When buying a vehicle, the purchase price is usually one of the first things people consider. But there is another number worth thinking about: what the vehicle could be worth when you eventually sell or trade it.
Vehicle depreciation can have a major impact on the true cost of owning a car. Two vehicles purchased for a similar price can be worth very different amounts several years later.
So, which vehicles tend to hold their value best in Australia, and what makes one vehicle retain its value better than another?
A vehicle that holds its value well is one that experiences relatively lower depreciation compared with similar vehicles.
For example, if you purchase a vehicle for $60,000 and it is worth $40,000 several years later, it has retained a larger portion of its original value than a vehicle purchased for the same price that is only worth $30,000.
Resale value can be influenced by factors including:
Depreciation is not something you can completely avoid, but choosing a vehicle with strong demand can help reduce the impact.
There is no single vehicle brand or model that will always have the best resale value. However, certain categories tend to perform strongly in the Australian market.
Toyota has historically benefited from strong demand in the Australian used car market.
Models such as the HiLux, LandCruiser and RAV4 have established strong reputations for reliability, practicality and widespread demand.
For buyers, strong demand in the second-hand market can support resale values, particularly when the vehicle has been well maintained.
Four-wheel drives and SUVs continue to be popular with Australian buyers, particularly vehicles that offer practicality, towing capability and off-road versatility.
Popular 4WDs can attract buyers across a broad range of markets, from families and recreational drivers through to businesses and rural operators.
The combination of practicality and demand can help some models retain value over time.
Utes are another category worth considering if resale value is important.
Vehicles such as the Toyota HiLux, Ford Ranger and Isuzu D-MAX have strong appeal across both private and commercial markets.
A ute that can serve as a work vehicle during the week and a recreational vehicle on the weekend has a broad potential buyer base.
For businesses, this can also make the vehicle an important asset to consider when planning future upgrades.
Fuel efficiency can also influence demand in the used vehicle market.
Hybrid vehicles have become increasingly popular as buyers look for ways to reduce fuel consumption without necessarily moving to a fully electric vehicle.
Models with strong fuel economy and established reliability may benefit from continued demand, although resale performance can vary significantly between individual models.
Buying a popular brand does not automatically guarantee strong resale value.
Several factors can influence how much a vehicle is worth when it comes time to sell.
A vehicle with a strong reputation for reliability can attract more buyers in the used market.
People purchasing a second-hand vehicle often want confidence that it will continue to perform reliably without requiring excessive repair costs.
Supply and demand play a significant role in determining used vehicle prices.
If a particular model is highly sought after but there are relatively few quality examples available, buyers may be willing to pay more for one in good condition.
Two identical vehicles can have very different resale values depending on their condition.
Regular servicing, reasonable kilometres, a clean interior and exterior, and a documented maintenance history can all help when it comes time to sell.
Fuel consumption, servicing costs, insurance and registration can all influence the appeal of a used vehicle.
A vehicle that is expensive to operate may have a smaller pool of potential buyers, while economical vehicles can appeal to a broader market.
The availability and pricing of new vehicles can also affect used car values.
If a new version of a model becomes significantly cheaper or receives a major upgrade, older versions may experience additional depreciation.
On the other hand, limited supply of new vehicles can sometimes support demand for quality used examples.
Not necessarily.
Depreciation is generally influenced by the percentage of value a vehicle loses rather than simply the dollar amount.
A $100,000 vehicle that retains 70% of its value after several years has depreciated by $30,000.
A $60,000 vehicle that retains 50% has depreciated by $30,000 as well.
This is why looking at expected resale value can provide a better picture of the overall cost of ownership than simply comparing purchase prices.
Vehicle depreciation can also be relevant when considering your finance structure.
If you are financing a vehicle and plan to upgrade it in several years, its future value may affect how much equity you have when it is time to sell or trade.
This is particularly important when considering a balloon payment.
A balloon can reduce your regular repayments, but you need to consider the future value of the vehicle and how you intend to manage the balloon at the end of the loan term.
Choosing a vehicle with stronger expected resale demand can potentially give you more flexibility when it is time to upgrade, although future vehicle values cannot be guaranteed.
You cannot control everything that affects depreciation, but you can take steps to protect your vehicle's value.
Consider:
The better condition your vehicle is in when you sell it, the more attractive it is likely to be to potential buyers.
Not necessarily.
A vehicle that holds its value well may be attractive, but it still needs to suit your lifestyle, budget and intended use.
For example, buying a vehicle purely because it has strong resale value does not make sense if it does not meet your towing requirements, passenger needs or business operations.
The best vehicle is one that balances purchase price, running costs, reliability, practicality and expected resale value.
Toyota is one brand that has historically performed strongly in the Australian used vehicle market, particularly across popular models such as the HiLux, LandCruiser and RAV4. However, resale value varies between models and market conditions.
Popular utes can retain strong resale values due to demand from both private buyers and businesses. Models such as the HiLux and Ranger have broad appeal, although condition, kilometres and specifications all matter.
Some SUVs can hold their value well due to strong demand in the Australian market. Resale performance varies considerably between models, so it is worth researching the specific vehicle rather than relying on the SUV category alone.
Depreciation varies significantly depending on the vehicle, brand, model, demand and market conditions. New vehicles generally experience their largest depreciation in the early years, but the rate differs considerably between models.
Yes. Higher kilometres can reduce a vehicle's resale value because buyers may anticipate greater future maintenance and wear. However, condition and service history are also important factors.
Yes, particularly if you expect to sell or trade the vehicle within a few years. Considering expected resale value alongside the purchase price can give you a better understanding of the vehicle's potential overall cost.
Choosing a vehicle is about more than finding the right purchase price. If you plan to sell or upgrade in the future, understanding depreciation and resale value can help you make a more informed decision.
Popular utes, SUVs and vehicles from brands with strong reputations for reliability can benefit from ongoing demand, but no vehicle is guaranteed to hold its value.
Consider how the vehicle fits your needs, what it will cost to operate and how strong demand may be when you eventually sell it.
And when you're ready to finance your next vehicle, looking at the purchase price is only part of the equation. The right finance structure should also fit your budget, plans and how long you expect to keep the vehicle. For tailored support, contact us.
