Mon, 09/21/2009 - 14:41 — jeremy
It is increasingly the case, especially in these trying economic times, that the smart buyer purchases a new vehicle with one eye firmly on its residual value. It's almost proverbial these days that, as investment choices go, a car is right up there with stocks in prestigious, third generation American investment banks – not good, that is to say. The second you ease the new car out of the dealer's yard you start losing money, since with the flick of the ignition your car has made the transition from 'new' to 'second-hand'. The question, therefore, is how to choose a model that will hold on to as much of its value for as long as it can.
Size
Or, How Australia Fell Out Of Love With Hulking, Petrol-Hungry Leviathans. At the moment, big is not beautiful. It is cars like the Mitsubishi Lancer and the Toyota Yaris that are topping the list of cars that retain the greatest proportion of their original purchase price at resale. This is largely due to the lower cost of the original purchase coupled with a smaller bill to keep them running.
A recent study that compared the price of new cars with their respective resale price three years later uncovered a noticeable trend in the direction of smaller cars as the larger passenger vehicles lost the position at the top of the heap that they have occupied for the last twenty or thirty years.
The overall winner, according to the report, was the Subaru Imprezza, applauded as the 'car likely to retain the most value overall'. This two litre, speedy but safe little dynamo held onto a laudable 63% of its value three years out from original purchase. Other heavy hitters were the Lancer, the Yaris and Holden's Civic, all small cars and all retaining between 55-57% residual value.
When stacked up against these front-runners, the larger family cars fare poorly. Pick of the crop was the middling-sized Mazda 6, which three years subsequent retained 54.3% of the price paid at purchase. As for the large car, the best they could do was 46%, which is the proportion of its initial value that the Chrysler 300c maintained three years down the track.
However, if it really must be a larger car for you, both the Mitsubishi Lancer Wagon and the Holden Astra Wagon clung onto more than half of their initial worth – alternatively, consider the diesel or the LPG equivalent since, as we will see, fuel is also an important consideration in resale value.
Fuel
Diesel cars are in the middle of something of a Renaissance. Not only do they run at a cheaper price than their petrol counterparts but they hold value for longer and offer you the driver better performance and refinement. Given these benefits, it is not terribly surprising that the movement towards diesel looks set to continue for a while yet.
LPG is another appealing option, with the substantial saving they afford at the service station giving them a decisive economic edge over their petrol counterparts. The resale prospects for LPG cars has been further improved by the decision lately made in Canberra to hold off until 2011 excise charges that were originally due to be implemented this year. This excise will have a gradual introduction, at a rate of 2.5 cents per litre per year until 2016. This prospective level only accumulates to 12.5 cents in total, which compares favourably with the current 38 cent levy on every litre of petrol and diesel fuel.
Colour
As a rule, it appears to be neutral colours that hold on to their value best – in any case, brighter colours carry an inherent risk that the violent purple that is popular this year will be a laughing stock by next winter. It is almost a given that, within five years, the colours that seem daring and modish today will look outdated, which will markedly cut the amount you successfully charge when reselling – unless, of course, you can hold onto to it for long enough that those same colours become retro and ironic enough to be cool once more.
The popularity of different colours is also affected by the area you live in. In cooler climates, the darker greens, blues and blacks are more popular, whereas the brighter tones are more prevalent in the warmer, northern parts of the country.
What to do, what to do?
If you are serious about optimising your car's resale value several years or even a decade down the track, you ought to take the time to assess every aspect. Buy a car that is the right size for your requirements, and no bigger, and at least keep an open mind to the benefits of diesel or LPG even if you're a committed petrolhead. Additionally, treat like the plague garish tones and hues such as metallic aquamarine or shocking pink, which might look simply terrific now – trust us, you'll see these colours in a slightly different light in a few years.