Drive your dollar further
Brands and models that hold their value best
BUYING the right new car can save you thousands of dollars.
With depreciation tearing the largest chunk out of any motoring budget, easily beating the costs of fuel or servicing or insurance, it pays to go with a bankable brand on the used-car market. It’s all about choosing a car that will hold its value.
The clock starts ticking the instant you leave the dealership.
Santo Amoddio, the chief executive of industry bible Glass’s Dealers Guide, says depreciation can rip more than a third from the second-hand price in less than a day.
“It’s safe to say they lose about a quarter of their value. That’s going from a new price to a trade-in price,” he says.
“If you’re talking a basemodel Falcon or Commodore, like a fleet car, it’s a lot higher at around 35 per cent.”
The right badge is the first step to success. If you can’t afford a luxury brand, pick a Mazda, Subaru or Toyota — you may pay extra but you will reap the rewards in the long run. Recent product improvements, as well as a five- year back-up program, is also helping Hyundai.
As for types of cars, the models that perform the best either have rock-solid reputations or offer something a little different from the garden-variety hatch.
Some of the strongest performers are humble onetonne utes, while sports cars and coupes also do well come trade-in time.
There has been a general downturn in resale prices over recent years but Amoddio says it is easy to see why the secondhand winners are doing such a good job for their owners.
“Toyota has a really strong used-car program. Mazda has the right products for this market at the moment, and cars that are desirable when they are new are also desirable as second-hand cars,” he says.
“Subaru had a rough patch a couple of years ago but they have lifted their game. The Forester, for example, is very strong on used-car values. That’s partly because a lot are retained by their original owners and passed down through the family.”
He also highlights the performance of prestige brands including BMW, Lexus, Mercedes-Benz, Porsche and Range Rover. Holden Special Vehicles is a bankable brand because of its unique appeal.
Glass’s rates the Honda Jazz as the second-hand bargain in the light-car class, with a 67 per cent residual rate after three years. Factor in the low purchase price and it’s the car that will cost you the least in three years of ownership.
The Mercedes-Benz A45 AMG is best among small cars at 62 per cent, the Audi Q3 tops small SUVs at 57 per cent, the Range Rover Evoque wins among medium SUVs at 73 per cent and the hulking Toyota LandCruiser is the winner at the top of the SUV battle at 73 per cent.
Amoddio says that apart from choosing the right car, the right options can make a big difference at trade-in time.
“Bluetooth, USB ports, satnav, ESP, rear-view camera and lots of airbags are now widely available in affordable
new cars. That’s what people are looking for and the result has been a steady and gradual decline in used-car values.
“Over the next couple of years that will naturally increase. If a car has those sorts of things in it then it’s very desirable as a second-hand car.”
But he also warns about worrying too much about prices, either buying or selling.
“The thing to always consider, when you’re looking at residual prices, is what you’re buying and selling for.”
Second-hand values are generally down but that also makes it a good time to buy a used car.
“It’s a very good time to buy. There are a lot of good used cars around at the moment,” says Amoddio.
“Today you can buy a new car with three or even five years of warranty at $15,000, so traditional used-car buyers of one to three-year-old cars are switching to new cars. Added to this is the continued offering of low or no-interest offers as an inducement to prospective new-car buyers.
“New cars these days have a lot more standard equipment and the new price has either stayed the same or dropped marginally. We’ve also had tariff reductions and free-trade agreements which have resulted in lower new-car prices.”
For the experts at Glass’s, there is only one change that could have a significant impact on second-hand values.
“The downward trend has been for about the last three years. The only thing we can see on the horizon that could see prices firm is that the fall in the dollar could see some prices rising,” says Amoddio.
RANGE ROVER EVOQUE