Volvo (overall) has a lower residual value than the average BMW, Lexus or whatever, according to ALG. And, please, do not mention Kelley Blue Book(NADA is OK) or Edmunds or whatever. Everyone knows that (usually, not always) those two are totally out to lunch when it comes to appraising cars. They are in a literal war with each other which does not bode well for the consumer. If you look at the actual transaction figures (auctions) you will be surprised. Even your "favorite" car, the S80....trade a 3-yr. old S80 with normal mileage in good condition and you will get AT LEAST 50% (actually a tiny bit more) in a trade value. These are THE HARD FACTS. I trade these cars every week. And I do not just give money away. BTW, where are the Honda Accords and Honda Civics, the PERENNIAL holders of the best value??? I do not see them listed anywhere there.<BR> <BR> <BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR><B>Facts, not car dealer spin.</B><HR></BLOCKQUOTE><P>I see that your onboxious side is showing up; that is OK. We all knew sooner or later your anti-dealer and ANTI-S80 sentiments would show up, sooner than later. Perhaps the hillbilly air in Temecula is not doing much good to you. Have a nice day.<P><BR>Yannis<P>
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Phil Pugliese:<BR><B>"Why don't you two take it outside?" Agree to disagree instead of making this forum your personal fight zone.<P></B><HR></BLOCKQUOTE><P>
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Phil Pugliese:<BR><B>"Why don't you two take it outside?" Agree to disagree instead of making this forum your personal fight zone.<P></B><HR></BLOCKQUOTE><P>OK, Phil! Why don't you show us where the "outside" is and we will follow you!<P><BR>Yannis<P><P>
 

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Discussion Starter · #18 ·
Wow, I didn't realize that this topic would cause such a heated discussion. <P>Come on now folks, lets keep it cool & friendly in here. <IMG SRC="http://www.swedespeed.com/ubb/smile.gif"><P>Like Phil said, it's alright to agree to disagree.<P>-Drew
 

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<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by InDy:<BR><B>Wow, I didn't realize that this topic would cause such a heated discussion.</B><HR></BLOCKQUOTE><P>What is wrong with that? Man...you guys hate..."conflict", huh? We, of Mediterranean descent, thrive on it! It's funny. If any friends of mine that are of Greek, Italian or Spanish descent talk (and we do get animated), many times people misunderstand us for "fighting", when all we are doing is trying to make our...point! <P> <BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR><B>Come on now folks, lets keep it cool & friendly in here. <IMG SRC="http://www.swedespeed.com/ubb/smile.gif"></B><HR></BLOCKQUOTE><P>Who says it is not cool and friendly? You just got to mix it in with a few "jabs" here 'n there or it would be boring. <IMG SRC="http://www.swedespeed.com/ubb/tongue.gif"><P>Yannis<P><P>
 

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Discussion Starter · #20 ·
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by GrecianVolvo:<BR><B> Who says it is not cool and friendly? You just got to mix it in with a few "jabs" here 'n there or it would be boring. <IMG SRC="http://www.swedespeed.com/ubb/tongue.gif"><P>Yannis</B><HR></BLOCKQUOTE><P>Good point. <IMG SRC="http://www.swedespeed.com/ubb/wink.gif"> Left hook or upper-cut? <IMG SRC="http://www.swedespeed.com/ubb/biggrin.gif"><P>-Drew<P>
 
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