Purchasing a new car can be a daunting process, especially if you don’t have a specific make or model in mind.
Whether you are a car enthusiast or just a simple motorist, you should always consider depreciation on a vehicle when purchasing. Some cars hold their value really well, some cars can even increase in value depending on demand and sadly, others depreciate really fast. Depreciation is especially important to consider when financing. You should know what your new car is going to be worth at the end of the contract period.
Cars that retain above-average value
As a guide, note the best-selling cars on the South African new car market. Some more than others, but these retain their resale value the best.
In this regard, Toyota sits at the top. The automaker has been the best-selling vehicle manufacturer for the past three decades. A used Toyota also sells really well.
Let’s take the ever-popular Corolla as an example. This car will only depreciate by 10 percent per year on an average mileage. The Toyota RAV4 compact SUV does even better in this regard. A 2016 RAV4 3.2D can demand a price of R500 000 – which, on a mid-2016 purchase, would’ve cost R522 000. That represents a depreciation of less than five percent.
Cheap used-car market
As aforementioned about Toyota, the Toyota Tazz rules here. A well-preserved 2003 model can be found starting from R70 000 and going up. This is what they were selling for ‘out of the box’ in 2003. Volkswagen Citi Golfs also have very high demand and can command very good prices. These cars can get away with those asking prices because aside from their reliability, spares are also readily available and cheap.
Used Volkswagens
There is a generally a preconceived notion when purchasing a used performance car, that it was probably driven hard by a young hooligan. In addition, that its next owner will have to cough up the money for a repair bill. This leads to the idea of it not being a good idea to purchase.
But if we take a look at the VW Polo GTi – a one-year-old model can ask for a price almost close to the original purchase price of R347 000 (2016 model). Two models can be found on AutoTrader selling in the R330 000 range, which makes depreciation of just 5 percent.
Japanese cars
The Honda Jazz has made for a great new car and used car buy. It has experienced relatively good sales for a decade and a half. Say what you will of the Japanese automaker [I’ve seen the memes ;)] but the Honda produces some of the most reliable cars on the planet. The Honda Jazz is also one of the most affordable and practical cars you can buy. You can expect depreciation of under 10 percent for this model.
Another Japanese car that also does well in used-car performance is the Mazda CX3. It has been a good selling model for Mazda in SA and used models are in high demand. For a used 2.0 Dynamic model you can expect to pay R275 000 and up. Which, in 2016, would’ve sold for R292 000 new. Depreciation here is just 5 percent.
Korean Cars
Makes such as Kia and Hyundai have earned a good reputation for reliability. However, in terms of new car sales, the falling value of the rand against the dollar has worked against them. One of Hyundai’s best-sellers is the i20 and has a depreciation (on average) of six to eight percent on a one-year-old model. That rate is quite good for this segment. Whereas the Kia Picanto is similarly popular on the used car market and its value retention is high.
Ford
After Toyota and Volkswagen, Ford sits at number three in SA and has been hugely successful in recent years. Ford Rangers have high demand and can command good used values.
The Ford EcoSport compact SUV is also a strong seller. Newer models have been discounted, but previously, used values have been strong. However, the discounts will have a negative knock-on effect on used values in the future.
Exotic Cars
In this category, the two brands that regularly command excellent resale values are Porsche and Ferrari. Germans like BMW, Mercedes-Benz, and Audi show appreciable depreciation but doesn’t affect Porsche and Ferrari the same. Lower quality Porsches would depreciate quick but models like the iconic 911 and about all Ferraris hold their value exceptionally well.
And if you want to make some real money of a Porsche or a Ferrari then best you keep it for a decade or two. To give you an idea, a 1997 Porsche 911 Turbo (993 series) is currently listed on AutoTrader for just under R4-million. It has a mere 19 000 km on the clock. In 1997 it would have sold for R975 000 new.
A 1990 Ferrari Testarossa can be found currently listed for R4,5-million. A 2016 Ferrari 488 GTB is selling new for just R500 000 less. A few years ago that Testarossa model would have sold for about R1-million. This is how the value of classic exotic cars have risen in recent years.
