How much a car’s value drops the minute you drive it off the showroom floor

 ·29 May 2024

Simply driving a car off the showroom floor significantly reduces its value.

With many South Africans facing a challenging economic situation, it is useful to see how they can save on certain purchases, such as buying a car.

It may not be fair to compare a 10-year-old car with one that is a year old, as cars with higher mileage will not be in the same condition as ones off the showroom floor.

“But, a one-year-old car that’s still new could be more reliable than one straight out of the dealership,” said Old Mutual.

“Any problems with a new car are usually experienced in the first few months, and if you are buying a used car with 30,000km on the clock, these will probably already have been sorted out.”

“Consider, then, what you’re getting for the premium paid for a brand new vehicle if reliability isn’t a factor: new car smell, a more shiny finish?”

A new car also massively depreciates as soon as it leaves the showroom floor, and there can be a big difference between a brand-new car and one with some mileage.

For instance, when BusinessTech browsed for cars in Gauteng on AutoTrader, a few kilometres can massively reduce the car’s selling price.

For instance, in our search, a 2024 Volkswagen Polo Vivo Hatch 1.4 Trendline that had only driven 10km already lost roughly 5% of its show floor value.

A 2024 Suzuki Swift 1.2 GL could lose just under 8% of its value if it has driven 50km, which is shorter than a drive from Johannesburg and Pretoria’s CBDs.

Below are the top five selling cars in South Africa and what they cost, new and used.

CarNew Used (Mileage)Difference
2023 Toyota Hilux 2.0 S (Aircon)R372 200R319 950 (21 175 km)14.03%
Ford Ranger 2.0 Sit Single Cab XL ManualR514 800R399 900 (30 738 km)22.32%
2024 Volkswagen Polo Vivo Hatch 1.4 TrendlineR262 700R249 995 (10km)4.83%
2024 Suzuki Swift 1.2 GL R233 900R215 900 (50km)7.69%
Toyota Corolla Cross 1.8 XiR408 400R399 900 (1 500 km)2.08%

For those who like a bigger engine, a carbon tax will also apply to new cars, but not older versions.

Source: Old Mutual

Old Mutual said that the only real reason to buy a new car is that it allows one to spec the car out the way one wants it.

“Some would say that the warranty is also a good reason, but this is usually not true. If you bought a year-old car with a five-year warranty, the vehicle would still be covered for four years when you bought it, and by this point the vehicle will have already seen its greatest drop in value,” said the insurer.

“It’s for these reasons that we believe that cars between one and two years old are the best buys. They’re typically still under warranty, they represent good value for money, and, because they are later models, they’re more fuel efficient than older models.”

“This doesn’t mean that you can’t get a good deal with an older vehicle. You can, but you have to be a little more careful in choosing your purchase.”

Read: What to expect from interest rates this week – and three key things to look out for

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