Understanding Car Depreciation: How to Maintain the Value of Your Car

Buying a new car is an exciting time. It’s fun to wander up and down a dealership looking at all the new cars to find the perfect one. 

Of course, when buying a new car, there are several cost factors to consider, such as:  

• on-road costs 
• fuel economy, as well as  
• servicing and insurance costs for the vehicle. 

What many people don’t consider, however, is the cost of car depreciation.

In this article, we’re going to take a deep dive into what car depreciation is, why it happens, how to calculate car depreciation and the steps you can take to help maintain the value of your car over time. 

If you’re thinking of buying a new car soon, this article will help you to make a more informed buying decision. 

What is car depreciation? 

Car depreciation refers to the amount of value that your car loses over time. 

Of course, while some cars can hold onto most of their value over their lifetime, others lose a significant amount in the first year alone. 

For this reason, it’s important to understand the different factors that affect the rate at which a car depreciates. 

Why do cars depreciate in value over time? 

Here are some of the most common reasons why cars depreciate in value over time: 

Age 

Most things, unless they’re collectibles, tend to become less valuable as they get older. 

Condition 

Every car naturally suffers some form of wear and tear the older it gets and the more it gets used. 

Mileage 

The more you drive your car, the more likely it will need repairs – hence it depreciates in value. 

As well as these, the mere fact that car manufacturers are always coming out with new cars every year means that, even if you buy a top-of-the-line model, it won’t stay top-of-the-line for long. 

How much do cars depreciate in value over time? 

As mentioned, each car depreciates at a different rate, but there are rough guides you can follow to help you understand the average rate of car depreciation and how to calculate car depreciation. 

Generally, a new car will lose around 20% of its value in the first year of ownership. This includes the 10-15% it loses the moment it’s driven out of the dealership (yes, that’s a true fact!). 

Over a five-year period, the average car loses around 40% of its original value. 

Why do some cars depreciate more than others? 

There are a few key reasons why some cars depreciate more or quicker than other cars do: 

Make and Model 

Popular cars, such as small SUVs and family cars driven by the masses, tend to hold onto their value longer than, say, luxury cars which are much more costly to run and maintain. 

Factors such as colour and fuel efficiency also play a role in car depreciation and resale value as well. 

Level of Demand 

Some cars are just in much higher demand than others on the market. 

If most people want an economic mid-sized SUV and they’re hard to come by right now, your SUV is going to be much easier to sell than a high-end two-seater car that chews through fuel. 

Brand Reputation 

A high-quality and popular branded car that doesn’t cost a lot to keep it running is going to hold its value far longer than a car built by a manufacturer you’ve never heard of with parts that are almost impossible to get replaced in Australia. 

Now, we’re going to give you a few tips to help minimise your car’s depreciation as much as possible. 

What are the best ways to maintain the value of your car? 

There are several things you can do over the life of your car to help it maintain its value: 

Do Your Research 

First and foremost, when looking to buy a new car, spend some time researching the cars that hold their value better than others. 

Look for cars that will still be in high demand as used cars, and remember factors such as colour and style when considering resale value too. 

Keep Your Mileage Low 

You want to enjoy your new car and use it as much as you need, but if you’re looking to sell it in a few years, try to keep those long drives on the open road to a minimum. 

A 5-year-old car with only 60,000km on the odometer is going to sell for more than a similar car that’s already ticked over 100,000km. 

Take Great Care of Your Car 

This one is a no-brainer. Get your car serviced regularly, in line with the manufacturer’s recommendations. Keep it clean, inside and out. If there’s any damage, like small dents or paint chips, get it taken care of immediately. 

Hopefully, by now you have a better understanding of how car depreciation works, and you can use what you’ve learned to help you make better decisions when buying and maintaining your new car. 

Of course, if you’re looking for help when buying your new car, Private Fleet can help. 

Find the right vehicle at the right price with Private Fleet 

Private Fleet empowers you to gain all the benefits of a fleet purchase but as a private buyer. 

Backed by decades of vehicle industry experience, fleet buying power and a network of car dealers across Australia, we are here to ensure that buying your next vehicle will be as straightforward as possible for you. 

Shopping for a car is an enjoyable process – let us make it hassle-free, too. 

