Depreciation is a silent killer in the running costs following a new car purchase. Most people tend to think of line items like fuel costs, servicing, tyre replacements and insurance as the main culprits siphoning money away from a new car buy, but they all pale in comparison to how much you lose with simple depreciation.
The claim often bandied about is that as soon as a new car drives off the dealership lot, it loses 10 percent of its value. That sounds dramatic, but sadly, that statement is actually not too far off.
That needn't always be the case, though! There are cars out there that are shielded from the depreciation downtrend.
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So what should you buy if you want to maximise your car’s trade-in value when it comes time to upgrade? That’s what we’re here to find out, armed with industry data to help.
Performance is king
According to automotive industry monitor Glass Data, the type of vehicles that dominate the top end of the 36-month/60,000km resale value charts are cars that are designed to go fast - and cost a lot.
In fact, the car that depreciates least - with 73 percent retained value at the end of 36 months – is the Audi RS3 Sportback, one of the hottest hatches on sale. Its sedan sibling isn’t far behind, with a score of 67 percent.
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Other notable members of the high-resale club include the AMG GT (67 percent), Lexus LC 500 (67 percent) and eight variants of the Mercedes-Benz SLC (all 67 percent). Nissan’s GT-R Nismo also scores 67 percent, along with the Benz S500, S63 and S65.
Audi’s A5 coupe also features strongly, with 2.0 TDI, 2.0 TFSI and the 3.0-litre turbocharged S5 all recording 64 percent retained values. The Ford Mustang achieves the same rating too, but only the V8-powered GT manual model and not the four-cylinder Ecoboost.
It is worth pointing out, though, that a performance cars tend to cost far more than conventional passenger cars. So while they may be losing less of their value as a percentage, in real terms they're still losing vast amounts.
Somewhat surprisingly, it takes a little bit of scrolling before Porsche’s sports car models start appearing. Vehicles like the 718 Boxster and Cayman as well as the 911 Carrera GTS retain 61 percent of their retail value after three years, which is a respectable result but lags behind the Cayenne and Macan. Porsche’s two-door models have traditionally been seen as rock-solid ‘investment grade’ buys, but apparently it’s the SUV product that performs better in the short term.
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Premium vs mainstream
Luxury brands prove to be the better option for the most part. Audi had the distinction of claiming top spot overall, with five models (RS3, A4, A5/S5, Q5/SQ5, Q7/SQ7) all retaining more than 63 percent of their purchase value at the end of 36 months. It was a strong performer, however it’s not alone.
Mercedes-Benz actually had seven model lines represented at 60 percent and over, with the AMG GT, the S-Class in S500, S63 and S65 trim, the SLC, GLE, GLS and the C43 Coupe being its top scorers.
BMW also figures strongly with six model lines represented in the over-60-percent realm, but if you count all of the Jaguar Land Rover products as a single group, it was the Indian-owned British brands that had the strongest showing – all up, there were eight JLR models with retained values in excess of 60 percent, with Range Rover providing four and Jaguar and Land Rover bringing two each.
What’s more, virtually every variant of the Range Rover Velar and Jaguar F-Pace families made it onto the >60 percent list, both at 61 percent. British-accented premium SUVs appear to have very good prospects on the used car market.
As an example of the premium vs mainstream trends, take the Jaguar E-Pace and Mitsubishi ASX. The E-Pace depreciates to 63 percent of its initial price after three years while the mainstream ASX can only hang onto 48 percent of its retail price. That's 15 percent more value retained for going premium over three years.
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The body style question
Not only is the 60-and-up gang dominated by premium brands, but it’s overwhelmingly populated by SUVs.
It's a reflection of current buying trends and demand which sees more SUVs sold than any other body category.
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Of course, we find a majority of the best retained values belonging to premium brands, but as a general rule, Glass Data suggests that SUVs tend to hang onto at least 50 percent or more of their value after three years.
Trends show that the larger the SUV, the more retained value as well.
Toyota snuck in among the prestigious group with 12 variants of the 200-series Landcruiser and six of the Landcruiser Prado, along with Volkswagen’s hulking Touareg. All three retain 61 percent of their value after three years.
As for the everyman, Mazda’s comparatively humble CX-5 Akera diesel AWD achieved a 60 percent score – though all other CX-5 variants appeared a few percentage points further down the list.
Just because your vehicle is a workhorse doesn’t mean nobody will want it once you’re done with it. In fact, if you shop smartly you’ll be able to dodge depreciation and reduce the impact on your business’ bottom line. Unsurprisingly, the best performers in the commercial space are Toyotas.
But despite dual-cab utes enjoying bigger and bigger sales in Australia, it’s not the Hilux that rates highest for Toyota’s commercial division – it’s the Hiace commuter van, which returns a healthy 59 percent of its retail value at the three-year mark.
The first Hilux on the list appears at the 58 percent mark (the Rugged X variant), followed by a brace of higher-spec Hilux Rogue, Rugged and XR5+ variants at 57 percent. Hiace SLWB models also turn up at 57 percent, while LWB models rate well at 56 percent.
The rest of the Hilux 4x4 range achieves a 56 percent retained value score too.
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Ranger FX4, XLS, XLT and Wildtrak models also achieve 57 percent ROI, with the rest of the Ranger range appearing at 56 percent. With the Ranger continuing to experience strong demand in the new car market, its healthy performance as a used vehicle is easily understood.
Virtually all dual-cab ute models hold their value well, but Chinese-built utes like the Great Wall Steed are an exception - only retaining 29 percent of its value after three years.
Colour, trim and options
It's also worth pointing out that the paint colour and trim selections you make at the dealership can also have quite a profound impact on resale values years down the line.
White continues to be the most popular colour in Australia but opting for a high-profile ‘hero’ colour can produce dividends when time comes to sell – particularly on performance cars.
Some paint finishes – like silver and black – are considered timeless and thus are fairly safe choices, but will specialised finishes like matte or satin paint age quite so well? It’s something you’ll need to take into consideration if you consider resale to be more important than your own personal satisfaction.
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And there are other general points to bear in mind to help preserve resale value. Keep your car clean and tidy and its interior will present far better. Paint scratches may be easily rectified, but a car’s interior is much harder – and more expensive – to refurbish if it’s heavily worn, soiled or otherwise damaged.
Keep the mileage down too, if you can. Used car buyers will always gravitate towards cars that have fewer kilometres on the odometer. Interestingly, Glass Data says optional equipment can depreciate faster than the car they’re bolted too – so select your options carefully.
And lastly, keep in mind that expensive optional extras very rarely add the same value (if any) to a car when it comes time to sell.