Insiders’ tips on protecting the value of your car
THINK ahead, invest a little time and effort on your new car and you can create a big pay-off in the garage.
Depreciation is still the biggest cost of new-car ownership, far exceeding the weekly fuel bill or even the annual service and registration.
But most people still worry more about their regular trips to the service station to refuel than maintaining their car to minimise the loss from the original purchase price — which can easily be more than 30 per cent after three years.
Keeping the car smoke-free, washing and polishing regularly, getting it serviced by the book and removing minor dings and scratches can make a huge difference when your car moves to someone else.
“We’re talking literally thousands and potentially tens of thousands,” says industry expert Santo Amoddio, the CEO of Glass’s Information Services. “Depreciation is still the biggest cost and accounts for more than 50 per cent of a vehicle’s annual running costs.
“Most cars will depreciate by about 50 per cent over three to four years from the new price.”
Choosing an outrageous fashion colour, instead of boring, basic white or silver, can hit hard at resale time.
“A new car that sells for $100,000 can devalue by more than 10 per cent almost immediately with the wrong paint colour,” says Amoddio.
But the inevitable depreciation need not turn ruinous.
“The best way to minimise depreciation is to look after the car, protect the interior and exterior, and have a full manufacturer’s service history,” says our dealer
insider, who represents many of the top-selling brands from sites in Sydney.
He prefers to stay anonymous but is keen to help.
“A popular new car is going to be a popular used car, so something like a mid-level Mazda3 can be a good choice. Go for a bit of jewellery, because a typical used-car buyer wants a new car but probably cannot afford it.
“An SUV is going to do well because they are very popular and always in demand, even seven-seaters.
“Steer clear of bright yellows and greens and any short-term fashion colours. White, black, silver and metallic paints usually help retain value.”
The basics of smart shopping have not changed over time, starting at the showroom.
Ammodio says: “I’d buy what’s popular new among private buyers, as you can usually bet it’ll be just as popular as a used vehicle.
“Don’t be afraid to buy something different but bear in mind you may not get the same service coverage as a more mainstream and established brand with an extensive dealer network. Also buy within your budget and consider your lifestyle needs.”
He advises avoiding going overboard on options or accessories, which can be a profit centre for a dealership.
“As a general rule, any options or accessories that you can see are the ones that add most value. Leather is a desirable option and floor mats help protect the vehicle’s original floor coverings.”
Once you get it home, think ahead. Don’t park under a tree and risk damage from broken branches and sap, remove any corrosive bird droppings as soon as you spot them, take special care of the alloy wheels and avoid bumping them on concrete kerbs, and park in a garage if you can.
Pets and children can also create mayhem so keep on top of cabin cleaning and avoid smoking in the cabin.
The dealer weighs in: “The best way to minimise depreciation is to look after the car. Protect the interior and exterior and have a full manufacturer’s service history. “With the tolerances so low these days in engines it is vital that the servicing is done correctly with the correct oils. Engine sludge, from the wrong oils, is a major issue.”
Looking ahead to trade-in time, Amoddio has some important advice.
“Low-kilometre vehicles are always more desirable. This will also provide some warranty protection for the used-car buyer if there is any remaining,” he says.
And our insider has several sharp tips. “We value cars purely based on what they will sell for and work backwards. Minor damage is all right but major damage will be a big turnoff because most dealers have maximum reconditioning timelines, so if it’s going to take more than seven days to recondition most dealers will regard the car as a wholesale prospect.”
When it comes to trade-in time it’s also worth spending a bit to ensure the car looks as good as possible. That means a clean-up in the engine bay, repairing any minor nicks and dents and getting a proper interior detail.
“Anything that takes appeal away from a vehicle for sale (will have an adverse effect on) its resale value so undesirable smells, burn holes in upholstery, or paint damage caused by the elements will reduce a vehicle’s resale value,” says Amoddio.
“Extra-high kilometres, say more than 40,000 a year, not having the vehicle servicing up to date, and any body damage that hurts the looks will definitely have an impact.”