For this installment of our 2012 Model Year Used Value Spotlight we will take a look at a few sedans from the competitive compact luxury sedan segment, the Acura TL, Audi A4, BMW 328i, Cadillac CTS, Infiniti G37, Lexus IS250, and Mercedes-Benz C250. 

For this comparison we are using a typically equipped MSRP which will include automatic transmission and leather seats, if not already standard.  The typically equipped MSRP does not include manufacturer destination charges or any incentives/rebates.  The table below highlights the typically equipped MSRP for each sedan along with August 2012 NADA Average Trade-In values.  In order to come up with the retention value for each sedan, the August 2012 NADA Average Trade-In value was divided by the typically equipped MSRP.

Looking first at the current compact luxury sedan segment value retention leader, the Mercedes-Benz C250 Sport ranked at the top of the pack, currently retaining 91.7% of its original MSRP.  This segment leading retention rate can be attributed to a few things.  First being the new more fuel efficient 1.8L turbocharged inline four cylinder engine which was just introduced for the 2012 model year, and also due in large part to recent refreshes of both the interior and exterior of the sedan.  These chiseled design refinements have helped propel the C250 ahead of both the 328i and IS250 in regards to overall value retention.

Following closely behind, the second place sedan in relation to value retention is the totally new for 2012 BMW 328i sedan, which is currently retaining 89.4% of its original typically equipped MSRP.  The new 328i sedan is also benefitting from a new more fuel efficient 2.0L turbocharged inline four cylinder engine, although it appears that the new design is not as popular as the segment leading C250.  Looking back one year when all of the similarly equipped 2011 model year vehicles were valued for the first time shows that the previous generation BMW 328i actually ranked nearly three points higher than Mercedes-Benz C300 in regards to value retention.  This shows that the tamer 2012 328i design might not be as warmly received as BMW was anticipating.

The rest of the compact luxury sedan pack is scoring much lower in relation to value retention.  The IS250, A4 Premium Quattro, TL, CTS, and G37 all failed to break the 84% retention mark.   One common theme amongst all of the remaining sedans is the fact that they have been around in their current form for quite some time now, which shows firsthand the importance of fresh product design in this segment.  It’s important to note that both the A4 and IS250 have managed to only come in six points behind the new 328i in regards to value retention.  Brand loyalty and awareness have kept these models on the consumer radar long past their prime, which is an impressive feat for any manufacturer. 

In regards to average incentive spending, we see that from January-June of this year incentive offerings on the C250 ($2,760) and 328i ($3,182) were actually the lowest of the group.  This is no coincidence, as lower incentive spending often times directly translates into strengthened vehicle value retention.  With lower incentive spending the actual new transaction prices tend to trend higher as well. 

Over the course of January-June of this year, average incentive spending on the CTS was approximately $4,694 per vehicle and the G37 posted an even worse $5,921.  That being said, both these vehicles currently have the poorest value retention, and also the highest average incentive offerings of the group.  Average days’ supply for the CTS and G37 was also the worst in the segment at 119 for the CTS and 96 for the G37.

The heightened level of competition in the compact luxury sedan segment is transferring over to the used market, and each redesign and new model introduction narrows the degree of separation between models within this competitive set.  Be sure to check out the August edition of Guidelines as we take a closer look how value retention in the compact luxury sedan segment has trended over time.