Top tips on how to protect your car's resale value
When you buy your first car, whether it’s brand new or a good used model, everyone will tell you that the value of this big-ticket asset will depreciate the moment you drive it off the dealership's floor. While this is true in part, the longer you own it and the more you drive it, there are ways to protect and maintain the value of your car for resale.
The following tips can assist you in getting a better return on your asset when the time comes to trade your vehicle in, sell it privately or upgrade to a newer model. As the country’s leading provider of innovative vehicle and asset solutions, WesBank highlights some of the key factors that could affect the resale value of the car. However, before we unpack these factors, it is also important to understand some of the common terminology used by the motor industry when selling your car.
The first one is the retail price – this is the recommended selling price, excluding any optional extras. Dealerships incur costs such as marketing, insurance, vehicle reconditioning and repairs, facility overheads and staff remuneration. As such, the dealership needs to factor some profit into the vehicle price, so the retail value is normally at the higher end of the scale.
The trade or market price is usually lower than the retail value. While this value may vary in line with vehicle demand, this is the value that should be considered when trading in or selling your vehicle.
The term depreciation refers to the reduction in the value of an asset over time, due to varying factors such as mileage and wear and tear.
It is also advisable to do some homework before committing to a vehicle purchase, as this can pay off down the line when it’s time to sell the car. Some recommendations from WesBank in this regard are:
- Consider the historic market demand of a particular make and model of vehicle
- Is the two-door or four-door model more popular?
- Is automatic preferred to manual?
- Does the vehicle run on diesel or petrol?
Used car websites can be extremely valuable for researching which vehicles are the most popular, are the fastest selling and which have held their resale value over time. The optimal time to trade in one’s car is when the trade value for the car is more or less in line with the settlement amount owed to the bank.
“Variables such as mileage and the overall condition of the car will also affect the resale value,” explains WesBank’s communication specialist, Kutlwano Mogatusi. “It can be tempting to consider a bargain deal on a particular vehicle because it has a high mileage, but this could prove to be costly down the line. If the vehicle also requires ongoing maintenance, it may be worth far less than you expected when the time comes to sell it.”
It is important to look after your vehicle by servicing it regularly according to the manufacturer’s stipulated service intervals. This will reassure the dealership that the vehicle has been well maintained, with less likelihood of finding a fault with the mechanics of the vehicle.
Here are a few simple ways to maintain your car’s resale value:
- Choose your vehicle make and model carefully – this includes the colour (white or silver are generally considered your best bet). Note that some brands are expensive to maintain and might require more aftersales support
- Keep a detailed service record – be diligent, stick to the maintenance schedule and keep a record of everything that has been worked on in your vehicle: a clean record will benefit you when it comes to the price negotiation
- Use it, don’t abuse it – this is self-explanatory and refers to all aspects of the car, from the brakes and transmission to paint chips, dented rims or damaged bodywork – all these elements will be checked by a potential buyer
- Keep your car’s papers in order – these include the original vehicle registration form and proof of payment of the annual vehicle licence fee. You should also ensure there are no outstanding fines or e-Toll costs owing on the car
- Deal with the small issues – if you notice something wrong with your vehicle (anything from an unusual sound in the engine to a few scratches) check it and deal with it. To preserve resale value, it is always better to be safe than sorry
- Use a reliable mechanic – it is recommended that you service and maintain your car at a workshop with a good track record and trusted mechanics. Remember that franchise dealerships have expert vehicle knowledge as well as qualified technicians who are specially trained to work on your brand of car
- Where you park your car can also impact its resale value – while a closed garage is ideal, this may not always be possible. If not, try not to leave your car parked under a tree or exposed in the sun for long periods at a time, so that you maintain the exterior paint. Consider using a sun visor and even car seat covers to preserve the car’s interior.
“Another useful tip is to resist over-embellishing your car with aftermarket accessories,” cautions Mogatusi. “While part of the joy of owning a car is making it your own, these additions could impact negatively on its resale value. You might think oversized rims, outrageous body paint or a booming sound system are improvements but be aware that the next owner, or the dealership where you plan to trade in your car, may not.”
“Keeping your car clean and in the best condition possible is probably the best way of ensuring it retains its value over time. A small scratch or dent might not seem a big deal now, but accumulating many such dents or scratches over time will detract from the car’s overall appeal. Maintain the appearance and mechanical condition of your car during your ownership cycle to ensure a reasonable return on your investment when the time comes to sell it,” Mogatusi concludes.