A few pointers on shrewd car buying and selling
Chevrolet sold 270,994 examples of their Equinox crossover SUV in the USA in 2020, making it the seventh vehicle on the top sellers’ list. Yet, every Chevy Equinox review such as these, rates the car as being rather average in its class. So, why does it sell so well if it does not actually stand out among its competitors?
We’ll come back to this point, but this serves as a demonstration that it is not always easy to predict which cars will sell well and – more importantly – which cars will retain their value best. If you buy a brand-new car, you can expect it to lose a massive chunk of its value during the first five years of ownership. In fact, you can congratulate yourself on a good buy if it retains half of its value; it’s likely to be closer to a third.
Unless it’s a very rare, 50-year-old sports car that you hardly drive, you are unlikely to ever make money when selling your car. Normal, everyday cars are not an investment, they are an expense. However, there are a few ways in which you can minimize your losses when selling your car can get the highest possible amount for it.
Which Cars Retain Their Value Best?
When we look at 2020’s list of cars in the US that retained their value best, certain trends emerge. Here are the top ten, calculated after five years of ownership:
- Toyota Tundra – retained 65.38 percent of its value
- Lexus GX 460 – 58.61 percent
- Lexus NX 300 – 58.25 percent
- Toyota Tacoma – 57.66 percent
- Jeep Wrangler – 57.26 percent
- Subaru WRX – 53.82 percent
- GMC Sierra 1500 – 53.51 percent
- Porsche 911 – 53.17 percent
- Hyundai Kona – 52.63 percent
- Toyota Corolla – 51.91 percent
The 2021 list is likely to be very similar and a few trends are becoming obvious when looking at the vehicles listed above. First, the Toyota Group took five out of the top ten positions. Second, most of the vehicles are trucks or crossovers/SUVs, with only three traditional cars among the top ten. Many trusted online resources list used cars’ value retention and it would be worth your while to peruse these lists before buying a new car.
Even so, the best ones only score in the 50s, percentage-wise, so buying new always loses you lots of money. Clearly, popular models such as crossovers, SUVs, and trucks retain their values best, despite their worse fuel economy. They make up for this in so many other ways by being practical. Ultimate horsepower figures and gas mileage are not always the metrics that sell cars.
Reducing The Losses
So if you’re bent on buying new, aim for a model that retains its value well and prepare yourself for a 50-percent hit on the initial MSRP upon selling after five years nonetheless, because this is about as good as it gets when you buy new. Smarter would be to buy used because a car’s depreciation slows as it ages and if you let the new buyer take the initial hit, you can buy their car some way down that depreciation curve, and you will lose far less money on it after five years.
Now you can also consider some heavier depreciators that you wouldn’t have otherwise because you won’t be footing the bill for those first few years of depreciation anymore. Another way to reduce your losses when selling your car is to make sure it is in a condition that will be conducive to it fetching the highest possible price when you sell it:
- Determine its value. Using a trusted source such as Kelley Blue Book, determine your car’s value. You can’t sell it for the right price if you don’t know what it’s worth.
- Obtain your car’s vehicle history report. To demonstrate that you don’t have anything to hide, this report can be obtained from many sources online and shows you’re not hiding anything in terms of shady vehicle history.
- Service record. Have your car regularly inspected and serviced and retain the proof of this for the buyer’s peace of mind.
- Repair record. Retain records of major repairs like engine and transmission work.
- Detail it. Has it properly and professionally cleaned and detailed? Condition sells.
- Photos. Use proper, high-quality photos on your ad.
- Provide detail. Give enough information to the potential buyer in your ad.
- Test drive. Let the potential buyer go on a test drive.
Buying a new car from one of the most popular categories like trucks or SUVs and from the most popular and trusted brands is the first step to ensuring a good resale value. These cars retain their value better in comparison with other cars because people love their cargo space, size, different available configurations, features, and towing performance.
However, if you’re not going to hold on to the car for many years and there are faster depreciators that you like, buy them used to lessen the depreciation blow when you sell them. Always maintain your vehicle well and retain the proof of this. Last, keep it standard if you can. People don’t always trust customized or modified vehicles.