Reach out to us today for a seamless and simple car-buying experience. 

6 Tips To Prepare Your Car For The Aussie Summer

It’s summertime! 

And in Australia that doesn’t just mean the weather gets warmer. 

• It means family road trips to the beach.  
• It means the aircon is slowly clearing out the dust.  
• It means you need to take that extra minute or two before you can hold the steering wheel after spending all day under the Aussie sun! 

Summertime also brings on the hustle and bustle of Christmas preparations, holiday arrangements, and many other obligations, but despite the chaos, there’s one thing you can’t forget – you need to take the time to prepare your car for summer. 

Doing so is crucial for your safety and your comfort during the warmer months. 

With so much already on your mind, we’ve decided to make things a little easier and provide 6 actionable tips to help you prepare your car for summer. 

So buckle up! (But be careful, the seatbelts are hot)  

1. Engine Coolant Top Up

A well-functioning cooling system is crucial for preventing your engine from overheating in the scorching summer temperatures.  

So, one of the first steps to prepare your car for summer is to ensure that the cooling system is ready to handle the heat – the last thing you need is to break down during the Christmas traffic. 

To do this, simply check your car’s coolant levels are between the minimum and maximum ranges and top it up with a high-quality coolant if you are running low. For a more comprehensive guide to car engine coolant, take a look here. 

2. Make Sure Your Car’s Aircon is Working

As Australian temperatures hit the high 30s or even the early 40s, your car’s air conditioning becomes a lifeline.  

Before the summer heat hits its peak, it’s best to test your car’s air conditioning system and ensure that it’s in good working order.  

If you notice any issues, such as: 

• weak airflow 
• leaking fluids 
• strange odour 
• unusual noises 
• delayed cooling, 

or anything else of concern, it might be time to seek a professional car inspection or professional air-conditioning maintenance.  

Although this may come at a cost and you might think that you can put up with poor air conditioning, these problems usually only get worse and remember, a fully functional air conditioning system not only keeps you comfortable but also enhances driver concentration and so the safety of you and your passengers. 

3. Consider Fresh Air Filters in Your Vehicle

Maintaining clean air in your car is essential for promoting respiratory health, enhancing driving comfort, and preventing microbial growth in your car’s interior – and your car’s air filter plays a crucial role in doing just that. 

With the windows wound up and the air conditioner pumping during the Australian summer, it’s more important than ever to ensure that your vehicle’s air filter is functioning properly.  

Also, the end of Spring and entry into Summer means there are large amounts of dust and pollen in the air, and it’s important that these are filtered out. 

To ensure the quality of the air you breathe while driving simply seek a professional who can check and replace the cabin air filter if necessary. 

4. Test Your Vehicle’s Brakes

Australian roads are packed during the holiday season and traffic is at an all-year high. This means safe driving should be a top priority for anyone taking to the roads this December and January. 

So, before embarking on any summer road trips it’s vital to inspect your car’s breaks.  

Keep an eye out for signs of wear and tear, an ear out for unwanted squeaking or grinding noises, and address any issues as quickly as possible.  

When it comes to road safety, it’s always better to err on the side of caution. 

5. Protect Your Car’s Paint

The intense summer heat can impact much of your car’s functionality, but it can also take a significant toll on your car’s exterior.  

To prevent this, it’s best to protect the vehicle paintwork by regularly washing and waxing your vehicle during the summer months. 

Washing removes dirt and debris that build up and can damage the paint, while waxing provides a protective layer against the sun’s harmful UV rays. It’s best to pay particular attention to exposed areas like the roof, bonnet and the tops of your side mirrors, and consider parking in shaded areas whenever possible. 

6. Check Your Car’s Oil

Summer temperatures can put additional strain on your vehicle engine so it must function as seamlessly as possible – a good place to start is to check your vehicle has the right level and type of oil.  

While you should always check your oil levels regularly and top up, if necessary, summer is a great reminder to do so. Just think, while you’re checking your air filter, engine coolant, air con and brakes, you may as well take the time to change your oil as well. 

In this way, a pre-summer check-up is a great way to keep your car maintenance efforts consistent and efficient. 

Find a vehicle that can withstand the summer heat with Private Fleet. 

