Which new cars depreciate fastest?

By Stuart Johnston

Before signing up for a brand-new car, it is well worth perusing the listings in AutoTrader to get an idea of how much your car is likely to be worth in a few years’ time.

It is a fact that some cars depreciate faster than others, and the idea behind this article is to give you an idea of what cars to avoid, if re-sale values are at the top of your list of priorities.

The first, general rule

The most important rule is to avoid models that don’t have a strong brand image in South Africa. The new-car market is extremely difficult to crack, from a newcomer’s point of view, and for this reason, some very good cars don’t enjoy the same resale value as cars of equal, or even lesser general quality and performance.

Other cars have strong emotional appeal, but suffer to some degree from poor reliability or after-sales service. When this happens to a brand, it is extremely difficult to reverse that perception.

Go for a  type of car that has  broad appeal

One of the fastest-depreciating categories of car in South Africa today is the large, luxury sedan. These cars are generally represented here by the Audi A8, the BMW 7 Series and the Mercedes-Benz S-Class. There are also other brands targeting this market, but in very small numbers, such as Jaguar with its XJ model.

The new prices of these cars can range from about R1,2 to over R3-million. They are generally magnificent cars, and in other global markets they retain much better value. But in South Africa, these cars have been largely superseded by the very luxurious and powerful SUVs on offer.

As a case in point, an Audi A8 recently listed in AutoTrader, a 2017 model  at R949 900,  had a list price of R1 369 000 in June  2017. That’s a depreciation of over 30 per cent, in less than a year, and these sorts of figures are not unusual in this large, luxury class.

Certain sports models also lose a lot of value in the first year

Sports cars are wonderful indulgences. They are sleek, sexy-looking, good for carrying only two people  (this can be sexy too!) and generally they go like smoke! But they can also cost you plenty of money.

Two iconic sports cars that haven’t been performing that well on the used lot in recent times are Aston Martins, and the excellent and well-priced Jaguar F-Types.

 The F-Type, in fact  is a very well-priced new car, the least expensive model coming in at under R1-million. You get great image, great engineering and great performance for your money.

But in the used car market, things are less happy for the F-Type, with even reasonably  low mileage models of a few years old, trading at around the R600 000 mark and less. If you opted for the top-of the range All-Wheel-Drive SVR Coupe, with  423 kW at your disposal, it would have cost you (at today’s prices) R2,1-million and some change. Thus it was surprising to a see a couple of these cars listed recently at prices ranging from R1,73 to R1,8-million.

The biggest surprise was that these cars had each logged under 1 000 km. That could represent a quick loss of R450 000, on a car that you’d only driven a few 100 kilometres!

Brand is so important

An impressive range of  cars that came onto the South African market some five years ago was launched by Infiniti, Nissan’s luxury-halo brand that is very successful in the United States. Toyota has a similar luxury brand, Lexus, and it took them many years in this country to move significant numbers of new cars. The Infiniti brand, it seems, was always going to be on a hiding to nothing in this respect.

If you bought, for instance, one of its hi-tech Hybrid models, the  Q50S Hybrid, in May 2017, it would have cost you (list price) R709 100. A low mileage 2017 example was listed in AutoTrader this week  at just  R469 900. This means it lost one-third of its value in just 18 000 km.

Cheap cars can also be vulnerable

Cheaper cars can also be vulnerable to huge depreciation, especially amongst the Chinese brands. For instance, a Chery Tiggo 1.6 TX sold for R239 900 in mid-2015. This week you could by one listed on AutoTrader for R139 995, with just over 21 000 km on the clock. That’s a R100 000 loss. And bear in mind that cars in this price bracket generally retain their value well.

French cars and Italian cars

Cars produced in these countries generally don’t have a huge reputation for great service in South Africa, in terms of either reliability, or service. There are exceptions, of course, and there are many cases of motorists driving around in Fiat Unos or Peugeot 207s that they swear by!

But an illustration of this point is the Citroen  Cactus e-THP 81 kW model, a French car with the rather weird “blister” protection panels applied to the flanks. The two Cactuses listed (Cacti?) this week had selling prices of between R160 000 and R170 000. Mileage on the R170 000 car, a 2015 model, was listed at 43 000 km, which is about average. In late 2015 this car cost R289 900, so the depreciation works out at over 35 percent  in two years. Not terrible, but poor when measured against prices retained by the likes of equivalent  medium-priced Toyota and VW models.

Alfas, too

AutoTrader was very impressed by the Alfa Giulia when we tested it recently, and we are hoping that this car marks a breakthrough for Alfa Romeo in terms of sales, once again. On the debit side, we noticed   this week  one  particular 2017 Giulia 2.0T Super listed, with only 18 000 km on the clock, trading at R456 000. That’s  appreciably less than the R625 000 list price.

The brighter side….

Of course there’s a bright side to all this. If you are in the market to buy a used car, and you are willing to take some risk, you can get one huge chunk of motorcar for money that would only secure a hum-drum new car. But if you do take the plunge,  make sure you set aside some finance just in case those low prices are the result of commonplace reliability issues. And on expensive,  complex hi-tech cars,  these can be expensive to rectify.