Protecting Your Car’s Part Exchange Value

Why is it that you go to a car dealership to discuss trading in your current car for a new one and sometimes come away disappointed by the amount they value it at?

What goes through the sales staffs’ minds as they look at your car, decide if they want it and how much it is worth? More importantly, what can you do to boost that figure?

Here we take a look behind the scenes at what happens from that initial discussion when you walk into the showroom and say “Hello, I’m thinking of part-exchanging this car for another and wonder what you think I can get for it?”

Let’s begin with the good news. Other than your house a car is one of the few assets you have that will retain some significant value second hand; the bad is that it is rarely as much as you think or hoped.

However, there are several things you can do to maximise that value and we talked to Phil Nothard, one of motor trade’s most expert and independent analysts of the used car market. Phil is the retail and consumer specialist at cap hpi and editor of its Black Book where guide values for each make and model are published.

We asked him a series of questions starting with:

1. How does a dealer value a car and what are the factors affecting that figure?

Phil said:

In addition to the obvious visual, mechanical and provenance checks to look at its history there are other factors taken into consideration too when valuing a car.

The colour and specification are important but we are looking for things that give us confidence in the car such as its number of owners, any supporting paperwork and having both sets of keys and just being able to show it has been cared for. These all help to build dealers’ confidence that it is a sound, proper car we can sell.

Dealers also need to think about the cost of any preparation and refurbishment before they can put it on sale, how much time will need to be allocated to a valet, is it due a major service or tyre replacement, any smart (small to medium area repairs) work required to meet their retail standards and does the investment offer a return?”

In other words, you need to have the paperwork showing its service history and it will also repay you if you give the car a wash and a hoover beforehand!

The differences can be significant as these tables showing how typical family cars vary in value according to their condition from clean, to average and below-average demonstrate.

2. Assuming everything else is OK what is the worst `offence’ an owner can do to drive down the value of a car?

Smoking! Smoking is bad for your health and your wallet. Lighting up in a car is a major problem for dealers. Smoke becomes ingrained in the fabric of the car and climate control, requiring a professional valet and a special ‘bomb’ to clean the air conditioning.

Cleaning up the car can cost anything up to £150 and is still no guarantee that the vehicle will smell sufficiently fresh. Any actual burn marks obviously cost a lot more and a car used by a heavy smoker can easily be up to £2,000 less at trade-in, if the dealer will even touch it at all.”

Some dealers tell us they won’t buy cars from smokers because of the time and expense of getting the cleaned up car properly clean and ridding the interior of unpleasant lingering smell of tobacco.

Examples of how smoking can affect car values: A 2014 Ford Mondeo 2.0 TDCI Titanium 5 dr Hatchback with 40,000 miles would be valued at £11,400 for a non-smoking car but £10,150 if it got a cigarette smell, a loss of £1,250.

For a 2016, 40,000 mile Mercedes E class the equivalent figures are £30,100 and £28,100, a drop of £2,000.

3. OK, having a car that is clean, which has a good track record of being serviced and the paperwork to prove it affects the trade-in values but how much does having a more specialist model rather than a mid-market one move the price?

Let’s take a sporty Ford Focus ST against an eco-friendly version of the same age and mileage as an example.  As you can see, the difference for the ST between its cost new and at 20,000 miles is £6,315 but for the less specialist EcoBoost Zetec the equivalent drop is £7,390.

Different models with the same mileage can often vary in value simply due to market forces. Supply and demand has a key hand in determining values. This means that some makes and models of cars are more likely to hold their value than others against their recommended retail price.

4. What actually happens to the car once you have agreed a price, signed all the paperwork and handed over the keys? How do dealers choose which cars they buy in are sent to the auction for disposal and which to keep for their own stock?

Dealers will examine the car and decide if it will sell as part of their own forecourt range. If there is an influx of a particular vehicle type, and it’s unlikely to shift from the forecourt, then they will probably decide to send it to auction where it will have a better chance of selling.

Most dealers would have gone to the trouble to hpi check the vehicles they are selling so the next customer buying it has a lot less research to do themselves. The dealers are diligently proving that the car history has already been checked. It’s a confidence-building thing again, but this time for the buyer.

5. What do they do before putting a second hand car up for sale on their forecourt?

As part of the resale process dealers will aim to make the car look as good as possible to increase its appeal. This will involve thorough valeting and cleaning and ensuring the car is in tip-top condition. It should also undergo a multitude of checks to make sure everything is in perfect working order.

There is a rule of thumb in the trade which says that if a car was to be sold as seen quite often they’d be unlikely to sell at all!

6.Which are the ten slowest depreciating brands and ten slowest cars? What are the slowest depreciating types of cars, eg SUVs or sports cars and by contrast, which are the fastest at losing value? ​

Crossovers and SUVs are the strongest performers in the car market, along with a handful of high-performance cars. Large premium SUVs and luxury high-end executive models hold their value best, due to relatively low volumes and high demand in the used market. As with every model range, residual values (RVs) are most likely to be highest when the model is new and there are few examples on the used market.​

7. Is there anything an owner can do if they sell the car and the next week they drive past the garage and see it on the forecourt at say, £1,500 more than they got for it or what they think is an unreasonable difference between what they got and what the dealer now wants?

In short, no. It’s important for consumers to try and get as much as they can for their car if selling to a garage so ensuring it’s in top condition for sale is key.

If a dealer is selling it for more than what you got for it this is because they’ve spent time on making it even more saleable and are more aware of market trend, demand etc. However, dealers are within their rights to try and get what they can in terms of reasonable market values. If the car is mispriced it won’t sell.

8. Final question. How can an owner get a rough idea of what their car is worth before looking to trade it in so they know what to expect, what source can they go to for a valuation?

Consumers should always do their homework. An easy way to do this is to check vehicle values online. It’s been possible for some time to get a free online accurate valuation from CAP www.cap.co.uk/car-valuation.

However, hpi is about to launch an online valuations service specifically for consumers for the first time. This will give consumers the most accurate valuation available on the market of a vehicle whether they are looking to buy or sell. By simply putting in their registration plate details consumers will now be able to get an instant valuation on any vehicle. Visit www.hpivaluations.com

Alternatively you can get a vehicle valuation from Swansway Group. If you have any questions about how to look after your car please contact us.