Sometimes, you and your car just aren't meant to be.
The cost of owning a vehicle has made sticking with one you hate for a decade or more at a time less desirable than ever. According to credit agency Experian's State of the Automotive Finance Market report, the average auto loan amount for a new vehicle reached a record high of $30,621 at the end of 2016. The average loan amount for a used vehicle also jumped from $18,850 in 2015 to $19,329 in 2016. The nation's total auto loan debt reached $1.13 trillion by the end of 2016, up $98 billion from a year earlier.
"With the average loan amount for new and used vehicles hitting all-time highs, we are seeing the need for affordability drive consumer purchasing behavior," says Melinda Zabritski, Experian's senior director of automotive finance. "Our latest research shows an $11,000 gap between the average loan amount on a new and used vehicle — the widest we have ever seen. This upward trend is causing many consumers to find alternative methods like extending loan terms, getting a short-term lease or opting for a used vehicle to get what they want while staying within their monthly budget."
The lease option has been particularly enticing. For consumers who still want to drive something new, leasing a new vehicle costs an average of $92 less per month than financing a vehicle. The average monthly payment for a new leased vehicle is $414, versus $506 per month for a new vehicle purchase. The number of consumers who chose to lease a new vehicle increased slightly from 28.87% at the end of 2015 to 28.94%, which means nearly a third of American consumers still prefer not getting too attached to any one car.
However, there are two distinct ends of that spectrum. On one end is a whole lot of luxury vehicles that are turned in less than a year after they're purchased. Credit luxury automakers and their dealers for the marketing strategy that leads to that bit of sales sleight-of-hand.
"While some might be surprised that these luxury brands top the list, these auto manufacturers offer their dealers incentives to buy new cars to use as loaner vehicles, which are then sold as used when they are still under a year old," says Phong Ly, CEO of automotive research firm iSeeCars.com. "This is a marketing strategy with a two-fold purpose. It puts brand-new models in the hands of current owners when they bring their cars in for service, increasing the likelihood that they will buy another car from that brand. In addition, it essentially increases the brand's new car sales, which help to give them the ability to claim the title of 'top luxury brand,' something that BMW and Mercedes-Benz compete for every year."
On the other end is a quality issue that no brand wants. Fiat Chrysler rightfully dumped both the Dodge Dart and Chrysler 200 after years of mind-numbing mediocrity, but consumers looking for a deal on discontinued vehicles got way less than they bargained for -- with each of those vehicles getting the average three-star rating or worse from J.D. Power.
With iSeeCars.com's help, we found 11 vehicles that were most likely to be sold a year after they were purchased. While the odds of that happening to the average car are about 1.5%, they're more than double that for every vehicle on this list:
Resold within the first year: 3.2%
The Versa looks like it was produced in plants in the former Yugoslavia and Czech Republic by Eastern Bloc bosses who thought the Yugo and Skoda had too many amenities.
Nissan could have just named this vehicle "Car" and gotten away with it. There are a scant 14.9 cubic feet of trunk space that actually comes up short of the Note hatchback version's cargo room by 10 cubic feet. It has traction control, ABS brakes, airbags and a whole lot of other safety features that are fairly standard by now.
Its 109-horsepower engine is tiny, its NissanConnect tech offerings are extra and its chrome accents, trip computer, outdoor temperature gauge, four speakers and 60/40 folding rear seats are listed as key amenities. What would draw someone to this car beyond price? Well, the automatic does get combined mileage of more than 35 miles per gallon. From a buyer's perspective, that's the only thing that looks remotely attractive about this faceless sedan, whose price drops by 12% once it's sold after a year.
Resold within the first year: 3.3%
There are two Subaru cultures: The one that shuttles kids to school, lacrosse practice and the organic grocer of your choice and the one that tunes up the WRX and tears up the streets.
That flat-four Subaru Boxer engine delivers more than 260 horsepower from the base 2.0-liter model and more than 300 hp from the 2.5-liter upgrade. Want to hook it up with paddle shifters, a spoiler, sport-drive transmission and the Starlink infotainment system? Why? If you're really serious about tweaking a WRX and taking it to the streets, chances are you aren't tapping the folks at Fuji Heavy Industries on the shoulder for extra parts. Strip off the emblems, get your candy paint and order all of your upgrades straight from Japan. This isn't a polite parent's Subaru: It's the one their neighbors complain about.
However, it takes a real piece of work to turn this car in after a year. Even when it comes back, it loses only 6.2% of its initial value."We know that the sporty WRX has been a popular model, which is why we suspect that the discounts aren't very large on cars that are being resold shortly after they were purchased new, but our research indicates that owners have consistently tagged the WRX as being noisy, with its share of rattles," Ly says "That's par for the course with its road rally heritage, though it stands to reason that it might be a bit too much for some buyers."
