Residual value cars – maintaining the resale value

With the recent jump in fuel prices, and speculation from some quarters that prices close to two dollars a litre are not out of the question in the near future, consumers are realising that residual value is an essential consideration when purchasing a new car.

It's common knowledge that a new car is usually not a good investment choice. As soon as you drive away from the dealership, thousands of dollars of value can be lost because your new car has now become second-hand. So how do you select a vehicle that will retain as much of its new car value as possible?

Size does matter

The days of the fuel-guzzling monster being the popular family car are long gone. In 2009 research by Redbook Australia has found that the lower purchase price of small cars, combined with lower running costs, has seen vehicles such as the Toyota Yaris and Mitsubishi Lancer top the list of cars which retain a high level of their new car value.

The study compared the price of a new vehicle with its comparative resale price, three years down the track. Results indicated an overwhelming shift towards smaller vehicles, with larger passenger cars rapidly losing the popularity they have enjoyed in recent decades.

Heading the survey list, and gaining the prestigious title of "the car likely to retain the most value overall" was the two litre, safety conscious Subaru Imprezza, retaining an impressive 62.9% of its new car value after three years.

Other small cars likely to retain significant percentages of their value include the Mitsubishi Lancer (56.9%), Toyota Yaris (56%) and Honda Civic (55.2%).

In comparison, the medium and large 'family' cars did not fare anywhere near as well with the highest honour going to the medium-sized Mazda 6, which only managed to retain 54.3% of its value over the three year period. The large car category was topped by the Chrysler 300c which retained just 46.1% of its new car value.

If you really need a car with more space, the Mitsubishi Lancer Wagon or Holden Astra Wagon could be good options, both of which scored percentages in the mid to high fifties. And if you truly desire a large car, try choosing a diesel or LPG equivalent.

Fuel choice

Enjoying an amazing surge of popularity, diesel cars are not only usually more economical to run than their petrol equivalents, they also often retain their value longer. Diesel can also sometimes offer the driver improved refinement and performance . Diesel has gained some popularity in Australia recently, and the trend looks set to continue.

LPG cars also enjoy economic advantages over petrol cars, due to substantial savings at the bowser. A recent decision by the Federal Government to delay the introduction of excise charges on LPG fuel until 2011 has been welcomed, seeing the residual value of LPG cars climb. Excise on LPG will be phased in slowly, seeing increases of 2.5 cents per litre each year for five years. Compared to an excise of 38 cents per litre for petrol and diesel cars, the proposed limit of 12.5 cents on LPG sees the attraction continuing long-term.

Colour

Neutral colours tend to retain their value better than the so-called fashionable colours which seem to change regularly. Today's popular colours may look outdated in two or three years time, radically reducing the resale vale of your car.

Area also plays a major role in popularity of car colour, with darker colours being more popular in cooler climates and light-coloured cars dominating in the warmer areas such as Queensland.

So, how do I choose?

To ensure maximum residual value for your new car after three, five or even ten years it's imperative that you consider all your options. You might not want to buy a car that's bigger than necessary and consider a diesel or LPG version for added economic benefits.

Finally, look to avoid the attraction of a lime-green or florescent yellow finish. It might be in vogue now but three years down the track your resale price might be substantially reduced.

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