Depreciation a fact of life with most late model sedans
Ross is looking at a used 2010 Lexus GS300 sedan which has travelled a shade over 22,000km that he has seen advertised for just under $50,000.
It's New Zealand new and has had only one past owner, an elderly gentleman who traded the car for something a little easier toenter and exit. The current asking price has already been reduced by a couple of thousand dollars.
"This car is loaded with extras including memory front seating which is important as there is quite a difference in height between myself and the wife," says Ross.
"We want something we can both jump into and have the driver's seat position pre-set. And I prefer petrol over diesel.
"I know how well equipped the car is overall; my question is why is the asking price so low in comparison to what the retail price was just three years ago (around $100,000)," asks Ross.
I suspect many franchise dealers are being asked to trade in low-mileage and late-model sedans as more and more buyers drift toward the SUV style of vehicle and the benefits they provide.
Depreciation is not something new in the industry; it has always been a factor that has swayed some buyers away from purchasing new, particularly those who change their vehicles on a regular basis.
Demand for a particular type of vehicle however, normally sets the benchmark for its retail value regardless of the badge.
When used imported European vehicles started arriving in New Zealand in big numbers for example, the demand for higher priced used NZ new variants declined and the market had to quickly adjust.
New vehicle distributors are selling some unbelievably well specced sedans at the moment but the target audience is a lot smaller than it used to be.
According to Motor Industry Association figures, large cars sales are currently making up only around 5 per cent of the total new passenger and SUV (27 per cent) registrations. Three years is a long time in the motor industry as well and while a 2010 Lexus is loaded with goodies so, too, are many 2014 makes/models with lower initial retail pricing.
If your preferred choice is a sedan then be fair to yourself, and look at new vehicles in the same price bracket. If you want to stay loyal to the Lexus brand however you will still be buying an awful lot of motorcar at a fraction of its initial retail price.
Like you Ross, there will always be buyers looking for a particular type and make of vehicle. If it's a used sedan however, the buyers aren't there in the same numbers as they used to be which is reflected in the asking prices.
Lexus GS300
Lexus GS.
Those who do buy the Lexus brand know the value for money, quality and reliability they receive. Don't blame the huge depreciation hit on the 2010 car itself. Like most sedans it is living in the shadows of the more popular SUVs.
Kia Optima
Kia Optima Photo / Ted Baghurst
A number of people I know have made positive remarks about the latest Optima and that was the previous model. The 2014 edition is a step up again in looks and specification level. The 2.4-litre Limited model has an almost endless list of high-end kit including electric driver and passenger seats with two memory settings for the driver. Retail price is just over $50,000. It may not carry the same prestige as the Lexus or top-end European brands but it does represent excellent value for money all the same.
Some makes/models do hold their prices better than others. The Edition 30 BMW is a good example. It was released to celebrate the company's 30th year in NZ. At the time it included $12,000 worth of extras but the retail price was increased by a mere $1000 and sold new for $75,900. While it will undoubtedly suffer some depreciation, I suspect it will hold its value better than most because it is a limited edition model and will be a much sought after car on the second-hand market.
Driven recommends
It's a buyers' market when it comes to sedans. Just do the homework on both the used and new offerings. Buy with the intention of long-term ownership, however.
