These are the cars that hold their value best after one year
By: Kriben Reddy
JOHANNESBURG - Since the Covid-19 pandemic and subsequent lockdowns brought the South African car market to a shuddering halt, it seems that the industry is starting to show signs of life again - but the way people buy cars may have shifted forever.
Call me a glass half full kind of guy, but the way I see it, if the market is 30% down, that means 70% is still active. And it's more important than ever that those hardy consumers are informed about the best decisions to make when it comes to buying a new (or used) set of wheels.
Judging by the Gumtree auto team's activity levels for the last three months, it seems people are sticking to the tried and tested brands. Because the numbers go beyond mere enquiries to reflect an actual intent to purchase, they give a good indicator of where consumer demand is. Not surprisingly, Toyota and Volkswagen attract the most attention, followed by Ford in a fairly distant third.
What's important to bear in mind is that the Gumtree numbers reflect enquiries about used cars. And as TransUnion's latest Vehicle Pricing Index (VPI) numbers show, the financial impact of the pandemic has seen a clear trend of consumers either putting vehicle purchases on hold for now, or looking to buy down from new to used vehicles. The VPI report shows the used-to-new vehicle ratio has been trending upwards post-lockdown, from an average of 2.16 in 2019 to 2.31 in Q2 2020. This means that for every new vehicle financed, 2.31 used vehicles are financed.
I am often asked what the “best brands” to buy are. The reality is, that when it comes to the used car market, no two used vehicles are the same. But what I can tell you is that it's important that you buy something that matches your budget, suits your lifestyle and that you aren't necessarily going to lose money on if you need to sell the car in a couple of years time. It all depends on your priorities.
Which cars depreciate the least?
If you're buying a car for its ability to hold value, there's a lot of information available on which cars have the lowest depreciation - and the results may surprise you. For example, if you're looking at budget cars under R145 000, the best-performing vehicle in terms of holding value is the Kia Picanto, which will still be worth 86.91% of its new price after 12 months, fractionally ahead of the Hyundai Grand i10, at 86.28%.
Hatches that were under R180 000 when new, one year ago? Say hello to the Renault Sandero, which will be worth 87.28% of its new price after 12 months, ahead of the VW Polo Vivo at 84.38%. Step up a price point to hatches under R290 000, and the VW Polo 1.0 TSi Comfortline DSG will be worth 84.29% of what you paid for it after a year, followed by the Kia Rio 1.4 at 83.61%.
If you're looking at a crossover under R350 000, the Hyundai Creta will still be worth 87.21% of its new price after 12 months. The next best bet in this category? The Suzuki Ignis, at 83.79%. SUV under R380,000? Toyota RAV is worth 85.15% of its new price after 12 months, ahead of the Hyundai Tucson, at 83.24%.
Budget car (value after 1 year)
Kia Picanto - 86.91%
Hyundai Grand i10 - 86.28%
Renault Sandero - 87.28%
VW Polo Vivo Comfortline - 84.38%
Hatchback under R300 000
VW Polo 1.0 TSi Comfortline DSG - 84.29%
Kia Rio 1.4 - 83.61%
Crossover under R400 000
Hyundai Creta - 87.21%
Suzuki Ignis - 83.79%
SUV under R450 000
Toyota Rav4 - 85.15%
Hyundai Tucson - 83.24%
SUV under R600 000
VW Tiguan - 85.49%
Hyundai Tucson - 84.83%
Premium Sedan under R700 000
BMW 3 Series (G20) - 88.89%
Mercedes-Benz C-Class - 84.17%
My point is that you sometimes have to look beyond the conventional wisdom around brands, and base your buying decisions more on actual numbers than what you brother-in-law says around the braai. It's also vital that you consider other factors like tyre wear, fuel consumption and total cost of ownership of a car.
You can also get a current value for a specific vehicle, and the 12-month pricing trend, by using the www.firstcheck.co.za website or downloading the app. Firstcheck allows you to buy a Car Value Report (Valuation), a Car Check Report (Verification), and even check your credit score.
The website and app provides instant, anywhere, anytime access on the value and status of a specific vehicle, including whether it's currently listed as stolen. The Car Value Report costs R19, and the full Car Check Report costs R99.
What's interesting is that the current crisis may just herald a more logical way of buying cars.
South Africans are notorious for buying cars with our hearts, and not our heads. Now, we're increasingly seeing people assessing their car buying decisions based not only on their current financial circumstances, but where they think they may be two or three years down the line.
And that's good news for our finances.