SANTA BARBARA, Calif. -

Japanese brands once again led the way in ALG’s 13th Annual Residual Value Awards, thanks largely to a mixture of strong consumer perception and loyalty, as well as low incentive spending and rental penetration, ALG’s Eric Lyman told Auto Remarketing in a recent interview.

The awards were released today and claiming the top spot on the mainstream side for the third straight year was Subaru.

Meanwhile, the luxury side saw a new winner, as Lexus grabbed top honors for the first time in four years. The awards also spotlighted winners in 19 individual segments, and Japanese models took almost half of the categories.

Toyota claimed the most with three winners (Toyota Tacoma, Toyota Tundra and Lexus CT 200h), while Subaru and Honda each had two winners. Nissan and Mazda were each represented in one category.

“The Japanese brands have typically done really well when it comes to residual value and a lot of that is driven by a couple of different things,” explained Lyman, ALG’s vice president of residual value solutions.

“First, we see that the Japanese brands rank very high on our perceived quality score study that we do a couple times of year. And that perception of quality is astoundingly high due to a long history of high actual quality and also a very loyal customer base that drives that high percentage of quality,” he continued. “So we see that perception of quality is very closely tied to retention of value in the used market.

“They keep their incentive spending low and they keep their rental fleet penetration low, as well. And what that comes down to is managing their production and inventory of vehicles very closely with actual consumer demand … so all of that leads to a very high and stable residual value, ” Lyman added.

Even through the ups and downs in used-vehicle values over the course of the past few years in the midst of a topsy-turvy industry, Japanese brands have been very stable when it comes to residuals and haven’t shown the same volatility as other automakers.

As Lyman put it, “they haven’t dropped as much and they haven’t rebounded as much” as othe brands and they have maintained a steady value level over the last five years.

As for Subaru, its strength in residuals is attributable to a number of factors, including its value-pricing strategy, which marks a change from the “taking the brand up market" approach seen previously, Lyman noted.

He gave the example of the B9 Tribeca at its launch.

“It kind of represented a previous strategy of taking the brand up market, trying to price the vehicle up market. What you notice is that with subsequent vehicles, there’s a much stronger value play going on … on top of that, as they re-launched some of their key vehicles — the Outback, the Legacy, the Forrester — they revised the features of those vehicles and the appearance of those vehicles to be much more mainstream,” Lyman explained.

The restyling has “expanded the reach” of their demand from a niche following to a more mainstream following. And as the all-wheel-drive vehicles have become more commonplace in the market — even on the luxury side — this has also helped Subaru, which of course is “well-known” for its all-wheel-drive offering.

“Virtually everybody has got all-wheel-drive vehicles available now,” he shared, noting that it “isn’t just for the Northeast or Colorado” and this type of vehicle has become more mainstream (i.e., more popular).

ALG’s Raj Sundaram added: “The consistently high quality of Subaru products, and the brand’s ability to remain progressive and practical in their redesigns, continue to draw fiercely loyal customers. With high sales Subaru has dependably low incentives and fleet sales, which have enhanced the brand’s used value and helped it hold on to the top spot among mainstream brands again this year.”

As for Lexus, it had only one segment winner (the CT 200h in luxury alt-fuel category) but still won the overall luxury award.

“That is just more representative of the overall holistic approach that Lexus takes with regards to production and being able to keep their incentives down and having a very balanced portfolio across all of their vehicles,” Lyman explained.

Sundaram noted: “Lexus has fully bounced back from its recent challenges, proving that it is one of the strongest brands. The brand is extending its reach with exciting and affordable new models like the CT 200h, while continuing to provide great luxury and value across the lineup. Lexus’ reputation for value and customer service is also key to its dominance among luxury brands.”

Following Lexus on the luxury side was Acura, Infiniti, Mercedes-Benz and Audi, respectively. For mainstream brands, Subaru was followed by Honda, Hyundai, Mazda and Toyota, with Nissan, Kia and Volkswagen rounding out the list.

All of the aforementioned brands finished above the average for their respective category. ALG does not provide information on brands that finish below the average.

Sharing more details about an up-and-comer, Hyundai placed third in the mainstream category, which reflects the “overall improvement of Hyundai as a brand,” Lyman said.

He added: “I think everybody has paid attention and there has been a lot of focus on how Hyundai has overhauled their portfolio and how they’re changing people’s perception of the brand.”

Hyundai has not only revamped its product lineup, he said, it has added more high-value content to vehicles while packaging and pricing them in the best way possible. The automaker has also limited incentives.

Additionally, Hyundai is “responding to what consumers are asking for, while also being somewhat cautious about some of the perceptions of the brand that have plagued the brand in the past,” he added.

Moving along, ALG did not offer specific rankings of the domestics, as they did not meet the average, but Lyman did note that “we have seen an improvement for domestic brands.”

Additionally, the Big 3 were honored in two vehicle categories, as the Jeep Wrangler took the compact utility vehicle segment and the GMC Acadia was tops for full-size utility vehicles. A year ago, there was only one domestic winner.

The complete list of winners is as follows:

Mainstream Brand: Subaru of America
Luxury Brand: Lexus

Segment Winners
Subcompact Car: Honda Fit
Compact Car: Hyundai Elantra
Midsize Car: Subaru Legacy
Full-size Car: Nissan Maxima
Sporty Car: Mazdaspeed3
Alternative Powertrain: Volkswagen Golf TDI
MPV: Honda Odyssey
Compact Utility: Jeep Wrangler
Midsize Utility: Subaru Outback
Full-size Utility: GMC Acadia
Midsize Pickup: Toyota Tacoma
Full-size Pickup: Toyota Tundra
Near Luxury Car: Mercedes-Benz C-Class
Luxury Car: Audi A6
Luxury Sports Car: Audi S5
Luxury Alt-Fuel: Lexus CT 200h
Luxury Compact Utility: Land Rover Range Rover Evoque
Luxury Midsize Utility: Land Rover Ranger Rover Sport
Luxury Full-size Utility: Audi Q7

The brand rankings are:

Luxury
Lexus
Acura
Infiniti
Mercedes-Benz
Audi

Mainstream
Subaru
Honda
Hyundai
Mazda
Toyota
Nissan
Kia
Volkswagen