Which new cars hold their value best?

By Stuart Johnston

Looking at a new-car price list can be a bewildering prospect, especially if you don’t have any particular preference for any make or model of car.

But whether you are an arch enthusiast or a run-of-the-mill motorist who simply wants “wheels”,  one of the things you should be concerned about is depreciation. Some cars depreciate far quicker than others, and this can be very important if you are financing the car, not least with a “balloon payment” at the end of the contract period.

So, which new cars retain above-average value?

As a rule of thumb, the best-selling cars on the South African new-car market retain their resale value the best. But some more than others….

Toyota is generally top dog in this respect. The company has been the best-selling vehicle manufacturer for the past three decades, and their products fair brilliantly on the used-car market too.

A case-in-point is the perennially-popular Corolla, which will only depreciate by 10 per cent per year on an average mileage. The Toyota RAV4 compact SUV , however, fares even better. A 2016 RAV4 3.2D-$D can command a price today of R500 000, which represents a depreciation  of less than five per cent, on a mid-2016 purchase price of R522 000.

And in the very cheap used-car market..

Here the Toyota Tazz is king. Well-preserved 2003 models are selling for R70 000 and above, which is what they cost new in 2003! Volkswagen Citi Golfs also command very good prices in this market, and deservedly so, as they are reliable, and spares are cheap and readily available.

And talking of Volkswagen….

There is a deserved perception that buying a used performance car is not a good idea unless you are willing to pay up for repair bill. Because generally these cars will have received a hammering throughout their life, driven by some young hooligan with his cap mounted backwards on his head.

An exception to this is the exceptional VW Polo GTi. Right now, one-year-old Polo GTis are fetching money close to the original purchase price of R347 000, back in mid-2016. AutoTrader this past week listed two examples selling for around R330 000, a depreciation of just 5 per cent!

The Honda Jazz is a great bet for the practical motorist

Honda’s Jazz has been one of the great new-car and great used-car buys for a decade and a half. Honda produces some of the most reliable cars on the planet, and the Jazz is one of the most practical of affordable cars you can buy.

The used-car values reflect this excellence.  Depreciation of under 10 per cent is the norm for this car.

Another great used-car performer is Mazda’s CX3. This car has been an excellent seller for Mazda here, revived under independent ownership, and used examples are in high demand. You can expect to pay upwards of R275 000 for a 2.0 Dynamic model, which sold for R292 000 in mid-2016. That’s a depreciation of just 5 per cent!

What about Korean cars?

The Korean mainstream cars from Hyundai and Kia have earned a fine reputation for reliability. But what has counted against them in new-car sales lately, has been the falling value of the rand against the dollar. The 120 model, one of Hyundai’s best-sellers, shows (on average) a depreciation on a year-old model of between six to eight percent, which is excellent for this category of car. Kia models, like the cute Picanto, are similarly popular on the used car market, and the value retention is high.

Ford is one of the top-sellers, so what about used values?

Ford Motor Company South Africa has been hugely successful in recent years, holding a solid third place behind Toyota and Volkswagen. Ford Rangers command good  used values, understandable because demand for the new pick-ups are so high.

Another strong-seller for Ford has been the EcoSport compact SUV. Used values have been strong up until now, but lately Ford has been discounting new EcoSport models quite heavily (for dealers to make targets?) and this obviously has a negative knock-on effect for used values down the line.

What about exotics?

Two high-priced brands regularly command excellent resale values and these are Porsche and Ferrari. Whereas other expensive cars from the likes of Mercedes, BMW, Audi  and Audi show appreciable depreciation, this doesn’t seem to affect the blue-ship status enjoyed by Porsche and Ferrari to such a degree. The more run-of-the-mill  Porsches (if there is such a thing) depreciate quicker. But  the iconic 911, and just about all Ferrari models,  hold their value remarkably well.

And if you can hang on to that Ferrari or Porsche for a decade or so..

The way to make real money on a Ferrari or a Porsche is to mothball it and keep it for a decade or two. We list two examples: A 1997 Porsche 911 Turbo (993 series) is currently listed at just under R4-million on AuoTrader. The car has a mere 19 000 km on the clock, an average of less than 1 000 km for the past 20 years. It’s price new in 1997 was  R975 000.

A 1990 Ferrari Testarossa is currently listed at R4,5-million, just R500 000 less than a 2016 Ferrari 488 GTB. Just a few short years ago, that same 1990 Testarossa would have sold for about R1-million, indicating just how values of classic exotic cars have  spiralled in recent years.