Mercedes-Benz on top for residual values

11th November 2014

When deciding which used van to buy, the manufacturer’s badge now carries more weight than practical considerations – and for top brands like Mercedes-Benz that means lower contract hire rates on new vehicles.

Vehicle valuation experts CAP claims that one of the most important factors in determining what customers will pay in the future used market is now the strength of the manufacturer’s brand image.  “You have to have the best brand image to win the residual values war,” said CAP Red Book Editor Ken Brown. 

Commenting on the industry’s use of ‘badge-engineered’ LCVs, where rival manufacturers produce similar vehicles through joint ventures, he cited the example of the Mercedes-Benz Citan and Renault Kangoo.  Residuals on the Citan are significantly higher, he said, with buyers expecting to pay around 20% more for a used van bearing the Mercedes-Benz badge.  That in turn means that contract hire rates on new vehicles are lower than they otherwise would be.

Ken Brown added: “The holy grail for vehicle makers is reaching a higher position in the pecking order of desirability.  In reality, it’s manufacturers who have built the strongest brands over an extended time period that almost always come out on top.”