Monday, January 4, 2010

Deals on Retired Car Models

With automakers finally starting to reel in their rebates, $4,000 off the price of any new Saturn sounds like a sweetheart deal. The hefty discount brings the starting price of the sexy Sky roadster down to the low 20s, making it one of the cheapest sporty convertibles on the market. And it drops the price of the seven-seat Outlook crossover to the mid-20s, a great price for a well-equipped family hauler.

The come-ons, however, omit one discouraging fact: Saturn is going out of business. Parent company General Motors has pledged to service all Saturn vehicles indefinitely, through other dealerships, but smart car buyers know that the true value of a car also depends on what it will be worth in a few years, if you decide to sell it. And the resale picture has never been hazier.

In addition to Saturn, GM is closing its Pontiac division and streamlining the lineups for Chevrolet and Buick. The company's Saab division may shut down completely, and a little-known Chinese company has purchased Hummer. Crosstown rival Chrysler is likely to kill many of its underperforming models as well. And with a devastating plunge in auto sales over the past two years, Ford, Toyota, Nissan, Hyundai, Volkswagen, and other automakers are also pruning their lineups.

More from U.S. News & World Report

» Slide Show: The Best Discontinued Cars

» Slide Show: The Worst Discontinued Cars

All of that fallout, combined with the usual retirement of aging models, will soon produce a frenzy of clearance sales on cars. Automakers plan to retire nearly 50 models over the next two years, including some of the most popular cars on the market. Some of these cars will be great buys, fully backed by the manufacturers and still popular years from now. Others will end up as soon forgotten orphans, barely worth the value of their sheet metal.

But don't expect the dealer to help you distinguish the classics from the clunkers: They don't want you to know when a model has been discontinued. To keep buyers from demanding fire-sale discounts, in fact, many automakers don't even announce when they plan to stop producing a model. It just disappears from showrooms.

To help identify the best and worst discontinued cars, I asked the analysts at car-research site to identify models likely to be discontinued over the next couple of years. For some of these models, the manufacturers have confirmed that the car is being axed; others made the list because of strong indicators that they're being discontinued, such as manufacturing changes or declining shipments to dealers. KBB then predicted the residual value of each of those models in five years--the amount it's likely to be worth, expressed as a percentage of its original list price. The median vehicle has a predicted residual value of 22 percent in five years. The highest residual value is 35 percent; the lowest, 15 percent.

Residuals generally reflect the quality and reliability of the car and the reputation of the automaker. So cars with high residual values tend to be the best-rated cars, whether they're discontinued or not. Residual values don't really matter if you're likely to own a new car for, say, 10 years, or the car's entire life span. But if you think you'll sell the car or trade it in within a few years, or you might want to buy a leased car after the contract expires, then residual values should be a key part of your purchase decision.

Smart buyers weigh price and residual values together: A deep discount might seem like a great deal today, but it will lower the value of the car in the future. Most Saturns, for example, have lower-than- average residual values, and none makes our top 10 list of discontinued cars. A really low price might still make a Saturn an irresistible deal, but a modest discount on a car with a higher residual might turn out to be a better buy.

Getting a good price depends on how much research you do and how effectively you negotiate. Car shoppers should start by researching the fair market value of a car they're interested in at sites like, U.S. News's car-ranking site,, or, then try to push the dealer below that price. Meanwhile, here are 10 cars that should top the list for shoppers looking for a good deal on a discontinued car:

Toyota Matrix. (Starting price, about $17,000; discontinuation date: unconfirmed; five-year residual value: 35 percent.) This cute and practical wagon isn't as trendy as the Honda Fit or as spacious as the Toyota RAV4. But it's comfortable and affordable, with a strong reliability record and gas mileage close to 30 mpg. Because it has been a popular car for years, the Matrix should remain appealing for a long time. It's worth noting that the Pontiac Vibe is nearly identical to the Matrix, since the two models are built on the same assembly as part of a joint venture. And the Vibe is being discontinued as part of the Pontiac wind-down. But the Vibe's residual value—27 percent—is lower than that of the Matrix because Pontiac has a weaker brand image than Toyota.