Resold within the first year: 3.8%
The offspring of the Fiat Chrysler (FCAU - Get Report) Sebring was always difficult to get excited about. A 2.4-liter, 184-horsepower V6 or a brawnier 3.6-liter, 295-horsepower engine that can get 35 miles per gallon on the highway were about as sexy as a sensible pair of khaki slacks. It was also the only mid-sized sedan other than the Subaru Legacy and Ford Fusion that was available in all-wheel drive. But nobody cared. This car had a legacy of crushing mediocrity, and the 29.9% drop in its value a year after leaving the lot is indicative of the buying public's indifference.
Resold within the first year: 3.8%
There are a lot of tech toys in this higher-end Benz, and that's part of the problem. The $2,800 ventilated front seats, $4,000 optional AirScarf neck-level heating system, an emergency monitoring service, a driver-fatigue monitor, pre-collision automatic braking, blind-spot detection and a lane-departure warning system, COMAND entertainment, navigation and communication system, dual-zone automatic climate control, ventilated seats and rear DVD entertainment system are advanced, but not bug-proof. The fact that the E-Class drops 19% of its value within a year suggests that not only do buyers not want to pay full price for a dealer's loaner, but they aren't always enamored of E-Class features.
"Frequently, these aren't really 'problems' at all, but are consumers who are having trouble with technology, such as Bluetooth pairing, voice recognition or the navigation or audio systems," explained Ly. "In reality, these systems are often just not operating as expected or as intuitively as they could be."
Resold within the first year: 3.9%
Oh, Bimmers aren't going to escape scrutiny here, either. This coupe and convertible tier of the BMW family only came into being in 2014 and has a 248-horsepower twin-turbo engine -- which is admittedly a bit underpowered for a vehicle that's doing its best to look sporty. Also, in an attempt to be a driver's car, the cockpit-style interior comes off a bit... well... plastic. While that make be fine in a base pony car, that propeller on the hood comes with expectations that can be damning when they aren't met. Those shortcomings cost the 4 Series 17% of its value after a year.
"Some consumers who buy these luxury models... are doing so as their first foray into the brand, only to discover that although they own the status symbol they were seeking, these particular models, especially the entry level trims, don't provide the level of luxury they expect," Ly says. "Disappointed, they trade-in these cars exceptionally early."
Resold within the first year: 3.9%
When you can call your crossover a Sport Activity Vehicle because you know it'll never move an apartment's worth of belongings or carry a kid's equipment from practice, you know you've made it.
With 27.6 cubic feet of shopping-bag space folding out to 63.3 cubic feet of lacrosse-gear storage, the X3 gives the appearance a person chef's grocery getter. However, the leather interior, a panoramic moonroof, automatic front climate control with separate left and right temperature settings, power tailgate, front and rear parking distance sensors, rearview camera, HD radio, Sirius-XM satellite radio, Bluetooth with Mobile Office functions and BMW TeleService, the X3 is as packed with perks as one would expect from BMW. The issue is that this vehicle costs significantly more than versions from Subaru, Toyota and Honda that are far more popular, but still represents BMW's base offering. Not many people turn this one back in, but when they do it's because the luxury expectation didn't quite match a reality only slightly more plush than in cars half its price.
"It's not surprising that consumers would make a change after a short amount of time if they felt the quality was lacking," says Ly. "After all, a new car is a very expensive purchase and one that consumers spend a significant amount of time with multiple times a day."
Resold within the first year: 3.9%
Hey, Dodge Dart: nobody cares.
Nobody cared about your uninspired run in the '60s and '70s, when you called yourself a compact sedan and Toyota, Honda and Datsun basically laughed in your face. Nobody cared about you when you launched in 2012 and bragged about your Alfa Romeo frame and 184 horsepower. Fiat Chrysler's own president, Sergio Marchionne, had this to say about the Dart and its Chrysler 200 counterpart: "I don't know one investment that was as bad as these two were."
If you bought one, our condolences. If you're thinking of picking one up, wait until one of the suckers who bought one before they were discontinued last year sells it at a 27% markdown.
Resold within the first year: 4%
Hey, it's the Versa... but in hatchback form!
That's Nissan's entire marketing strategy around this car, which does nothing to improve upon the Versa other than give it 112.9 cubic feet of cargo space. And what did that do? Only make buyers somehow hate this car all the more. We aren't just throwing "hate" out there blithely: this car loses 20% of its value a year later. The only other cars on this list to see their value drop by that much or higher are the Dodge Dart and the Chrysler 200, and it's because they're discontinued zombie cars.
