Buying a car... that will hold value

[leo_meshay]

I've delayed this purchase for a long time, but now need to buy a car.

I luckily have a family member that gets cost +5% on used cars, and have enough to buy cash.

Currently looking at a 2023 VW t-cross highline, with 5,000 or so km, which I can get for R409k.

The t-cross seems to hold value exceptionally well, and while I don't expect to make my money back, I do think there is a legitimate chance of getting 80-90% back in 2-3 years.

Would love the thoughts from the experts here.

 

[lovebug3]

@leo_meshay Well you going to lose value when you drive it out the door. Because it's too new.
Buy a decent car for 100k. Next year or will be worth the same.
I bought my car 11 years ago for 75k , still worth 75k.

 

[leo_meshay]

@lovebug3 Thanks - interesting advice. If I may ask, what car did you buy?

I obviously want to buy something that is modern for safety and service related reasons.

I dont imagine putting much km on it. It will be to work and back and then the odd trip up the coast.

 

[elizabeth1990]

@leo_meshay I bought a 2006vw 1.9tdi 5 yrs ago for 60k. Amazing little car, super reliable. Now 5 yrs later i reinsured it for 5k more than i bought it. I can sell it today for the same amount i bought it

 

[leo_meshay]

@elizabeth1990 Nice. What kind of KM we talking?

 

[elizabeth1990]

@leo_meshay Its at 250k now. I probably put about 70k on it. I drive 120km a day for work. Aside from maintenance costs etc, ive had no issues. 19tdi polo is an amazing engine if you just take basic care of it.

 

[heavenlyking]

@elizabeth1990 The TDI VWs are really good value.

Ive got a 2012 vw polo 1.2 TDI.
Bought in 2014 for R124k, just reinsured fie R120k 9 years later. Currently got 206 000 km on it.

Spent 52k maintaining it over 9 years with all the services, tires, shocks etc. So about R5700 a year.

Fuel consumption is good. Get 4.0 L/100km on the open road and 5.2 in town.

Probably the best financial decision I've ever made.

 

[saidagha]

@leo_meshay I bought a 2007 Polo in 2012 for R105k. I think it's now worth probably around R60k?

So I think it has worked out very well for me. Doesn't make sense to buy a new car if you have to pay half a million for it. You'd be postponing retirement by a lot.

 

[lovebug3]

@leo_meshay I bought a Peugeot 407sw. It was a top of the range car. Dropped from 300k to 75k in 5 years.
I have driven it now to 348000kms.
My way of thinking is to drive a car into the ground. To me the cheapest car is a paid off car.
I missed a good deal the other day a Volvo S60, with 64k Kms on. Book value is like 70k, due to its age, ten years I think, it was sold for 130k. It has only done 500 Kms a month since new.
So if you don't want to lose too much, look around a bit
At this time, it's hard to find a good car under 100k that's decent.
But you need to look.
My advice is to decide on a car. Let's stay honda CRV.
Go and look at every CRV you can find, suddenly you will see what's shit and whats good. And the right car will suddenly pop out at you.

 

[ruth777]

@leo_meshay Almost any car will start losing it's value as soon as you drive it off the floor. It's only expensive, rare cars that hold or go up.

 

[scotty2hottie12]

@leo_meshay You need to buy an older car. Cars lose most value in first couple of years. It is possible to find low mileage cars 4 to 5 years old that has great value.

 

[brokenhill]

@leo_meshay Lexus or Toyota. Statistically they hold their value better than any other car brand in SA. Consider the Lexus NX if you want a crossover. Or if its too expensive go for the RAV. Such quality. Their warranties, motor plans and after sales service are FAR superior to VW’s as well. I know from experience.

 

[leo_meshay]

@brokenhill Thank you. Very useful response.

Of course the other consideration I need to make is whether or not the vehicle fall inside the dealership, which qualifies me for the discount.

But will ask. Thanks.

 

[gdub81]

@leo_meshay I’m not sure if this is true. Esp lexus is suspect.

I bought a suv a year ago and just dumped data onto a spreadsheet from the used car sites and did some basic comparisons. I don’t have it anymore. Toyota and vw lost the least value across the first 8 months (haval and cherry also not losing as much as expected driving out of the dealership for some reason). 8 months to 3 years toyota, vw, hyunday, kia, subaru, nissan and volvo were VERY similar. Lexus was some way back. Older than that I didn’t check because I’ve had bad experiences with maintenance. This is just from memory and not super accurate, but my most important take away was that general perception on these things does not reflect reality. Dive into the date yourself if you want a decent picture

 

[jrod98]

@leo_meshay I was looking at the T cross at 1 point. I think it’s a great car. Although it holds its value pretty well as you mentioned, I always wondered why there were so many for sale. Besides the Polo, there are more T cross for sale than any other VW. I might be completely wrong here, (and I hope I am) but I feel also those higher prices are an illusion to make us think it’s worth more and hold it’s value. Check with an insurance broker what the retail price and trade price is of a 3 year old T cross and see what they are selling for online.

 

[asp510]

@jrod98 The current demand for compact SUVs is probably not sustainable - VW has only recently begun catching up with chip shortages, and statistics from mid covid time (3-year old cars) is not indicative of anything useful either, unfortunately.

 

[eddiec593]

@leo_meshay So let's compare the Tcross to a new Suzuki fronx - they are xomparable in features and size.

Fronx is R280K. So over 100K cheaper, and you'll get a new car, which will probably also hold most of it's value

But here comes the real difference:
You'll pay interest on the R100+k difference, which you will not get back when selling. More expensive insurance, whic is a sunk cost. And more expensive maintenance, considering the servoce plan on the new Suzuki is bpund to be valid longer.

So yeah, the VW isn't necessarily bad, but definitely not the most economical choice.

 

[resjudicata]

@leo_meshay T-cross is getting a major update next year so this alone will cause heavy depreciation for your “old style” 2023 model.

But yes if you don’t want to deal with heavy depreciation only buy VW and Toyota. Anything else will depreciate like crazy. The more demand there is for a car the less it will depreciate.

 

[leo_meshay]

@resjudicata Thank you. This is a useful comment that does make me second guess this specific model.

I appreciate the time spent responding.

 

[asp510]

@leo_meshay Anyone who really knows what the future holds isn't going to be a reddit expert, unfortunately. Looking at past trends to predict future value is insanity. We could have an equivalent "vw dieselgate" scandal next year that sees the second hand value of the car turn to almost nothing - only the original owners got to put claims in....

No brand is immune to this either, not even Toyota.

If the purchase price of any depreciating asset cannot be justified when making the end-value zero after use for a reasonable period (10 years for a car), then you're financially better off looking for something cheaper - don't use financial calculations to try and justify emotional purchases.