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Factors Affecting Car Resale Value

· Personal Finance

If you're looking to sell or trade in your car, you'll want to get the most money possible. However, a little testing can surprise you as to how much or how little your car's market value is. Depreciation, a measure of how rapidly a car loses value, is now a famously bad investment, accounting for more than a third of the total annual cost of car ownership.

It's important to understand what factors affect a car's resale value in a country like Malaysia, where the used car market trades about 400,000 cars annually, or around 66 percent of new car sales, according to the Malaysian Reserve. Take a look at the following:

#1: Brand and Model

The brand image of a car varies by country, and this can have a positive or negative effect on the resale price. Branding's influence is undeniable, and it is the greatest economic moat. Brand recognition is also the primary explanation why a car has necessarily more value than others, and why a customer prefers one car over another, regardless of its condition or quality. This element may not be based on logic or truth, but rather on personal preference and interpretation. Other times, a brand that is thought to be more realistic (e.g., effective fuel consumption) is chosen. Brands with a more reputable reputation for consistency and reliability may be more trusted than brands that are less well-known or unknown.

As previously mentioned, brands such as Proton, Perodua, Honda, and Toyota are more widely used in Malaysia since most Malaysians consider them to be more reliable. Continental vehicles, on the other hand, are usually less well-received in the Malaysian resale market and have higher depreciation rates than Asian car brands. This may be due to the fact that these brands appear to have more costly and difficult-to-find components.

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#2: Maintenance records

Prospective customers may like to know whether a car's service centre is equipped to handle the vehicle's maintenance. At the same time, they'll almost definitely want to see your service history to check that your vehicle has been properly maintained. Holding all of your service records in one location will save you time when it comes time to present them to a potential customer.

Aside from that, it should go without saying, but another simple way to maintain your car's resale value is to get it serviced on a regular basis and on time. Each car has its own maintenance schedule, which is normally every few months or after a certain number of kilometres. It's also crucial to take your car to a shop that specialises in your car's make and model. When customers see that the car has been well taken care of, they would be more likely to pay a higher price.

#3: Mileage

This is an outstanding predictor of a vehicle's age and wear. A vehicle with a high mileage has been driven extensively is less appealing than one with a low mileage. A car with lower mileage, on the other hand, typically has a higher resale value. Even if your car is in excellent shape,but if it has logged more than 420,000 kilometres, it might not be a good resale value. In reality, many, if not all, market value calculators demand mileage as one of the data measures before assessing a resale or market value.

#4: Year Made

With the exception of antique or classic cars, an older car is usually less expensive than a new car. The latter is more likely to maintain, if not raise, its value over time, making it a worthwhile investment. Unfortunately, used cars, especially those between the ages of nine and twelve, are more difficult to finance – they either come with exorbitant interest rates or may be difficult to obtain loans from banks. The good news is that used car insurance rates can be smaller! Car insurance rates are measured using a number of variables, one of which is the vehicle's market value. As a result, a less expensive vehicle (due to its use) will result in less expensive insurance. 

#5: Modifications on the car or aftermarket accessories

High-end stereos, custom rims, and other complex accessories can be visually appealing and enjoyable, but they can be expensive if you intend to sell the car in the future. This is a subjective aspect that varies depending on the change, but certain cutting-edge improvements can have a negative effect on resale value because potential buyers may not want to be responsible for the high maintenance costs.

Our recommendation is to avoid add-ons altogether, as they can be harmful to your vehicle if they change the powertrain or safety equipment.These variables can or may not have the greatest effect on the resale value of your vehicle, but they can definitely affect it. The state of the economy is critical because selling your car during a recession could not get you the best price compared to selling it during a boom. Because of the current economic situation, you may be given a cheaper price for your vehicle, even though it is in excellent condition.

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Finally, though it may not be readily apparent, auto insurance has a minor effect on the resale value of your vehicle. People always choose the cheapest insurance to save money, but this might not be the best choice if it leaves your car vulnerable on the road. As a result, spending a little more on premiums would have an indirect effect on the resale value of your vehicle in the future.

Depreciation is like taxes: no matter what you do, you can't stop it. It's even worse in that depreciation has no meaning for you. Understanding how depreciation functions and what factors impact your resale value is important because it could save you thousands of Ringgit in the long run – money that could be put into other savings or obligations. As a result, we suggest that you put in the effort to learn how to preserve or improve the resale value of your vehicle. 

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