How often is Automotive Lease Guide wrong? Not often, but Vice President Raj Sandaram admits it is 'not invincible.'
For instance, the guide thought the Nissan Xterra wouldn't fit well in the automaker's lineup and would hurt Pathfinder sales. But Nissan defied its erratic history, nailing the Xterra launch while scaling back Pathfinder targets and giving Pathfinder a premium engine to differentiate it.
While the guide did not boost Xterra residuals, it slowed the seasonal adjustments that deflate the residual over a vehicle's life.
The same goes for the current generation of Volkswagen products, which have been upgraded to better valuations than the previous lackluster vehicles. 'We based too much of our information on history and time-series data of the old models, instead of looking at the new Passat and Jetta,' Sandaram said.
Sandaram declined to discuss the far more numerous times the guide has accurately predicted the demise of a product over the protests of an automaker. However, he will talk about some of the current disagreements. The guide's latest squabble is with DaimlerChrysler over the poor residual the guide gives the popular PT Cruiser.
'The product is awesome, but we have concerns over the volume they want to sell, and whether the styling will hold three years from now. They want to sell 150,000 a year, while the VW Beetle was selling just 70,000,' he said.
'They have to look at how it does as a used vehicle vs. how it is doing now. It all comes down to days' supply, incentives and selling rate. If you beat our numbers, we will change them.'
But Sandaram also said brand image can prop up residuals. How else to explain why the Lexus LS 400 has held its value so well when the Infiniti Q45 continues to deflate?
'You have to go back to the credibility of the brand and look at the execution,' he says. 'You can always bet on the Yankees.'