The value of a car depreciates year on year as soon as it leaves the showroom. This has a significant impact on the resale value of your car as the value decreases by 15% immediately after purchase and then by 10% every subsequent year. After 5 years of ownership, you would have lost more than 60% of your car’s resale value and the longer you hold onto your car, the more value you lose.
While this loss in value is not of concern for those car owners who prefer to use their cars for their entire lifespan, it is important for those who regularly update their cars. Apart from the age and condition of your car, a number of external factors also play a significant role in the price your car gets when you decide to sell your car.
As we near the end of the year, there is no better time than now to get the most value for your car. We go through the three external factors that will have an impact on your car’s resale value in the coming year and look into how you can get the best resale value right before the year ends.
Three Factors Affecting your Car’s Resale Value
A Seller’s Market
New car launches in recent months have been accompanied by news of long waiting times for many popular cars. Additionally, the pandemic highlighted the importance of personal mobility and car ownership, increasing demand for cars across the country. These two factors have created a unique situation where people selling their car are able to secure thousands, and in some cases, even a few lakhs more compared to last year.
However, it is important to keep in mind that this increased demand will not last forever. As production of new cars stabilises and demand for cars in general reduces, the prices you will be able to quote for your car will also reduce in the coming year. If you are planning to sell your car, you might want to consider selling sooner rather than later to take advantage of the higher prices in the market.
New Government Regulations
The vehicle scrappage policy was introduced in 2021, targeting cars older than 15 years in an effort to boost demand for new cars while also phasing out older polluting vehicles. The policy states that cars older than 15 years must undergo a mandatory fitness test to be allowed to drive. Failing the fitness test will require the car to be scrapped.
While keeping a car beyond the stipulated 15 years is possible, it will be an expensive affair as there are multiple fees and taxes involved to ensure the car will be legal to drive. The old car will also be the target of any temporary bans that may be introduced in the interest of controlling pollution.
If you plan on selling your car, doing so closer to the 15 year cut-off will drastically reduce the price you are able to quote for your car. Keeping in mind the cut-off, a 10-year old car will fetch a higher price compared to a 12-year old car. As the year comes to an end, the age of your car also advances by a year and if you are close to the 15-year cut-off, you stand to lose more value by keeping the car than selling it.
Upcoming New Launches and Facelifts
A number of new cars and facelifts were released over the course of this year. While new launches usually don’t immediately impact the used car market, there is a gradual shift in demand towards the more recent model in the used car market. Cars like the fourth generation Honda City did see a reduction in the prices their owners could secure as the newer model made its way into the used car market. To ensure the car is sold, a compromise on the quoted price becomes necessary.
Most car manufacturers follow a five year update cycle for their cars to either introduce a facelift or a new generation of the car. If you currently own a car that has an updated model in the market, it might be time to consider selling your car and securing a higher resale value. This will help you avoid losing out on the price you expect for your car solely because the newer model is more attractive.
How to get the best resale value for your car
While it may seem like time is running out, there is more than enough time to sell your car for a higher price. Certain car models like the previous gen Hyundai Creta have still retained their resale value due to steady demand for the car. For in-demand cars like these, you will still be able to get the value you expect in the coming year.
However, the market is constantly changing and it is important to take any advantage, especially when you are considering selling your car for the best price it can get. Car valuation tools are a great way to monitor the current market price for your car. If it matches your expectation, you should consider selling as soon as possible, especially if you own a car that is older than 10 years old.
