Resale values are a tricky subject. Because there is no authority in the Philippines on secondhand prices, pinning down the exact value of a car is difficult. Sure, there are financial institutions that can dicate it, but those prices are often seen as, well, low-balling. Because of that, the market somewhat runs itself with nominal values you see in classified ads. That’s also one of the reasons why some car’s used prices take a tumble.
But why is that so? There are several factors out there that are both within and beyond your control. Here are a few of them.
It’s not a popular model
Let’s talk about supply and demand and use the Toyota Fortuner as an example. There are so many of these SUVs around, and there are many people looking to score a deal on them in the used market. As a result, used prices are high thanks to a steady supply, and there is a strong demand since there are loads out there willing to pay a decent sum. On the flipside, if you get an obscure model from a brand that doesn’t have much traction here, you’re forced to sell it at a low price just to make it attractive to bargain hunters.
Let’s be honest here, there will always be more people searching for a used Toyota, Honda, or Mitsubishi in the market compared to less popular automakers. Brands with a strong name are more immune to depreciation.
The unfortunate sting of brand stigmas
There are brands out there with a well-deserved reputation, while others are still reeling from past stigmas. Unfortunately, that also takes a hit on secondhand prices. A prime example of this is Nissan. Some of you might remember all the sayings about Nissans in the early ’90s—chief among being that they were bad for resale.
Even though the brand made genuinely good products through the years, the label of being depreciation disasters proved difficult to shake off. No matter how good the product is, if there are people who latch to the stigma, residual values will be affected. At least newer Nissans are getting on par with other Japanese makes in terms of resale now.
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Color choice
Let’s be honest here, how many people are out there specifically look for hot pink, baby blue, or light metallic yellow units? Unless it’s a sports car, a rugged SUV, or a cute hatchback, uncommon color choices don’t resonate with folks who just want point A to B transport. It goes back to supply and demand: If the majority of buyers aren’t looking for it, the seller has to price it for less. Oh, and don’t even think about respraying your car booger green or pee yellow. You might as well give it away for free.
Gas guzzlers depreciate faster
“Ay, ayoko yan. Matakaw sa gas.” And because of that, people stay away from large V6s and V8s in droves. Sure, there are a few exceptions, but anything that gets less than 6km/L is avoided by practical (i.e., non-enthusiast) used car buyers. A prime example of this would be the Toyota Land Cruiser Prado. But isn’t the Prado known for solid resale? Let us explain why we chose this.
If you look around the used car market, there’s a pretty big gap between gas and diesel models in price. A used Prado with the 4.0-liter V6 goes for a lot less than the diesel with a price cap of at least half a million between them. Sure, the gas-powered Prado was cheaper to buy new, but the price gap becomes bigger when it’s time to sell. And because diesel Prado owners are unwilling to let their SUVs go, prices stay high because of demand and limited supply, whereas gas Prado owners let theirs go for much less.
You bought it right before a facelift or full model change
Sometimes, it’s all about timing. Your brand-new car can quickly become yesterday’s news as soon as an automaker launches the all-new model or facelift. If you bought it right before the new version’s launch, your resale will take a big hit, even if your car is just a few months young. To counter that, ask the dealer for a hefty discount to recoup the potential losses.
Parts availability and ease of servicing
For most folks, they just want a car that’s easy to service. So if a car earns a reputation for being difficult to procure parts for, chances are it’ll sit in the classifieds for a while. Sure, there will be a few enthusiasts who are willing to go the extra mile for service and maintenance, but for the most part, used prices will have to take a tumble to make it more enticing for more consumers.
The car looks like a beater already
“If you take care of your car, your car will take care of you.” That saying applies to resale value ,too. If a three-year-old car already looks like it’s been through decades of wear and tear, then it won’t get any eyeballs in the secondhand market. Besides, why even consider paying mint-condition money for an abused and neglected example?
Smoking kills resale values, too
Are you the kind of person who smokes in the car? If you do, you’re hurting your car’s resale value. For starters, the smell is extremely difficult to eliminate, not to mention the embers that can burn holes in the upholstery. Nicotine stains can also leave their mark on touch points such as the steering wheel and buttons, and any light-colored areas in the cabin will turn yellow in no time. The solution is simple: don’t smoke in the car, or kick the habit.
Too much, um, personalization
Cars are an extension of our personalities, hence, why we also put unique touches to our cars from time to time. However, too much personalization can hurt your chances if you need to let go of your ride. Whether it’s drilling a hole to fit a gigantic spoiler or slapping on a sticker that’s, er, features NSFW language, personal mods limit your potential buyers. Not everyone will want a body kit, or random abubot on the dashboard. And if, for some reason, plastered your name on (or in) the car, then good luck.
Mileage*
There’s no denying that mileage is a factor for determining resale. But there’s a reason why we put an asterisk above. Just because a car has low miles, it doesn’t mean that it’s been cared for the moment it rolled off the dealership. Conversely, a well-loved but high-mileage car won’t have the same value as a religiously-serviced, low-mileage example. That said, we’d rather buy a high-miler with a detailed service history than a low-miler that never got its first 1,000km free oil change.
In a nutshell...
Unless you have a potential collector’s item, cars will depreciate.
If you want to your car to hold its value, be wise about your purchasing decision. You can start by giving more care and attention to your car in terms of maintenance and looks. So even if your choice isn’t known for holding value, you can still sell it for a higher price because of its condition.
You can also haggle for a discount for a model that’s about to be replaced soon to take out the brunt of initial depreciation. That said, we won’t stop you from getting something that’s not too popular, but bear in mind you’ll get less of your money back come resale time.
Of course, resale isn’t everything. If that was the only factor in buying a car, we’d all be driving the same thing.
