Honda, Lexus Capture ALG Residual Value Awards

Honda and Lexus are the brand award winners in the mass market and premium segments, respectively, of the J.D. Power 2022 U.S. ALG Residual Value Awards.

The awards recognize vehicle models projected to hold the highest percentage of their manufacturer’s suggested retail price following one to three years of ownership.

This value retention is a key variable in the lease cost of a vehicle and emphasizes an automaker’s success in the areas of long-term quality and design, as well as the overall desirability of automotive brands and their models. It is also an important purchase consideration for vehicle shoppers as it helps forecast a vehicle’s resale value once they sell or trade in the vehicle for a new one.

“Accurately forecasting residual values in the auto industry is a key factor in assessing an estimated $225 billion lease portfolio of vehicles in the United States,” Eric Lyman, vice president of ALG – a J.D. Power division specializing in automotive residual value projections – says in a news release. “The brands and vehicle models that rise to the top demonstrate that they score well across the award program’s criteria, including manufacturers’ superior design and quality.”

For model-year 2022, 19 different brands won awards in 29 segments. The award process consisted of evaluating 284 models by analyzing used-vehicle performance, brand outlook and product competitiveness. Eligibility for a brand award requires a manufacturer to have model entries in at least four different segments. To account for differences across trim levels, model averages are weighted based on percentage share relative to the entire model line.

Besides the mass market brand level award, Honda also wins three model-level awards. Lexus ranks highest among premium brands while only having one segment-winning model.

“The achievement of Lexus speaks to an impressive, industry-leading continuity of residual value across its entire lineup,” Lyman says. “It’s like a decathlete who wins only one of the 10 individual events but scores enough points in each of them to stand atop the podium.”

Honda and Hyundai share the most model-level awards, with three each. Manufacturers winning in two categories are Audi, Kia, Land Rover, Mercedes-Benz, Subaru and Toyota.

For 2022, the Mercedes-Benz AMG GT 4-Door tops long-time segment leader Lexus LS in the Premium Executive segment, while the new Ford Bronco introduced in June beats out perennial winners Jeep Wrangler and Toyota 4Runner for top honors in the Off-Road Utility segment. Electric vehicle winners are highlighted by the Kona EV in the Mass Market Electric segment and the Tesla Model Y in the Premium Electric segment.

Many variables affect the actual residual value of a vehicle over a multi-year lease term. Examples include mileage, quality/reliability, options and feature sets, weather and macroeconomic environment. Since these factors need to be considered to accurately forecast residual values, the more scrutiny and greater the understanding of the effect of each variable, the better equipped manufacturers and lenders are able to maximize profitability.

Honda Civic 22 driver front - Copy