Resold within the first year: 6.1%
We'd say there was a time when this was the starter Benz, but it's pretty clear that both dealers and buyers still view it as that.
The C-Class was the entry-level model that was supposed to yield to an E-Class executive future and sporty S-Class retirement. But the economy makes fools of us all and Mercedes brought in the downmarket CLA-Class just to get a lower-priced option into U.S. drivers' hands.
That puts the C-Class firmly in the middle class, but even that move and a recent revamp of the entire vehicle haven't dislodged it from its lowly position as loaner of choice. However, when you look at the C300, it's clear that a bunch of the features you'd want -- COMAND telematics system, Burmester sound system, heated and ventilated seats, enhanced suspension, LED lights, blind-spot assistance -- are all optional and unlikely to be found in a loaner or base model. That explains not only the high rate of resale, but the fact that the C-Class loses a whopping 19.6% of its value when it's sold back a year later.
Resold within the first year: 7.1%
The 2.0-liter 4-cylinder engine and its 248 horsepower are underpowered for a BMW, which makes it more efficient, but not a whole lot more luxurious.
The hybrid-style brake energy regeneration system powering Xenon headlights, LED accent and fog lights, LCD displays, automatic dual-zone climate control, 10-speaker stereo system and moonroof are your selling points. The leather steering wheel, dark wood trim, BMW Navigation and iDrive system with touchpad controller just make it a bit more plush. Along with that emblem on the hood, that's what most 5 Series drivers are looking for. If you just expect more out of it, there's a reason that this car loses 18% of its value in a year.
Resold within the first year: 8%
What's the moral of this story? Entry-level luxury doesn't often exceed high-level offerings from non-luxury brands enough for a buyer not to have a little remorse. Packed with a heads-up display projected onto the windshield, blind-spot detectors in the rearview mirrors and a freestanding iDrive screen for communication, navigation, entertainment and apps, the 3 series is just teeming with perks. But are they more perks than, say, a tricked-out Buick LaCrosse or Toyota Avalon?
Is a 180-horsepower engine -- which is less powerful than that of a base-model Honda Accord -- really what you had in mind when you opted to pay BMW-level money for a vehicle? If your answer is no, prepare to take an 18% hit by selling it back a year later.
Another bank is bullish on Alibaba: J.P. Morgan initiated Chinese e-commerce giant Alibaba (BABA - Get Report) with an overweight rating and $190 price target in a new note Tuesday, representing more than 30% growth over Monday's closing price of $142.73. In J.P. Morgan's eyes, Alibaba is entering a transformation from a pure play e-commerce company to a data-driven beast that stands to power its bottom line more than most expect.
"We believe Alibaba's core commerce is expanding from traffic monetization to data monetization and such trend will quickly expand to its media/cloud businesses," writes J.P. Morgan analyst Alex Yao. "Such expansion not only allows Alibaba to tap into non-transaction-based corporate budget (e.g., market research, brand awareness, and customer service), but also supports our investment thesis based on sustainable revenue/earnings growth."
Costco has an opportunity here: Costco (COST - Get Report) recently opened a store in Paris, TheStreet's Lindsay's Rittenhouse reports. The new store is likely one of many to come for Costco in Europe, where it only has 32 stores.
A key Walmart business springs back to life: Walmart (WMT - Get Report) is starting to see long-awaited sales growth at its U.K. Asda division as Brits shift their shopping habits towards food purchases with a slump in consumer confidence and surging inflation, TheStreet's Lisa Botter reports. Sales at Asda rose by 2.2% for the 12-weeks ended June 18, well ahead of the 0.9% pace notched in the 12 weeks to May 21, according to new data from research firm Kantar.
Different strategies emerge in driver-less cars: Alphabet Inc.'s (GOOGL - Get Report) deal with rental car giant Avis Budget Group Inc. (CAR - Get Report) to have Avis manage some self-driving test cars developed by Alphabet's Waymo unit and Fiat Chrysler (FCAU - Get Report) feels a little overblown, writes TheStreet's Eric Jhonsa. The deal only covers test cars deployed in one metro area (Phoenix, Ariz.), and isn't exclusive, Jhonsa points out.
Meanwhile, Apple Inc.'s (AAPL - Get Report) deal with Avis rival Hertz Global Holdings Inc. (HTZ - Get Report) feels even smaller. Apple, which has reportedly been testing a half-dozen self-driving cars around the San Francisco Bay Area, is just leasing a small number of Lexus RX450h SUVs from Hertz, with the idea of retrofitting them with self-driving test systems.
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Editors' pick: Originally published May 8.