Car depreciation is the rate at which your vehicle loses its value over time. It is essentially a difference in how much your vehicle costs from when you purchase it to what it costs when you sell it.
Believe it or not, that value starts depreciating the moment you receive your car from the dealer. Various factors come into play in deciding how fast the resale value deteriorates, including market demand, economic conditions, make and model, history of accidents, modifications, and mileage.
But the most common factor remains — natural wear and tear. A well-used car tends to have a lower market value than one less used. But in general, car value depreciation is pretty standard for most vehicles in Malaysia, as explained below.
Car depreciation rate in Malaysia
The value of new cars decreases faster than used cars, regardless of the model or brand. The table below illustrates how a car’s depreciation rate is counted in Malaysia. Within the first 5 years from its manufactured date, a car’s value can deteriorate by 50%.
So, if you buy a brand new Toyota Vios worth RM95,000 in 2023, its resale value may only be RM47,500 by 2028. Remember that a car’s depreciation value is determined by examining various aspects, such as flood damage or a history of accidents, among others. This means further depreciation is still possible even though the vehicle is only five years old.
Ways to minimise depreciation rate
Car depreciation is a natural and inevitable process, regardless of how well you take care of it. However, there are several strategies you can use to minimise its impact and retain more of your vehicle’s value over time. Here are some tips to reduce the depreciation rate:
- Keep the mileage in check
High mileage is a good indication that your car has been used extensively. Therefore, it is highly recommended that you keep mileage readings low if you intend to sell your car later. You can reduce excessive mileage by considering alternative transportation, such as carpooling or public transportation, for daily commuting.
- Clean and protect
Wash and wax your car regularly to protect the paint and keep it looking good. Remember that each damage, scratch, or dent on your car gives prospective buyers a chance to negotiate the price down by hundreds of ringgits. This applies to the vehicle’s body, interior, and exterior.
So, always look after your car and repair any damage as soon as possible. If you use it less often, consider storing it in a garage or covered parking to protect it from the elements and reduce wear and tear.
- Do regular service and keep records
Another way to keep the car in good condition is to maintain it regularly by performing oil changes, tyre rotations, and other recommended services. A well-maintained car tends to retain its value better than an irregularly serviced one. This is because buyers are more willing to offer extra money for a car with a well-maintained history.
Also, keep service records that demonstrate your car’s maintenance history. This gives potential buyers confidence in its condition. Your service records will prove that the vehicle has been serviced regularly to ensure good upkeep.
- Limit modifications and use original parts
If you’re a car enthusiast who likes modifying, avoid making excessive or expensive modifications that can reduce resale value. This is because buyers often prefer buying original models that have been less modified, as they cost less to maintain and drive around, compared to ones that have been modified with sporty features.
Besides, make it a priority to use high-quality replacement parts during repairs. Opt for high-quality OEM (Original Equipment Manufacturer) parts during repairs to maintain the car’s value.
- Choose popular colours and features
When buying a new car, choose popular colours and features with broader appeal and higher resale value. For example, graphite grey is a popular colour for the 3rd generation Perodua Myvi compared to solid white. Likewise, a higher-spec Honda Civic (higher engine capacity and better fuel efficiency) will have a better resale value than its lower-spec counterpart.
Reselling your car in Malaysia
Selling a used car is pretty common. One way or another, most vehicle owners will find themselves at a point where they must let go of their used vehicle to buy a new one. Therefore, it is crucial to understand how value depreciation works to get the most out of your vehicle.
Depreciation is influenced by various factors, including market demand, economic conditions, and specific vehicle models, as mentioned above. While you can reduce depreciation, to some extent, it remains inevitable. If you plan to sell your car sometime in the future, consider following the tips above to maximise its resale value.
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