General: 9 Things That Affect Resale Value

Published by: on Monday August 13th, 2012

In the history of the automotive industry, resale value has never been more important than it is right now.  Think about what you spent or are spending monthly for your vehicle(s).  In the event that you need to sell that vehicle in the near or not-so-near future, did you ponder the state of Obama’s economic affairs before you bought it?

Did you foresee the earthquake devastation in Japan that caused meltdowns of nuclear facilities near their automotive and automotive parts’ plants?

Is there something else on the horizon that we don’t know to plan for?  I can assure you that the answer is, “yes.”  But until then, my job is to teach you to be the best automotive planner possible.

Do you know how to gauge resale value for a vehicle?  Take note.  It’s not as simple as it used to be.  Over the first five years of new car ownership, depreciation (the amount a vehicle loses value over time), is a car owner’s business expense. (1)

Determining resale value is an art.  However, if you peruse the web, you’ll see a lot of “resale value artists” are providing resale calculators to help you compute your car’s worth.  SPOILER ALERT:  Beware the calculator’s canvas.  Many of these calculators are weighted toward specific automakers and are little more than rudimentary (rude) ads.

Here’s the top 9 things to think-tank:

(1)   BRAND – the first name of your car is the most important one… (And no, I don’t mean what you call it while kicking the tires when it runs out of gas or the battery dies).  Certain brands (makes) just have a reputation for high resale value.  Before you say, “I knew that,” consider this…Some brands have high resale value because they have a reputation for high resale value.  Huh?  Translation: Residual value projections can and are based on consumer’s perceptions of long-term value, which then translates in long-term value.  Say that fast three times.  How many of you have heard how a Honda holds its resale value?  Do you know that because you had one that did?  You know someone who had one that did?  Or an ad agency spent O’billion dollars telling you that it did?  Hmm.

 

The ideal scenario is to find a car that will retain roughly sixty percent of its value over the first three years.  These brands usually include Acura, Subaru, Hyundai, Mazda, Toyota, Honda, Infinity, Lexus, Mercedes Benz and Audi.  There, something for everyone.

Let’s look deeper:

(2)   DRIVETRAIN – just because you enjoy shifting gears doesn’t mean that most do.  Most don’t.  Period.  All-wheel or four-wheel drive?  Unless you are planning to get off the grid, all-wheel drive holds better value unless you live where inclement weather makes rear-wheel drive worth the investment (and, hence, reinvestment).

Confused yet?

(3)   PAINT COLOR – white, silver and black have the best resale value unless, of course you’re driving a sport’s car that screams “RED, please!”  

(4)   TECHNOLOGY – in most cases, less is more.  Whereas audio systems and navigation aids are now readily accepted, affordable and available…think twice before you spend 2-grand on rims or a car that will parallel park itself.  People in the market for used cars may not appreciate your technological sense of adventure. 

(5)   ADD-ONS - Beware of adding performance- or aftermarket parts.  Voided warranties are usually deal breakers.

(6)   EXTERIOR/INTERIOR CONDITION – Exterior paint, dents, dings and rust, and anything in or on the interior in the way of unsightly (stains, rips, burn holes, pet hair or nasty mats) or smelly (old food, new or old tobacco smoke or pet puddles) are also big bones of contention.  Spend $200 on clear coat, have your car detailed and last, but certainly not least, remove (before the sun fade) all, “My kid (fill-in-the-blank) at (insert school here) stickers, inappropriately attired females on mud flaps and absolutely anything that ever proved you voted for a democrat.

(7)   MECHANICAL CONDITION – Service your car.  Keep a record.  Rinse.  Repeat.

(8)   MILEAGE – If you’re considering a once in a lifetime road trip—rent a car.

(9)   WHERE YOU LIVE – At the beach?   Rinse and dry your undercarriage often.  In the snow?  Rinse and dry your undercarriage often.  Salt is salt, regardless the source.  Salt equals rust.  Oh, and with global warming, if you live below the Artic, maintain your A/C.

I feel a real need to add one more.  Sorry, Mr. Cain, I love the number 9, but there’s a tenth one I can’t avoid… (10) WHO YOU KNOW – get a good mechanic.  Study a Kelly Blue Book.  And, remember, times are changing.  You don’t have to buy a feature or a talking car with more apps than your child’s iPod.  Granted, today, GPS is imperative to many, but before we had that in mainstream mechanics, MAPQUEST still did a dang good job.

Me?  I own two Fords.  American made.  American repaired.  American driven.  And, my resale value is just fine.  Of course, I’m a good mechanic.

 

Bumper sticker free – CAR MAN (Two on the pavement.  Two on the dirt.)

(1)   Kelly Blue Book