CAPE TOWN, South Africa – Most cars are depreciating assets. This means the value of your car is likely to decrease the longer you own it and further you drive it. However, there are ways to avoid its value decreasing more than absolutely necessary.
In this article, WesBank highlights some of the key factors that affect the resale value of cars with the aim of helping you get the best value when the time comes to sell or trade-in yours.
Let’s understand some of the most common terminology used by the motor industry…
Retail price: The recommended sale price, not including extras or consumer demand. Dealers incur costs while running their businesses – marketing, insurance, re-conditioning and repairs, facility overheads, and staff pay.
A dealer must factor-in some profit into vehicle prices so retail values are normally at the higher end of the scale. This is the price you can expect to pay when acquiring a new vehicle. Any aftermarket extras can void the warranty of the vehicle so rather purchase additional accessories directly from the dealer to avoid this.
Trade/market price Is always lower than the retail value: it’s the recommend trade price for a vehicle in good condition which will vary in line with a brand/vehicle demand. It should be considered when trading-in or selling your vehicle.
Depreciation: The reduction in the value of an asset over time, due to factors such as odometer reading and wear-and-tear.
Doing some homework ahead of committing to a purchase can pay off down the line when it’s time to sell a car. Consider the historic market demand for a vehicle, for example, is the two-door or four-door model more popular?
Auto or manual: Has it an auto or manual gearbox? Diesel or petrol? Used-vehicle websites can be extremely valuable in research for the most popular vehicles.
Bodywork: Consider exterior colour and cabin trim options. Where luminous orange and acid green may be desirable on a supercar, it may not be on a budget hatchback. Likewise, beige cloth seats might pose a problem when it’s time to sell later on, whereas black leather might be more appealing.
Bear in mind that, generally, neutral colours sell better.
Odometer reading vital: Variables such as odo reading and the vehicle’s general condition will also affect resale value. It can be tempting to consider a bargain deal when buying but could prove a deal-killer if too high.
It will also cost more in maintenance – another resale deal penalty.
It’s also important, while owning a vehicle, to adhere to its maker’s stipulated service intervals. The franchised dealer’s service staff must have the necessary training to best keep the car in good running order.
At first glance: One of the first things a dealer looks at when assessing the trade-in value is the odometer reading. Very high will draw relatively low offers. A dealer will also look at the vehicle’s maintenance and service trip dates.
This will reassure the dealer that the vehicle has been cared for – meaning it will be less of a breakdown risk.
ACCESSORIES… DON’T OVERDO IT
Keeping your car clean and in tip-top shape is probably the best way to maintain its trade-in value in coming years. That small scratch might not be a big deal now but many of them will detract from its sale appeal. Do your best to maintain the appearance and mechanical condition of your car during your ownership.
Last word on accessories: Finally, resist overdoing it with aftermarket accessories. Part of the joy of owning a car is making it your own but too often personal style/custom additions might not be wanted by its next owne – especially if they are permanent.
Owning and driving a car should be fun and rewarding. Being aware of the factors above, and maintaining the vehicle’s ”newness”should comtomie right up until the day you sell it.