One thing buyers forget when shopping new car brands in South Africa

Consumers regularly forget about resale value when they purchase a car from a fresh-faced brand in South Africa, a mistake that could end up costing them dearly.

Obi Mokoditwa, used sales manager at Eagle City group of dealers in Joburg, emphasised that while the attractive features and competitive price tags of new manufacturers may seem like a winning deal, the relative unfamiliarity of these cars could count against your favour.

Mokoditwa tells a story of a motorist who walked through Eagle City’s doors in February this year with the goal of trading in their newly purchased car which had a relatively young badge on the nose.

He bought the vehicle in December for the sum of R680,000, bedazzled by its futuristic design and long list of creature comforts that nothing else in the price class offered.

By the time he wanted to perform the trade-in, he had only covered 3,000km in total, barely enough to break in the engine.

“Life happened. As it often does, circumstances changed, and he wanted to trade it in. We contacted the franchise dealership of the same brand to determine the trade-in value,” said Mokoditwa.

“Their response? R380,000 maximum. Let that sink in.”

In only three months the vehicle had lost a staggering R300,000, or 44%, in value.

While new cars are known to depreciate quickly, they usually only see a 20% drop in value in the first year of ownership, underscoring the alarmingly poor resale prices of new and unfamiliar nameplates.

“Honestly, I couldn’t believe it at first. I thought maybe there was a mistake. But no, it was accurate, and this wasn’t an isolated incident,” said Mokoditwa.

“So, what does this tell us? It tells us that while these vehicles offer attractive features upfront, they can be devastating when it comes time to sell or trade in.”

Short-term pain for long-term gain

When the day comes to say goodbye to your ride, whether it’s one, five, even ten years old, you’d want the best possible resale value you can get.

That’s where trusted, reputable brands – as well as reputable dealerships – come into play.

Brands with a long-standing reputation tend to hold their value better because they’ve built trust over time.

“Their vehicles have proven reliability, parts availability, aftersales service, and buyer demand in the used market,” said Mokoditwa.

It is this demand that keeps prices steady and trade-in values strong.

Likewise, when you buy from a reputable dealer, you and whoever owns the car next have more peace of mind.

A good dealer will be upfront with you about depreciation, expected resale potential, insurance costs, servicing, parts availability, and more.

“They’ll help you understand the total cost of ownership, not just the sticker price,” said Mokoditwa.

“More importantly, you’ll have someone to call when something goes wrong or if your situation changes – like needing to trade in a vehicle unexpectedly.”

Mokoditwa emphasises that it would be wrong to paint all new market entrants in a bad light.

“Some may offer great value for specific needs,” he said.

However, before you swipe your card or sign that contract, always consider what that particular car may be worth in a few years.

“Make sure you’re making that purchase with your eyes wide open, not just dazzled by the tech on the dashboard,” concluded Mokoditwa.

“After all, saving R50,000 today means little if you lose R300,000 tomorrow.”