Buying second-hand can be a good way of keeping yourself mobile without costing yourself an arm and a leg in depreciation. However, some models are better than others when it comes to outlay and return.
For most of us, buying a vehicle is an emotional experience irrespective of whether it is new or used. The obvious benefits of buying new is that it is yours from the get-go and generally comes with a warranty and service/maintenance plan to help ease the initial cost of ownership. The downside is that the minute you drive off the showroom floor, its value has already dropped, anything from 15-25%. The more expensive the vehicle, the greater the fall in Rand value. The rate of depreciation levels out as each year passes, but (ignoring exotics and limited edition models) it is money that can never be recovered.
However, buying second-hand / used / previously owned, can make financial sense if done properly. The thrill of the purchase may not be as satisfying because someone has owned the car before you, but these days a well-maintained second-hand vehicle will not have lost appeal because it has a few thousand kilometres on the odo. Having said that, for any given class of vehicle, the higher the build quality when the vehicle is new, the less the rate of deterioration will be. Remember, quality costs money…
First, though, buying a demo model from a dealer is worth considering because although it will have been driven short distances by any number of individuals, it will have been allocated to a salesperson for personal use and consequently well looked after – it is a mobile advertisement after all. Generally put up for sale within a year, its price may be a little more than a vehicle that is more than 12 months old. A demo vehicle put into service in, say, May 2017 and sold in October is still a 2017 model and therefore current. The same vehicle if bought new in May 2017 and sold in March 2018 will be seen as being a year old, with consequent less resale value. This dating affects insurance values, too.
Last month we gave some general advice on buying second-hand, but with feature wish list in hand, for anyone having on open mind on what make and model to go for, it is worth looking at what are the most popular acquisitions. This gives an indication of what vehicles have proven to be good buys before becoming good byes. See what we did there? And this is not just about being reliable, economical, having reasonable service costs, or a valid warranty, service or maintenance plan. It’s also about having a slow depreciation; in other words, when it is time for you to sell your vehicle, its drop in value is less than average, therefore giving you a good return on your initial outlay.
As a general rule, cars that sell well when new, sell well when second-hand. There are a number of online used car advertising or finance house sites that monitor sales trends and while they do not necessarily correlate, there are some vehicles that stand out in most.
Gumtree’s Pre-Owned Auto awards name the following vehicles as best in class:
Under R130 000 – 2016 Volkswagen Take Up 1.0
R130 000 – R160 000 – 2016 Volkswagen Polo Vivo 1.4 Trendline
R160 000 – R275 000 – 2016 Volkswagen Golf 1.4 TSI Trendline
R275 000 – R330 000 – 2016 Mazda CX-3 2.0 Individual / Mazda CX-5 2.0 Active
R330 000 – R505 000 – 2016 Toyota Fortuner 2.8 GD-6
Sedan under R550 000 – 2016 Audi A4 2.0 TDI
Double-cab bakkie under R460 000 – 2016 Toyota Hilux 2.8 GD-6 Raider
Performance car under R615 000 – 2016 Volkswagen Golf R / Audi S3
Once you have honed-in on a particular vehicle, scour the used-car sites such as Gumtree to get a firm idea of what you can expect to pay, which may even differ from province to province. And do not be lulled into paying over the top for an extras-laden example – goodies are often more nice to have than need to have. Colour can play a part, too. Dark colours tend to show up blemishes more than lighter shades. Just see how many white vehicles there are on our road. Boring maybe, but practical…
But buying is only part of the story. When to sell? Around every three to four years has long been considered a sensible time span, by which time the model will not be significantly outdated and any finance deal will have been concluded. If you have bought wisely and looked after your vehicle, you will be able to sell it quickly and with a good return. Trading-in is unlikely to be a better option because of subsequent dealer mark-ups being taken into account. If you have bought second-hand with a longer ownership in mind, it still pays to have bought a popular model because of ongoing spare parts availability and servicing expertise. And if and when you do have to sell, it will not be a giveaway.
SA’s Top 10 New Car Sales for September 2018
Toyota Hilux – 3 943
VW Polo – 3 866
Ford Ranger – 3 016
VW Polo Vivo – 1 976
Nissan NP200 – 1 888
Toyota Corolla/Auris/Quest – 1 680
Toyota Fortuner – 1 345
Isuzu KB – 1 193
Toyota Yaris – 1 111
Hyundai i10 Grand – 1 049
*Note Mercedes-Benz and BMW do not issue individual model sales.