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"Imports sell, they sure do," says Ron McNutt, owner and president of Kentucky-based McNutt Motor Sales, a large-volume wholesale buyer in the mid south that resells to dealers in Kentucky, Indiana, Illinois, Tennessee and Missouri. He estimates his inventory is divided between domestics and imports.

Domestic car manufacturers are trying to move away from the production-driven philosophy that has led to too many cars being sold in fleet and rental markets, both Nerad and Toprak say, resulting in an over abundance of these cars languishing in the resale market two years later.

"If you have way too many cars in service, they're going to flood the marketplace," Toprak says. That over supply drives prices down, lowers residual value and ultimately effects the salability of newer models.

"Essentially there weren't retail customers for them in the first place, and so there aren't likely to be customers on the secondary market," Nerad says. "The domestics are getting away from that, and are making a concerted effort to do that as little as possible these days."

Quality concerns and the reputation of domestic manufacturers have also factored into their cars' lower resale value, Toprak says, although that's changing.

"In the last few years, domestics are in the process of closing the gap," he says. "The way they're pricing their vehicles enable them to at least close the gap between the Japanese brand and themselves."

Domestic manufacturers could boost their resale values by weaning themselves off incentives, too, Toprak says. Hefty incentives reduce a vehicle's initial starting value, and at resale they also have a direct pricing impact.

Industry wide, incentives averaged $2,391 in May 2007, barely changed from $2,374 in May 2006, Toprak says. But the domestics outspend the Japanese almost three to one, with American manufacturers' incentives averaging $3,139 per vehicle while Japanese spend just $1,321.

Beyond choosing specific brands and models, consumers can do other things to increase their cars resale value.

Kelley advises the following:
Choose popular exterior colors, like black, white or silver.
Select sought-after equipment including antilock brakes, alloy wheels, a CD player, parking sensors, navigation system, sensing cruise control and leather seats.
Avoid ultra customization.

"The key to selling a car, either retail or wholesale, is to have something the public wants," says McNutt.  

-- Posted: Aug. 2, 2007
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