How to minimise vehicle depreciation

Dubai - Avoid a prickly financial downer when you’re ready to dispose your car

By George Kuruvilla

Published: Thu 5 Aug 2021, 5:50 PM

For some, parting with their ride can be hard, but not landing a good deal is even worse. Purchasing a car is probably the largest investment that one would make in one’s life, after a home. But unlike the latter, it is a depreciating asset (in most cases) and it is important to stay informed so that when you are ready to dispose your vehicle, you avoid a prickly financial downer and instead, receive the most amount of money for it. Here are some tips and tricks to keep the residual value up.

Selecting the appropriate make and model

It all begins and ends in the same place — the marketplace. Some automakers, especially some models, enjoy a reputation for high residual values and purchasing one from this list makes all the difference. Traditionally, these are vehicles known for their reliability, low ownership costs, good fuel economy and so on and so forth. Besides checking with your friendly-neighbourhood automotive journalist or enthusiast, a good way of separating the cream from the crop is to observe which ones are the bestselling models in the region and which ones are consistently shortlisted for automotive awards such as J.D. Power. Toyota and Honda are examples of such. And the probability of shaking hands on a good number is high with these manufacturers and the demand for these vehicles also makes them easy to sell. Speaking of which, an acquaintance of mine once bought his Honda Civic for about Dh10,000 and sold it for the exact same amount, almost five years later.

The paint factor

The colour of your car can impact how fast it depreciates. Typically, white, black, silver and grey vehicles are much in demand and maintain their value better. While owning a car with a bold colour scheme, such as yellow, orange or green, may work in your favour if your vehicle is a sports car, it would work against you, if it is a commuter.

The used-car proposition

It is no secret that depreciation is highest with new vehicles. In fact, most cars purchased new lose about 15 to 20 percent of their sticker price the second they’re driven off the showroom premises. And for that reason, it just may be more sensible to get a second-hand vehicle, as the first owner would have taken the hit, one that you have strategically avoided. While the glisten of a new coat of paint and the new car smell are all a delight, when it comes to resale value, there is nothing like buying second-hand. The trick is to get one just a year or two old, with which you may just get the best of both worlds.

The unspoken warranty coverage

When selling a car, buyers often look for ones with valid warranties. If you plan to sell, do it at a time before the contract expires. You can also opt for an extended warranty at the time of purchase; while it does add to the CapEx, it may prove to be worthwhile down the road.

Once you have purchased the vehicle, minimising depreciation becomes harder as the years roll on, since it requires a plan and a long-term commitment. Here are some critical aspects that deserve your attention.

The accident-free vehicle

A fender bender — even minor one — often taints the image of the vehicle in the buyer’s mind, regardless of what condition it is in after repairs. So drive safe! And in case you do have an accident-free ride, make sure you back it up with a vehicle history report and ensure you present it to the buyer, whether asked for or not.

Maintenance mantra

Regardless of the brand, used car buyers often want to purchase a reliable vehicle, one that has been treated with a gentle right foot, has all parts in working order and has service history. Some sceptical buyers scout for simple things like tyre wear, oil level, wiper blades, etc., while others take due diligence to another level. Either way, we suggest that you keep your car or SUV in top shape and have it serviced at manufacturer’s recommended service intervals at the designated agencies for best results.

Keeping mileage to the min

The more kilometres you put on, the more wear and tear the vehicle experiences. And while things like the roads you take, the speeds at which you drive, how you drive and what function the car serves all take a toll on the resale value, none of them have quite the effect as those numbers on the odometer. Also, since vehicle warranties are tagged to both a duration and mileage, it’s best to keep it low. That surely doesn’t mean that you avoid picking up or dropping friends or family just for better resale value. And do not tamper with the odometer, it just isn’t good practice.

Eternal praise for the spotless vehicle

There is nothing like having a clean set of wheels, be it while you own them or when the time comes to hand over the keys. Luckily for us in the UAE, we have so many carwashes in every locality, many of which do a fantastic job inside out... or if you prefer, you can also do it yourself. All you need is a cordless vacuum cleaner, air freshener and polish to keep the paint, wheels and even interior panels shiny.

Keep it stock

Having thoughts of souping it up with a turbocharger, a flamboyant body kit or aftermarket exhaust system? Think again! While there are buyers who look for such “mods”, they are few and far between. The general used market buyer is looking for something that is untouched, keeping the warranty intact and the longevity as expected.

Put out a good ad

Make sure your ad has as many photos of your vehicle as possible. Ensure the front, back and sides of the vehicles are presented, and include photos of the cabin interiors as well. And if you have anything to highlight, like an upgraded audio system, take a snap of that too. It also helps to keep the language of the ad both precise and concise. If you can’t find the words, you can take it off another post that you like. Just make sure you put in the right contact details and your preferred method of being reached, such as email, telephone etc.

Tap the many channels

Post those ads in as many platforms as possible, such as websites, newspaper classifieds, office and gym memo boards, forums, social media, etc. Do everything possible because visibility is key. And while selling to a certified used vehicles showroom may be an easier transaction, a private buyer will get you more money.

Take the time to sell

Most sales don’t happen overnight, they take few telephonic conversations, maybe a show or two of the vehicle, to one or more individuals. So remember, even if you plan to sell something as bulletproof as a Toyota Camry or Honda Accord, expect a reasonable duration between posting the ad and the date of sale. Patience pays, as they say. Also, it is good to consider the month of the year. If it’s a convertible or a 4x4, try to post the ad in the early days of winter, not after.

More news from Driver's Seat