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Your new car could depreciate by more than 60% in the first five years of purchase. In the current economic climate 58% of Australians believe it makes more sense to buy used rather than new when it comes to buying a car.
Australian made cars are the biggest depreciation offenders. Putting further pressure on the local car manufacturing industry is the fact that seven of the top ten depreciating cars on Australian roads are Australian manufactured.
Ten worst mainstream cars in order of depreciation (percentage represents the value retained from purchase):
1. Ford Falcon XT Sedan – 39%
2. Ford Falcon G6 Sedan – 43%
3. Holden Commodore Omega 3.0L V6 Wagon – 43%
4. Nissan Maxima 350T-S Sedan – 44%
5. Hyundai i45 Active Sedan – 44%
6. Holden Berlina 3.0L V6 Sedan – 46%
7. Holden Caprice 3.6L V6 Sedan LWB – 46%
8. Crysler Grand Voyager people mover van – 48%
9. Toyota Camry Altise Sedan – 48%
10. Toyota Aurion Sportivo Sedan – 49%
According to the Gumtree Australia Depreciation Distress Report, high levels of depreciation in new cars is creating distress, annoyance and stress amongst Australian consumers and increasing propensity to consider the benefits of buying a used car. 9 in 10 Australians (88%) think that a brand new car depreciates as soon as it leaves the dealership and 39% think that they are simply throwing money away when buying a brand new car.
“We have seen enormous growth of people coming to our cars classified business over the last 12 months looking to find a bargain and save themselves the very high levels of depreciation you see with new cars,” said Nat Thomas, Corporate Communications Manager at Gumtree.com.au.
Gumtree’s top tips for consumers when buying a used car:
- Meet the seller: Meet the seller and ensure the car is the same as the one listed on the registration certificate. Inspect the car in full daylight to easily identify possible defects under the bonnet, any rusting under the car or dents in the exterior. Take a friend if you can, to help inspect the car.
- Test drive cold: Arrange to test drive when the engine is completely cold, which will give you a good idea of how the car starts. Test drive the car in all gears and on a range of road surfaces to identify any potential issues.
- Check the history: Get the car’s Vehicle Identification Number (VIN) and check the history of the vehicle with your state database.
- Independent inspection: It might be worth the investment to have the car inspected independently. If there is any hesitation from the seller it is likely they are hiding something. Gumtree.com.au lists a range of service providers you can choose from in your local area.
- Negotiate: Negotiate the price based on your research into the average market prices and if you found any faults with the car. There is usually leeway for bargaining.
* According to Glass’s Guide 2011 (The percentage figure shown represents the value retained from purchase. Ie. A Ford Falcon XT Sedan retains 39% value of original cost).