Private Fleet empowers you to gain all the benefits of a fleet purchase but as a private buyer.  

Backed by decades of vehicle industry experience, fleet buying power and a network of car dealers across Australia, we are here to ensure that buying your next vehicle will be as straightforward as possible for you. 

Shopping for a car is an enjoyable process – let us make it hassle-free, too. 

Reach out to us today for a seamless and simple car-buying experience. 

Carnauba Wax: Giving Your Car A Brazilian

Christmas is just around the corner, and many car enthusiasts have a pretty shrewd guess that one of their relatives will give them car wash products as a present.  Polish and all the rest of it is one of those go-to presents, along with socks and underpants for guys, and bath salts or scented soaps for girls.  One of those products may, if you’re lucky, contain carnauba wax (note: this statement applies to the car cleaning products, not the undies or bath salts).

I used to think that carnauba wax was a brand name and I wasn’t the only one to think this, I discovered after a few quick conversations with friends. However, this isn’t the case. Carnauba wax is a generic plant-based product that is known for its high shine and toughness.

These days, it’s nice to be using something that originally comes from a plant rather than being stirred up in a lab. This is the case for carnauba wax, although your car polish will be stirred up in a lab somewhere, and the wax goes through a fair amount of processing before it gets into the package waiting for you in your Christmas stocking. It’s a product from the leaves of a palm tree that grows only in parts of Brazil, which is why you’ll also hear this wax being called “Brazil wax” or “palm wax”. The name “Brazil wax” is out of fashion at the moment, probably because that term has another meaning – although you can use carnauba wax for a Brazilian wax.

The palm tree in question is Copernicia prunifera or the carnauba palm, and the wax is just one of its many products. Although the tree is grown extensively in the suitable parts of Brazil commercially to get this highly desirable wax, the rest of the tree is pretty useful as well. It produces fruits that are used as animal feed, and for making jelly and a type of flour, and even coffee substitutes and oil. The wood is resistant to termites and is good for making houses in the local area that resist these pests. The leftover bits of the leaves after the wax has been removed are used for textiles or are used as feedstock for biofuels. And just in case that wasn’t enough to give the carnauba palm plenty of green credit, it also grows well in saline soils that aren’t any good for other crops, it’s resistant to drought, and because the trees aren’t cut down to harvest the leaves, they provide a good habitat and food for wild birds and sequester carbon while they’re at it. Wins all round!

The leaves of the carnauba palm have a natural wax coating that help it retain moisture and to stand up to other stresses, such as insect attacks. After the leaves have been cut from the trees, which is done a couple of times during the dry season, they are left to dry in the sun. This makes the wax dry to a crumbly yellow-white powder. After that, the leaves are beaten out to release the wax, and the powdered wax is collected. Various other things can be done to it before it’s exported. In fact, because of the properties of the wax in its raw state, you wouldn’t be able to do much with it unless you mixed it with this and that and/or refined it.

Carnauba wax has about the highest melting point of all the natural waxes: a shade over 80°C, in contrast to beeswax, which melts at around the 60-degree mark. It’s also very hard as well as being able to produce a high shine. This makes it perfect for use in a polish for cars, as it’s long-lasting and good-looking as well as being protective.

As well as being used in car polishes, carnauba wax turns up in a variety of other products. As it’s plant-based and nontoxic, it’s safe to use in cosmetics such as lipsticks (another go-to Christmas gift for women) and for coating some types of sweets, such as M&M chocolates (yet another generic gift idea). As a food additive, it’s got the E-number E903. It also turns up in surfboard wax, shoe polish, dental floss and furniture polish. But don’t try eating your car polish. The carnauba wax will have been mixed with various solvents to make the polish.

Car wash products containing carnauba wax come in three types: pastes, sprays and liquids. Pastes are the purest form of the product and are the most long-lasting, although it requires a fair amount of elbow grease and/or professional tools to apply properly. Sprays are the easiest to apply but don’t last as long. Liquid forms of carnauba wax are in the middle, being fairly easy to apply but longer-lasting than a spray.

Some synthetic waxes last longer than carnauba wax, which lasts about 3–5 months, depending on where you keep your car, the weather, how many incontinent seagulls have flown overhead, how often you wash your car, etc. However, carnauba wax is cheaper, as well as being a natural product with all the benefits mentioned above.

