Factors that affect the depreciation rate of cars in SA

What affects the depreciation rate of cars in South Africa?

The most painful thing about owning a car is knowing that is continuously depreciating. Depreciation is the main factor that causes your vehicle’s resale value to dip. But, you can’t avoid this problem. Most cars lose about half of their value within their first three years. There are other ways to lessen the blow of depreciation on your vehicle. One way is to do proper research on a car before you buy it so that you buy a car that doesn’t have a high depression rate.

Type of used car values:

• The retail value: this is the average price a car dealer would probably get for your car.
• The current market value: this is estimated by companies who have an idea of the selling price of cars like yours across the country.
• Trade-in value: this is the amount you can expect a dealer to offer you for your car. However, you should always research the value of your car before taking it to a dealer.

What are the factors that affect the depreciation rate of cars?

• Brand – not all car brands depreciate at the same rate. For example, Toyota, Audi, Mercedes, Honda, Mazda, Lexus and Subaru are among the car brands with higher resale values in South Africa. Some of these brands are even able to retain up to 60% of their original value, while other brands can lose more than 75% of their value within three years.
• Body – the body type of a car is also important to buyers. The most popular body types in South Africa are crossovers, four-door hatches, sudans and bakkies. Body types that are considered niche and harder to sell are sport cars, coupes and convertibles.
• Colour – cars in white, silver or black have a higher resale value as cars in neutral colours are easier to sell.
• Mileage – you should aim to sell your car before you rack up a lot of mileage. Second hand cars are known to start having issues after 100,000km.  A lot of South Africans clock up to about 15 000 to 30 000 km per year – this type of mileage can have a huge impact on the resale value of your car as more mileage is often associated with more wear and tear.
• Fuel economy – cars that use too much fuel seem to be easier to sell nowadays, especially due to the fact that they are better for the environment and cheaper to drive.
• Extra features – safety and comfort also play a big role in ensuring a higher resale price. Buyers prefer anti-lock braking, parking assistance, navigational equipment, central locking and any other features that ensure safety and convenience.  However, some features, such as a supercharged engine, a sunroof and rear entertainment may cause a car to depreciate faster.
• Service history – a consistent service history shows the buyer that the car has been taken care of.
• Appearance – paint marks, dents and scratches often put off potential buyers immediately – this counts for the inside and outside of your car.
• Warranty – buyers want a car that is still under warranty and/or a motor plan.

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