9 factors that affect the trade-in value of your car
There are many factors that come into play when selling your car. Fernando Pinheiro, joint MD of tech start-up CarZar, gives more insight into the trade-in market in South Africa, and how pricing works.
Founded in 2016, CarZar is an online marketplace for the second-hand Auto-Trade market in SA.
By looking at the retail price, Pinheiro said “you are only shooting yourself in the foot if you think that is how much you could fetch for your vehicle”.
The retail price is after the car has been reconditioned and the dealers expenses have been accounted for.
“You may feel you are being given a raw deal when your vehicle is evaluated, however you are not,” Pinheiro said.
CarZar said one needs to take into account the following factors which are used to evaluate your vehicle:
- Car make, this is the brand of the vehicle
- Car model e.g. Kuga
- Car variant, engine type
- Recondition costs, (mechanical, electrical, physical defects)
- Popularity
- Service history
- Mileage
- Age
- Colour – White cars have a better resale value than other colours, as it more visible on the roads.
There are many reasons why trade-in values are lower than retail values. “One is simple: convenience,” Pinheiro said. “Many vehicle owners have no interest in going through the process of selling a car, which means they are more comfortable losing some money when trading their old car for a new one.
“The dealer also handles all of the paper work, meaning that the person trading in the car never has to worry about dealing with the DMV or getting an inspection or an emissions test.”
Another reason trade-in values are lower than retail prices, according to Pinheiro, is that many trade-ins need to be reconditioned. “In other words, most dealerships won’t sell a car directly after receiving it in a trade from a customer.
“Instead, they have to put some money into washing it, detailing it, and even fixing worn or broken items such as paint, lights, audio systems and other functions. As a result, a dealer needs to offer a trade-in value that’s below the car’s retail value so they can still make some money on it after the reconditioning is complete.”
Read: How to know when to sell or trade-in your car in South Africa
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