The only real downside about carnauba wax is the fact that some of the commercial plantations and harvesting operations pay their workers poorly – and it’s quite a labour-intensive job that can be and is done by hand.  Although some organizations are getting their act together to ensure that their carnauba wax comes from properly responsible suppliers that treat their workers right, even this isn’t without its problems, given that carnauba wax comes from Brazil and only from Brazil, and that this is a country that got a score of 38/100 in the latest corruption index (where 0 is totally corrupt and 100 is not corruption whatsoever; Australia has a score of 75/100) and – at least according to my Brazilian sister-in-law who has friends and relatives in the coffee industry – producers have to pay a hefty fee to get Fair Trade certification, which puts off a lot of smaller cooperatives from getting this certification. So things get a bit messy on the ethical front.  I’d still rather buy a product that’s got a natural origin, is good for the environment and keeps real humans employed instead of robots. In my books, it comes down more on the Nice side of the ledger rather than the Naughty side.

One last warning: if you want to put carnauba wax on your wish list for gifts, make sure that you (a) specify that you want the automotive sort, not the cosmetic sort and (b) call it carnauba wax, not Brazil wax or Brazilian wax, or you never know what you might end up with.

Should I Repair My Car or Buy a New Car?

Sometimes it’s hard to let go and move onto a new vehicle.

Whether it’s an emotional attachment to our pride and joy, or the belief that a new car is less attainable and will end up costing us more – we often like to give ourselves a reason to resist change.

But while these may be factors we care to consider, the more pertinent questions we should be looking into are how the numbers stack up, and what our personal circumstances are.

The easiest way to consider this is to separately assess the here and now, from the future. When it comes to the here and now, you need to consider the up–front costs associated with purchasing a new vehicle. This obviously includes tangible elements, but also intangible factors too.

Weighing up a new car

Starting with the obvious, to fund your purchase it is likely you will either need to trade in your existing vehicle, supplement it with savings or finance, or take out a loan for the entirety of the car’s price. And when interest rates are rising, that’s an even bigger consideration.

This introduces potential cash flow strains, as to get the best possible financial outcome, it’s better to pay off as much of the initial purchase cost as possible. The downside means you will be left with less disposable expenditure if you make a larger up–front payment.

Looking at a lengthier timespan, you’re facing interest repayments, maintenance, repairs, registration and insurance costs. Besides that, there are operational costs concerning fuel efficiency.

To help form a comparison, you’ll want to break these expenses into weekly, monthly and annual prices for the ownership of your vehicle.

Choosing to repair your current car

On the other side of the ledger, you’re operating a car that does not involve an initial cost. But while there may not be up–front costs involved, ongoing operational expenses are likely to cost significantly more than a new vehicle.

You have to keep in mind that an existing or used car, particularly an old one, is usually more prone to repairs or maintenance even if in good condition.

And when such maintenance or repairs are undertaken, parts may be far dearer considering their scarcity, or you may need to replace more parts considering their life span could be surpassed.

An existing car is also more likely to be less fuel efficient than newer models. There is a greater chance you will pay more to fuel your current car. If you have repayments due, you should also assess these so that you’re including all relevant costs.

One thing that does generally work in favour of existing cars is that insurance is likely to be cheaper, although this is just a rule of thumb as opposed to a certainty.

New cars are also stung by a huge depreciation expense which, depending on your circumstances, could be beneficial as a business owner using the car for taxable business purposes.

What else to consider?

Keep in mind a couple other things.

With old vehicles more likely to break down, what impact will this have on other aspects of your life? How will you get around while you don’t have access to a vehicle? Could it impede family matters such as taking the kids to school, or dropping a spouse off at work?

There may also be features that are less safe compared with today’s cars because of technological advancements.

In deciding, you may wish to adopt a particular line of thought – if the repairs or operating expenditure for an existing vehicle surpass the car’s market value, or the financing of a new vehicle, or even the repayments due on the current vehicle over the course of a year, move on and purchase a new car.

If on the other hand things are still running well, and relatively affordable, or you’re in a position where you can’t afford to outlay a large initial capital cost, keep on top of maintenance to defer the decision.