Do Discontinued Cars Lose Value Faster?

When a certain make or brand of car is no longer made, do the ones still on the road lose value? It depends on several factors.

The housing market crash of 2008 and the recession that followed sent shock waves through the world’s economy. Just about every sector was affected in some way. Apart from housing and construction, no industry felt the impact more than the auto business.

Two of the Big Three auto manufacturers – General Motors and Chrysler – required government assistance to keep their doors open. Ford didn’t require a bailout, but it struggled. Like its competitors, Ford had to undergo massive cost cutting. Thousands of dealerships closed. Each of the Big Three discontinued whole brands of cars in an effort to cut costs. GM shuttered Pontiac, Oldsmobile, Hummer, and Saturn. Chrysler, having done away with the Plymouth nameplate in 2001, began the process of being acquired by Fiat of Italy. Ford discontinued its Mercury brand.

Discontinued Cars

In an effort to boost car sales, the federal government introduced the Car Allowance Rebate System (CARS) better known as “cash for clunkers.” The program did encourage people to buy new, more fuel-efficient cars, but some argue that these sales would have happened anyway. What the program did succeed at was taking hundreds of thousands of older cars off the road completely, with much older cars being junked by the government.

The program also created a shortage of late-model cars. Folks who didn’t buy new cars decided to hold on to cars that were only a few years old. Since modern cars are designed to last longer, this made economic sense for vehicle owners – and it still does.

However, the supply of used late-model cars available on dealers’ lots includes several models and entire brands that aren’t produced anymore. Is it a bad decision to buy one of these? If you own one, is it less valuable than a similar model that’s still in production?

Parts

The biggest concern when buying a discontinued car model or brand is availability of parts. Manufacturers continue to make parts for several years after a vehicle has gone out of production. If you have your car serviced by a local mechanic, chances are he or she is using aftermarket parts. These can still be made even if the original manufacturer has stopped producing replacement parts. The availability of third-party parts depends on how many cars like yours are still on the road.

Warranty

A manufacturer will honor the warranty of a discontinued brand or model as long as you obey the warranty terms. Third-party warranty companies will also offer coverage beyond the period offered by the manufacturer. These aren’t usually a good deal, though; you’ll likely spend more buying the warranty then you would have otherwise spent on covered repairs.

Savings

Discontinued cars can be cheaper than older models of cars that are still in production, but it depends. Unique cars like the Honda Element crossover SUV sometimes develop a loyal following. While the Element wasn’t popular enough to keep in production, it does have fans who don’t want to let it go. That has kept the selling prices of used Elements a little higher than other used crossover SUVs.

On the other hand, many people don’t like the idea of owning a car model or brand that is no longer made – or even one that has a significantly different design from the latest version. If this isn’t a concern for you, you can pretend it is and use that point as leverage to negotiate a lower price.

Value

The value of a discontinued car normally shouldn’t be any less than a similar vehicle that’s still being produced. As we mentioned earlier, there’s a perception that a discontinued car isn’t as desirable as one that’s still in production. If the car in question is in good shape, it may still fetch a fair price.

If you hold on to a car long enough, it might become a classic. This will stabilize its value and possibly increase it. According to the Classic Car Club of America a car must be at least 30 years old to be considered a classic. It’s hard to believe that cars like the Chevy Chevette, Ford Pinto, and AMC Pacer fall into this category. Classic doesn’t necessarily mean valuable, though –even if the vehicle is in mint condition.

Nothing new

Vehicle models and brands have gone in and out of production since the horseless carriage was introduced in the late nineteenth century. In the early part of the twentieth century, hundreds of companies built cars – but most lasted only a few years. After World War II, there were basically seven different companies making passenger vehicles in the U.S. By the 1970s, only the Big Three and their associated brands remained – along with American Motors (AMC). AMC was absorbed by Chrysler in 1987.

Timeline of notable, discontinued car brands

American Motors Corporation (AMC)

AMC was formed by the 1954 merger of Hudson (1909) and Nash (1917). From 1955 until 1965, the company was known as Rambler, which had been one of Nash’s most popular models.

