Turns out the color of your car matters more that you might think.
(And no, we’re not talking about the myth that red cars attract more speeding tickets.)
A recent analysis by Boston-based iSeeCars found that the color of a vehicle can affect its retained value. Model year 2013 orange and yellow cars, the research company found, depreciated the least over the first three years of ownership.
While the average car depreciated 29.8 percent over three years, orange and yellow cars depreciated by 21.6 percent and 22 percent, respectively — the least of any color. Green was not far behind at 24.5 percent, making it the third-best color for retained value.
Popular car colors such as black, white and gray, meanwhile, showed depreciation that was closer to the average car (30.2 percent, 29.5 percent and 29.5 percent, respectively).
“Going in, the idea was that perhaps there wouldn’t be any surprises,” iSeeCars chief executive officer Phong Ly told Auto Remarketing. “But it was surprising to see that these unusual colors stood out.”
And, he added, these findings stood up across most body styles and car segments.
What might be at play
Ly posited that supply and demand may play be playing a role.
“The more unusual colors are not as readily available, yet they are popular with enough car buyers to create a demand that directly affects resale value,” he noted when the study was released.
“These brighter color cars make up 1.5 percent of all the cars that are out there,” he subsequently explained. “From a seller’s point of view, there may be more pricing power. From a buyer’s point of view, if that’s what they’re looking for, they may be willing to pay a bit more for it. What’s surprising to me was that these unusual colors didn’t actually take much longer to sell than the average car.”
In fact, while the average 3-year-old vehicle is on the market for 43.9 days, orange, yellow and green cars are on the market for 44.1, 49.5 and 45 days, respectively.
Lower average mileage may also be a factor in higher retained values for vehicles in rarer colors.
“Cars in orange, yellow and to a lesser extent green are primarily sports cars and muscle cars,” Ly said. “Not only do these colors appeal to many of the buyers in these segments, but these cars are driven less, most likely because they are not used as daily drivers.”
For example, the average mileage of a 3-year-old orange sports cars is 27,210; for a muscle car it’s 26,822. This compares to 36,324 miles on average for all cars.
Of note was that gold cars showed the worst three-year depreciation at 33.5 percent, perhaps because gold mostly adorns sedans, which have been falling out of favor in recent years.
While buyers should choose “common” colors if that’s what appeals to them, Ly said they shouldn’t necessarily shy away from less-common hues.
“I think the conventional wisdom out there is that when a buyer is considering a color, they tend to go with the more popular colors with the thought that it might be easier to sell then they need to sell. That is not always the case,” he said.
And while consumers who will be turning in or trading in leased vehicles shouldn’t expect more than the average retained value, Ly said, “consumers who have a car in orange, yellow or green may be able to get more money for their cars, potentially adding to the down payment on their next car.”
Reminder for dealers
So what is the takeaway for those on the selling side of the equation?
“For a dealer, it’s basically that when they buy a car to sell, remembering that color could play a role in the value of that car. For just the average consumer selling a car, I would do a bit more analysis before just saying that ‘I’m selling an orange car or yellow car, it’s not as popular so I’m not going to list it for much.’ Don’t shortchange yourself.”
A note on methodology: iSeeCars analyzed more than 1.6 million used 3-year-old vehicles (model year 2013) sold between July 1, 2015, and June 30. Depreciation over three years was calculated by comparing the average listing price to the average MSRP (inflation adjusted) for each car color, as well as for each color and body style/market segment. Colors with fewer than 1,000 cars, and colors and body styles/market segments with fewer than 30 cars were excluded from the anaylsis.