Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The 2014 Chevy Silverado’s Biggest Edge Over Ford Motor Company (F)’s F-150

Page 1 of 2

The battle between the Chevy Silverado from General Motors Company (NYSE:GM) and the Ford Motor Company (NYSE:F) F-150 has been heating up lately, with General Motors Company (NYSE:GM) trying to challenge Ford Motor Company (NYSE:F)’s long dominance atop the best-selling vehicle list. But despite some concerns about the Silverado launch, General Motors Company (NYSE:GM) recently got some good news that could help give it an edge against Ford Motor Company (NYSE:F) and its other competitors.

General Motors Company (NYSE:GM)

Research company ALG made its forecast for projected residual values for full-sized pickup truck lines earlier this month, and its figures for GM’s biggest truck lines were unexpectedly strong. ALG projects that 2014 Silverados will retain 55% of their value after 36 months, compared to just 47% for the 2013 model. That forecast also puts the Silverado ahead of its most important rivals in the segment, including the F-150. ALG found that only Toyota Motor Corporation (ADR) (NYSE:TM)‘s Tundra weighed in with slightly better residual values.

To understand why the boost in residual value represents an important edge, you need to understand the basics of vehicle leasing. In essence, higher residual values give GM a lot more flexibility in offering attractive deals for customers who want to take home a Silverado as inexpensively as possible.

2014 Chevy Silverado Texas Edition. Image (c) General Motors.

Vehicle leasing 101
From the customer’s perspective, leasing rather than buying can be an attractive way to drive a new vehicle every few years. With a typical lease, you’ll pay a fixed monthly payment as well as some upfront costs. After the lease term expires, you typically have the option either to purchase the leased vehicle or to return it in favor of buying or leasing a newer car or truck.

But from the automaker’s perspective, the economics of the lease are much different. In deciding where to set monthly lease rates, automakers have to look at two things: the value of the brand-new car on the lot and the amount of money they’ll be able to get for that car at the end of the lease term, when the dealer sells it as a used car. The greater the difference between full retail price and the residual value at the lease’s end, the more an automaker has to charge on lease payments in order to recoup the loss in value and make a profit. Conversely, greater residual value boosts profit margins on leases, giving an automaker the latitude to offer more attractive lease terms.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!