Checker Motors (1922-1982)

Checker was best- known for making the iconic, chubby taxicabs that roamed the streets of many American cities from the 1950s through the late 1990s. For a time, Checker sold cars to the general public. It stopped making cars altogether in 1982, but continued on as a parts supplier to GM until 2009. The last Checker cab in service in New York City left the streets in 1999.

Crosley (1939-1952)

A successful maker of radios and home appliances, Crosley of Cincinnati started making small, affordable cars in 1939. Unable to compete with larger manufacturers, it stopped producing cars in the early 1950s.

DeLorean (1975-1982, 2007- )

Widely recognized from the jazzed-up version seen in the Back to the Future film series, the DeLorean had a short but memorable run. The company went under in 1982. In 1995, Englishman Stephen Wynne bought all of the company’s assets – including the remaining unassembled inventory. Starting in 2007, the company began offering “new” DeLoreans assembled mostly from those leftover parts.

Hummer (1992-2010)

The Hummer was a staple in the US military and it was later offered in a consumer-friendly version. The company was bought by GM in 1999. Slowing demand and the recession were the main factors that led to its 2010 closing.

Kaise (1947-1955)

Soon after the end of World War II, industrialists Henry Kaiser and Joseph Frazer founded Kaiser Motors. The company later acquired Willys-Overland, the original makers of the Jeep brand. The company was purchased by AMC in 1970 and became a wholly owned subsidiary known as Jeep Corporation. AMC and the Jeep brand were later acquired by Chrysler.

King Midget (1946-1970)

King Midget was a micro car built in Athens, Ohio. The parts were made in Ohio and the buyer assembled them. Looking to retire in 1966, the founding partners accepted a buyout from a group of investors. The new owners produced cars for four more years.

LaSalle (1927-1940)

A sister brand to GM’s Cadillac, this luxury brand ceased production a few years before the start of World War II. The LaSalle wasn’t different enough from the Cadillac brand to survive.

Mercury (1939-2010)

Ford’s luxury nameplate debuted in 1939 and continued production until 2010. In its later years, Mercury mostly offered more luxurious versions of Ford cars.

Oldsmobile (1897-2004)

One of America’s oldest car brands, Oldsmobile was founded by Ransom E. Olds. It was acquired by GM in 1908. Olds’s initials were later adopted by the rock group REO Speedwagon, in honor of the vehicle that the band employed to haul equipment in its early days.

Packard (1899-1954)

Founded by James and William Packard, this car company merged with Studebaker in 1954. Before the merger, Packard was in better shape than its soon-to-be partner. The new company dropped Packard from its name in the early 1960s.

Pierce-Arrow (1900-1938)

Based in Buffalo, New York, Pierce-Arrow was known for building luxury cars as well as trucks and bicycles. The company got its start making bird cages in 1865. The lack of an affordable vehicle model in its lineup was the company’s undoing.

Pontiac (1926-2010)

For most of its run, Pontiac was the twin of Chevrolet – also owned by GM. For a time, though, Pontiac was better known for producing muscle cars like the Firebird, the Grand Prix, the GTO, and the Fiero – a European-styled two-seater. The 2008 recession and GM’s financial woes led to the Pontiac brand’s retirement.

Saturn (1985-2010)

Founded by GM, Saturn initially announced itself as a “different kind of car company.” In the end, it was operated pretty much like the rest of the GM family. Saturn built a loyal following for a while and even hosted rallies at its plant in Tennessee. Saturn ultimately didn’t capture enough market share to stay in business and GM folded the company in 2010.

Studebaker (1902-1966)

Studebaker started as a wagon builder in 1852, Its first horseless carriages, introduced in 1902, were electric powered. Gasoline models came along two years later. A merger with the healthier Packard Motors in 1954 couldn’t save the brand from its financial woes and only delayed the inevitable. The last Studebaker rolled off the assembly line in 1966.

Tucker (1949-1949)

This short-lived car company inspired a popular movie in 1988 called Tucker: The Man and His Dream. After World War II, the major car makers failed to introduce any new models. Aviation magnate Preston Tucker saw an opportunity and introduced the Tucker ’48 – also known as the Tucker Torpedo. The car had several innovations that would later be adopted by the other automakers. Allegations of stock fraud and manufacturing defects led to the demise of the Tucker Corporation. The film suggests that much of the scandal was manufactured by Tucker’s competitors –the Big Three.