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29 March 2024

The productive resell

The reliability of Toyota and the availability of spares means depreciation is kept to a minimum. (GETTY IMAGES)

Published
By Gordon Torbet

Very few of us buy a car on impulse without regard for a range of considerations, such as suitability to our lifestyle, economy, comfort, insurance, kudos, and not least, how much the car will be worth in a few years when we fancy something newer. But what criteria actually gives a car a high resale value? And which makes and models best fulfil these?

With the transient nature of Dubai, resale has to be one of the main considerations, for many people will not be happy losing 50 per cent of a car's value when it's time to move on.

But as important as the second-hand car market is – and in the UAE it is booming – it is not the only point to consider.

Reliability also has to come near the top of the list. As an example, Alfa Romeo's stunning cars were so dogged with reliability and build quality issues during the 1970s and 1980s that resale values globally plummeted. Even now they are only just emerging from the stigma. Honda, on the other hand, has always had a very good reputation in these areas, which explains why they remain top of the regional tables alongside their Japanese compatriot Toyota, although surprisingly it is Suzuki in the United Kingdom and Hyundai in the United States which have the best reliability records, according to the WhatCar? Reliability Index 2008.

Low mileage also has a dramatic effect on second-hand value. Vehicles with less than 25,000km on the clock will always attract both higher trade-in and private sales prices, even though modern engine technology means that a car can be driven well over 100,000km (with regular servicing, of course) without significant wear. However, for the shrewd buyer this does mean that you can get a good price on ex-fleet or even ex-demo vehicles without sacrificing performance. So, cars such as the Toyota Camry, Mercedes S Class, BMW 7 Series and Audi A8 are good choices, especially with pre-owned dealer warranties.

As with everything in this region, appearance counts, not just with regard to the type of car you want to be seen driving but also to colour. It is a mysterious influencer and while white or beige are also good at reflecting heat they are not the only pull factors. Trends in colour – both exterior and interior – change on a regular basis, often informed by the fashion and home interiors industries.

Christopher Webb, exterior colour and trend designer for GM North America, says: "What we're finding is that the 1980s was a period of colour, the 1990s was an era of absolute neutrals and now colours are coming back."

Currently, besides the ubiquitous white, silver is the most popular, as it is perceived both as cooler under harsh sun and has psychological associations with wealth and wellbeing. Of course, certain makes such as Ferrari are renowned for their blood red and racing yellow, but despite other manufacturers attempting to imbue the historic tones, ever popular colours in this region continue to be white, black, grey and silver.

Insurance costs also matter. The more powerful the car, the more costly insurance will be. And while in other countries cars are placed in classes, in the UAE insurance premiums are based purely on the car's value, with added premiums for under 25s and sports cars.

The rarity of the vehicle should also be on the checklist as replacement parts will be more difficult to locate, so bear in mind how good the support and dealer networks are in the region.

Spares for a Lexus – part of Toyota – are much easier and cheaper to source than for a Spyker or even a Citroen, while those willing to swallow their male pride, should consider the cars commonly seen on the road, such as the Honda Civic and City, the Toyota Yaris or Corolla, the Nissan Sunny or Tiida as parts are easy to come by. Following in the same vein, in a region where what you drive says more about you than virtually anything else, exclusivity and image can be both a resale advantage and an ownership bugbear. The rarer the car, the more likely it will hold its pricetag or even appreciate as decades pass, but this obviously comes at a price: maintenance, insurance, storage, and running costs.

So those planning on buying any Ferrari, Maserati, Koenigsegg, Bugatti or even a Bentley, should budget for a long list of extraneous costs, especially in the UAE where parts must be ordered from overseas. However on the upside the resale value will be unusually high because they are classic models.

And then, of course, there is reputation. Even though Kia and Hyundai now produce solidly built vehicles with exceptional warranty agreements and perform very well in this extreme climate, the stigma of their original poor quality still affects their resale value. Current global financial concerns of manufacturers such as Ford and GM, also put the resale value of a car at risk when you don't know where that company will be the future.

So, have we come any closer to finding out what gives a car a higher resale value? Well, mechanics apart, it seems that the formula is primarily an emotional one: The cars most likely to hold their value, whether they cost Dh50,000 or Dh1.5 million are those which err more on the side of fun than practicality. In most top 10 resale value lists the following cars – high performance makes aside (which put them in an exclusive bracket) – will appear and are a pretty safe bet: Chevrolet Corvette, Mini Cooper, Honda Civic, VW Eos, Golf and Jetta, Porsche 911, BMW M3 and M6, Infiniti G37, Hummer H2 SUT and Jeep Wrangler.

However, because of the specific trends and uses of vehicles in the UAE you might also like to add to this list the Toyota Land Cruiser and Prado, the Mitsubishi Pajero, Nissan Patrol, GMC Acadia, Hyundai Tucson and Ford Explorer – all of which combine both rugged functionality and a degree of either classic styling or modern luxury, or both.

Specific models which apparently don't offer a very satisfactory resale price include the Kia Rio, Hyundai Accent, Mercury Grand Marquis, Hyundai Sonata, Jaguar S-Type, Dodge Durango, Jeep Grand Cherokee, Saab 9-7X, GMC Envoy, Chevrolet Trailblazer, and Suzuki Grand Vitara, according to www.ed munds.com. Therefore, is it better to buy a more expensive car and sell higher, or buy cheaper and sell for less?

The answer is unique to this region because running costs such as fuel, taxation and insurance, which might make owning an executive car prohibitive anywhere else, don't necessarily apply, and favourable financing terms are also easy to find. This means that many people drive far more expensive cars than they would do elsewhere.

This region has a transient population so the choice of vehicle often depends on the amount of time someone intends to stay rather than its resale value.

The sale of second-hand vehicles is also frequently reliant on time constraints because people are moving away. This all means there are bargains to be had when buying new if people are willing to shop around and haggle on options, warranty deals, and servicing contracts, but likewise for those buying second-hand, time limitations and ready cash will put buyers in a favourable position.