Why do Volvo Cars have poor resale value in South Africa? Experts weigh in
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JOHANNESBURG – “Volvos have poor resale values.” This is a statement often heard in South Africa. I have been hearing it a lot lately, because I’m driving a Volvo XC40.
While everyone who has had the opportunity to ride in it loves it, they often say: “It’s going to lose a lot of money on the used market.”
I must admit this was the case in the past. More that a decade ago, I owned an S40 sedan that I loved. While it served me extremely well, it did not attract interest in the used market. had to part with it for below trade value in the end. It was perhaps an early indicator that South Africans were losing interest in sedans, particularly non-German sedans, as most D-segment sedans have disappeared from the new car price list in Mzansi.
Last week, I got in touch with two industry insiders to find out more about the resale values of Volvo Cars in South Africa. Here’s what they had to say:
Busting the myth of poor resale value
“Nothing could be further from the truth. The reality, in fact, is that the brand performs extremely well in the used-car arena and many Volvo models are best-in-class when it comes to resale values,” says Greg Maruszewski, the managing director at Volvo Car South Africa.
He says the perception of poor resale values for Volvos is a uniquely South African challenge.
“This situation doesn’t apply anywhere else in the world. To the contrary, Volvos are perceived to have good resale values in other markets – and this is also the reality in South Africa.
“In Europe, dealers don’t want the cars to cross borders, so they will often pay a premium to retain the car. However, turning to the local situation, possibly because of a legacy of low resale values some South Africans believe that this remains the case today. And it certainly doesn’t.”
SUVs in high demand in all segments
While three-year-old XC40s and XC60s are best-in-class when it comes to resale values, one-year-old Volvos retain a presentable 87 to 90% of their manufacturer suggested retail price, says Maruszewski.
But what factors influence resale values?
This is a somewhat complex issue, because values are affected by tangible and non-tangible factors. The perception of the brand and popularity of the model, for instance, come into play. So too does the condition of the vehicle, mileage, engine type and transmission (most people want an automatic). Awards can also play a role – the XC40, XC60 and XC90’s bulging trophy cabinets have also bolstered their resale values.
Kriben Reddy, the head of Auto at TransUnion Africa, says several Volvo models retain strong resale values when compared to their competitors in the local pre-owned vehicle market.
“Volvos are becoming increasingly popular on our roads. They put a lot of focus on the SUV segment, and are strategically offering the South African consumer attractive, high-specification vehicles at significantly lower prices than their rivals. This is going to drive higher resale values as more consumers see the value in these remarkable vehicles,” says Reddy.
Then there are some cars that are star performers in the used-car market. The Volvo C30 hatchback is one. You will normally pay over book value and will sell over book value too. Buyers take great delight in acquiring one of the Volvos – because you get a lot of car for relatively little money.
However, ultimately, resale values can be impacted by training and education. For this reason, Volvo Car South Africa regularly educates its dealer network and used-car managers from outside the network, who trade in Volvos. Focus areas include performance and safety as well as pricing (Volvo has implemented fewer price increases than some German rivals).
“It’s a case of informing/educating, managing perceptions and, most importantly, debunking myths,” Maruszewski says.