Toyota FJ Cruiser. (About $25,000; unconfirmed; 33 percent.) Toyota's answer to the Jeep Wrangler has been a hit with off-roaders and beach bums, but the FJ Cruiser has never garnered the mainstream appeal Toyota sought. Still, this retro rambler boasts strong safety and reliability ratings, and its rugged looks have a kind of timeless appeal.

Honda S2000. (About $35,000; 2009; 32 percent.) If you can find one of these roadsters, grab it. Honda stopped building the S2000 in mid-2009, and dealers would probably be completely sold out if not for a miserable economy. Those cars that are left will be labeled as 2009 models, since there is no 2010. The S2000's design barely changed for 10 years, yet this finely engineered, rear-drive sports car continually wowed critics with its precise handling and thrilling acceleration. And the S2000's curves should wear as well as some of the classics.

Chevy Colorado pickup. (About $18,000; unconfirmed; 30 percent.) This compact pickup never really found its niche, with less towing capacity than competitors and a cabin that wasn't quite as refined. When outfitted with a few options, it came close in price to its big brother, the Chevy Silverado—a much more rugged truck. But the Colorado is still a serviceable pickup that's great for light hauling. Its nearly identical cousin, the GMC Canyon, will also be retired around the same time as the Colorado, and has the same residual value.

Lexus SC430. (About $65,000; unconfirmed; 30 percent.) The power retractable hardtop was a marvel when this high-priced sports car debuted in 2002, and the SC has always impressed critics with its plush, precise interior. Reliability is superb. The styling hasn't changed much since the 2002 debut, but this will remain a classy ride years into the future.

Volkswagen GLI. (About $25,000; 2009; 28 percent.) Technically speaking, this lively sedan hasn't been discontinued; it's merely sitting out the 2010 model year as Volkswagen winds down its current production plan and focuses on a redesigned GLI that will debut for 2011. The asterisk doesn't change the fact that this Jetta-GTI hybrid is a barnburner that blends grin-inducing performance with the space and respectability of a four-door.

Hyundai Veracruz. (About $28,000; 2012; 28 percent.) For the price, this seven-passenger SUV offers a generous set of standard features, such as a full set of airbags and safety equipment, rear-seat climate control, and a backup warning system. And the cabin earns high marks for its luxury feel and quiet ride. Competitors like the Mazda CX-9 and Chevrolet Traverse have a sportier ride or better packaging, but the Veracruz offers a lot of transportation for a fair price. [Note: The fate of the Veracruz has been in flux as Hyundai adjusts its lineup, and its life may be extended.]

Pontiac G8. (About $28,000; 2009; 26 percent.) For all of its empty promises, parent company GM truly did build excitement when it created the G8, which hits nearly every base required of a premium sports sedan: It offers muscle-car acceleration, crisp handling, good looks, and a spacious rear seat. The upgraded GXP model even compares favorably with the BMW 5 series, which costs $20,000 more. That explains why the G8 ranks highest among the discontinued GM products on our list. With Pontiac's demise, other GM dealerships will continue to honor warranties and provide service. Good thing - some enthusiasts predict the G8 may even become a collector car.

Pontiac Solstice. (About $27,000; 2009; 26 percent.) It's tiny and impractical, but this two-seat roadster sure is fun. And it's relatively cheap for a vehicle with real sports-car performance. Critics ding the Solstice for a subpar interior, but you might be so delighted by the ride that you don't notice. The Saturn Sky, incidentally, is nearly identical, with some refinements that raise the price by a couple of thousand dollars. Yet the Sky's residual value is 4 percentage points lower than the Solstice's.

Mercury Sable. (About $25,000; 2009; 24 percent.) The Sable's twin, the Ford Taurus, was completely redesigned for 2010, but the Sable was put out to pasture. So remaining models are built on a dated platform. Still, the Sable has earned praise as a spacious and comfortable family car, and is one of U.S. News's Best Cars for the Money. It's got more cargo space than a Honda Accord or Toyota Camry and a high seating position that will let buyers cruise into the future in confidence.

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