We've all heard the popular saying: "A car is not an asset, it loses value the minute you drive out of the dealership." How much truth is there to that? Well, half. The dictionary definition of an asset goes along the lines of: a resource that is of economic value and will be used for future benefit. A resource that allows you to move from point A to point B at any time of your choice and can later be traded in for money or another one? Sounds like an asset to me. So let's dissect the other half: it loses value the minute you drive out.
What really happens to the value of your car when you drive out? Depreciation - the decline in the value of a vehicle from the time you bought it, starts from the minute you start driving your car. The highest rate of depreciation occurs in the first year of vehicle ownership (usually 15 - 30%) and gradually declines in the years after that. After depreciation, there are other factors that affect the resale value of your car, which we will delve into below.
Colour - While not the most exciting, safe, neutral colors (grey, black, white and charcoal) are easier to sell and therefore would be cheaper than colours that are harder to come by. In essence, buyers have to cough up slightly more for your exotic purple vehicle.
Transmission - In South Africa, it's a cut-throat competition between people who prefer the manual driving experience and those who swear by the convenience of an automatic vehicle. In recent years, automatic drivers are winning so if your gearbox is automatic, your vehicle is worth more than its manual twin.
Mileage - It goes without saying that the more kilometres a car has travelled, the greater the impact on its resale value. Worth noting though, a car can have less kilometres on the clock and more damage, depending on the driving habits and the road conditions it has travelled.
Condition - When buying used, we're all looking for good value for our money therefore, easily the most important factor that comes to mind. Has the car been involved in a car accident? Are the airbags in tact? Are the wheels aligned? Does it have fender dents? Paint scratches? So as a seller, it is advised that you ensure that your vehicle is in the best possible condition, to retain the resale value.
Placing your car on the market can be as frustrating as it is confusing, determining a car's worth is not easy but there are a few pointers to make it easier for you. For a second opinion, check out Kelston Trade Centre for our free vehicle valuation: https://kelston.co.za/sell-my-car , there's no obligation but you might find that it's the right time to sell your vehicle and drive something new.
