Owning a car can be a costly investment in South Africa, as most vehicles tend to depreciate with time and use. However, there are proactive steps you can take to prevent your car’s value from plummeting unnecessarily. While external factors like market conditions and demand do play a role, you can significantly influence the resale value by managing what’s within your control during your vehicle ownership journey. WesBank, a leading credit provider, has highlighted some key factors affecting the resale value of cars to assist motorists in obtaining the best value when it’s time to sell or trade in. But before delving into these factors, let’s familiarize ourselves with some common terminology used in the motor industry:
Retail Price:
- This is the recommended sale price, excluding any extras or consumer demand.
- Dealerships have various operational costs, including marketing, insurance, reconditioning, repairs, overheads, and staff remuneration. Dealers must incorporate some profit into vehicle prices, so retail values tend to be on the higher side.
- Retail price is what you can expect to pay when acquiring a new vehicle.
- Note that adding aftermarket extras can void the vehicle’s warranty, so it’s advisable to purchase additional accessories directly from the dealer.
Trade/Market Price:
- Always lower than the retail value, this is the recommended trade price for a vehicle in good condition. These values may fluctuate based on vehicle demand.
- This is the value to consider when trading in or selling your vehicle.
Depreciation:
- Depreciation refers to the reduction in the value of an asset over time due to factors such as mileage and wear and tear.
Now that we’ve established these terms, let’s explore the factors that could significantly impact the resale value of your car in South Africa:
1. Doing Your Homework
Before committing to a car purchase, invest time in research. Understanding the historical market demand for specific vehicle features can pay off when it’s time to sell. Consider factors like two-door vs. four-door models, automatic vs. manual transmission, and diesel vs. petrol engines. Utilize used car websites to gain insights into which vehicles are popular and have retained their value over time.
2. Color Matters
Exterior color and interior trim options can influence resale value. While vibrant colors like luminous orange and acid green might suit a supercar, they may not appeal to budget hatchback buyers. Neutral colors generally sell better. Additionally, consider the material of your seats; black leather often garners more appeal than beige cloth seats.
3. Mindful Mileage
Mileage is a critical factor affecting resale value. Beware of bargains on vehicles with high mileage, as they may require extensive maintenance, especially if you plan to use the car frequently. Dealers closely inspect the odometer reading when assessing trade-in value, and high mileage typically leads to lower offers.
4. Adhering to Service Intervals
Ensure your vehicle is serviced according to the manufacturer’s stipulated intervals. Regular maintenance by a franchised dealer instills confidence in potential buyers. It signifies proper care and reduces the risk of underlying issues, enhancing your car’s resale value.
5. Maintain Your Car’s Condition
To retain your car’s value, keep it clean and well-maintained throughout your ownership. Small scratches may seem insignificant individually, but an accumulation of such imperfections can detract from your car’s appeal when it’s time to sell. Maintain both the appearance and mechanical condition of your vehicle to maximize its resale value.
6. Be Cautious with Aftermarket Accessories
While personalizing your car can be enjoyable, excessive aftermarket accessories can adversely impact resale value, especially when they’re permanent modifications. Oversized rims, extravagant body kits, and major stereo systems may be your personal style statements, but they might not align with the preferences of the next owner or the dealer when you decide to trade in your vehicle.
Owning and driving a car in South Africa should indeed be a rewarding experience. By being aware of and proactively addressing the factors mentioned above, you can ensure that this rewarding experience continues right up to the day you sell or trade-in your vehicle, getting the best possible value in return.