Why is depreciation so bad on Legacy

Before buying my LGT I had owned a WRX and Outback, both of which seemed to have "normal" depreciation. Why does the LGT depreciate so horrendously?

I recently saw an '05 LGT wagon 5MT on Ebay with about 30K miles and it failed to meet reserve at a highest bid of $12000. From the pix the car looked in great shape. When these cars first came out in 05 they were real hard to get for about a year. My local dealer found one about 2000 miles away! How is it 2 or 3 years later they have taken such a big hit? Do they have a safety or reliability issue?

Because it's not a popular car. Low demand, low resale. Not rocket science.

Any mid-size sedan with a manual tranny will depreciate badly. Even buyers of Camry's w/ manuals experience it. That being said, the 05, manual tranny wagons seem to have very good resale going by the used prices we've seen people paid for them on here.

I think part of it is that the general public has no idea what the car is. Subaru is horrible at advertising.

I wouldn't use eBay as a gauge of what a car is worth. With that said, the depreciation on a Legacy is not good but it's really not that bad. Here is what Edmunds' true cost to own calculator says what the depreciation for the LGT, TSX, 9-3, G35, 328Xi A4 and MB C300:

 

http://www.edmunds.com/new/2008/subaru/legacy/100867923/cto.html?step=2&setzip=80109

http://www.edmunds.com/new/2008/audi/a4/100882874/cto.html?step=2&setzip=80109

 

After 5 years the cars retain:

 

LGT $29,437 to $11,761 = 40.0%

TSX $29,379 to $13,598 = 46.3%

9-3 $2,9682 to $10,362 = 34.9%

G35x $38,960 to $16,645 = 42.7%

328xi $43,389 to $17,825 = 41.1%

A4 2.0T Qauattro $34,307 to $14,012 = 40.8%

C300 Sport $38,269 to $15,991 = $41.8%

 

LGT is on the low side when compared against the luxury brands but not awful. Part of the equation is how much rebate Subaru tends to give toward the end of the MY. I know I paid $24.6k for my '06 LGT so if I can get ~$11.8k for it after 5 years then my car retained 48% of it's value. Pretty good really, since the best cars retain about 50% of their value after 5 years.

I think the rebates have alot to do with the figures. I mean how many people really payed full price for their car. If you subtract what most people got in incentives and rebates the depreciation tends to look a bit better.

Subaru isn't a luxury brand.

Subaru isn't a luxury brand.

 

Agree, but that's what Edmunds put it against in the comparison against similar vehicle. Then again, TSX, A4 2.0T and G35 are the cars I know a lot of us cross-shopped when we bought the LGT, so it's probably a fair comparison.

It also depends on where you live. That's why KBB asks you for your area code.

Before buying my LGT I had owned a WRX and Outback, both of which seemed to have "normal" depreciation. Why does the LGT depreciate so horrendously?

I recently saw an '05 LGT wagon 5MT on Ebay with about 30K miles and it failed to meet reserve at a highest bid of $12000.

 

Your post about ebay makes little sense. If the car failed to meet reserve with a high bid of $12k then obviously no one was interested and the dealer and guide books say its worth much more.

 

If it met reserve at $12k then I would agree with you.

Ebay is not the place to gauge the value of a vehicle. Location in the country makes a huge difference in the value of a Subaru, up here in Idaho, Subarus bring full Blue Book or more. Now if you look at Texas, you can't give the things away. Most people don't wanna have to fly to a vehicle and then drive it back, which is a big part of why vehicles of ebay don't bring a whole lot of money, not to mention that ebayers are trying to find a deal, not pay more for something they could find locally.

OP- That's nothing. You should see what happened to the value of my wife's '06 Mazda 6.

If you're looking to get rid of a car within 5yrs isnt it more reasonable just to lease it?

If you're looking to get rid of a car within 5yrs isnt it more reasonable just to lease it?

 

Not necessarily, your lease payment is based in part on the residual value of the vehicle at the end of the lease. So either way you are paying for the depreciation.

If you're looking to get rid of a car within 5yrs isnt it more reasonable just to lease it?

 

Yes

Depreciation is bad cause some of the parts on these cars are very low quality for the price. I would never buy another one. I bet the Spec B's have a much lower depreciation, but thats just a guess.

Leasing is never a better deal. If it was, why would dealerships TRY to get you to lease the car...

I bet the Spec B's have a much lower depreciation, but thats just a guess.

 

If Edmunds' TCO calculator is to be believed, it's worst actually.

 

http://www.edmunds.com/new/2008/subaru/legacy/100867926/cto.html?step=2&setzip=80109

 

Spec B $35,888 to $13,352 = 37.2%

Leasing is never a better deal. If it was, why would dealerships TRY to get you to lease the car...

Well the problem I think with leasing that most people run into is that they run over the mileage that the leasing contract covers. So they have to pay extra for those additional miles.

 

Personally I figure that if you buy a vehicle you're better off keeping it for the long term unless its a complete lemon.

Before buying my LGT I had owned a WRX and Outback, both of which seemed to have "normal" depreciation. Why does the LGT depreciate so horrendously?

I recently saw an '05 LGT wagon 5MT on Ebay with about 30K miles and it failed to meet reserve at a highest bid of $12000. From the pix the car looked in great shape. When these cars first came out in 05 they were real hard to get for about a year. My local dealer found one about 2000 miles away! How is it 2 or 3 years later they have taken such a big hit? Do they have a safety or reliability issue?

 

Hmmm... That seems a bit bad. Here in Sweden I got my '04 2.0 Wagon this autumn for about US$23000... Included a set of winter tires, a hitch and cargo rails. It's actually really hard to come by decent wagons at decent prices here... Sedans are easy, even if there are fewer of them. Must be a cultural thing... I think that it goes about 10 wagons for each sedan here in Sweden when it comes to Subaru Legacys. The Imprezas are a bit more balanced thanks to the STI...

Personally I figure that if you buy a vehicle you're better off keeping it for the long term unless its a complete lemon.

 

Well, that's do the math. The special lease right now in my area is 2.5i SE 5MT for $199 for 24 month + $1,798 due = $6,574. The lease is limited to 10,000 miles/year with $0.15/mile charge if you go over.

 

Carsdirect.com tells me that I can get a '08 2.5i SE for $19,610, you can probably do better if you negotiate with the dealer but for argument's sake that's use that number. Subaru is offering 3.9% financing for 5 years. So that's say you use the same $1,798 as down payment. According to online calculator your monthly payment is $327.23 and after 2 years you will still owe $11,100.31. Edmund's TCO says the car will be worth $14,399 with 30,000 miles. From what I can tell Edmunds uses ~$0.06/mile to calculate the cost of mileage. To match the lease term we should increase the resell value of the car by ~$600 for a car with 20,000 miles. So your total cost for buying is $1,798 + $327.23*24 + $11,100.31 - $14,999 = $5,752.83.

 

Without looking at tax and insurance premium differences, buying a 2.5i SE instead of leasing it will save you ~$800 over the 2 year lease term.

Many people would gladly pay $800 every 2 years to just bring their old car back and get a fresh one. That's why they lease.

Many people would gladly pay $800 every 2 years to just bring their old car back and get a fresh one. That's why they lease.

 

More power to them, but they shouldn't say they are better off financially by leasing instead buying just because they only want to keep the car for 2 years.

The sticker for a 2005 base model legacy is 26,8xxx

 

with 30k, it's worth roughly 16k Private sale, 14k trade in.

 

basically, it loses half it's value in 1/8th of it's life span