Why Depreciation Is Your Car’s Silent Wallet-Leak

When you drive a new car off the lot, it’s like stepping out of a shop with fresh clothes — but instead of fading fabric, what’s happening is its value quietly shrinking. That’s the harsh reality of vehicle depreciation, and it’s one of the biggest costs most buyers never factor in properly. 

What “Depreciation” Means

Simply put: depreciation is the gap between what you paid for your car and what it’s worth today. As soon as you sign the purchase papers — boom — the value begins sliding. That dip often outweighs what you spend on fuel, maintenance or insurance over the first few years. 

For example: new cars in South Africa typically lose 15–20% of their value in the first year alone. Over three years, many vehicles shed 50–60% of their original price. 

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What Makes Value Drop — And What You Can Do About It

The Usual Culprits

• Age & mileage — The older the car and the more km on the clock, the less it’s worth. Even minimal driving accelerates decline. 

• Condition & maintenance history — Dents, scratches, wear-and-tear, and a scant service record all reduce resale value. 

• Brand, model and demand — Some cars simply hold value better than others. In South Africa, reliable, widely demanded models tend to retain value more strongly than flashy or niche vehicles. 

• Market shifts and new releases — When newer versions come out, older models immediately look dated. Buyer preferences change too, which affects demand and resale value. 

How to Slow the Slide

If you want to keep as much value as possible, a bit of strategy goes a long way:

• Opt for cars and models known for strong resale value (popular, reliable, mid-range rather than niche). 

• Maintain full service records and fix minor dents or scratches promptly. Good maintenance can make a big difference at resale. 

• Keep mileage reasonable and avoid excessive wear — city traffic and stop-start driving speed up depreciation. 

• Avoid heavy customisation or odd colours/specs that limit appeal when selling. 

• Time your sale wisely — market demand, model cycles and seasonality can impact resale value. 

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What Depreciation Means for You — Real Costs

• When selling or trading in — Because of depreciation, you’ll get much less back than you paid; what you lose isn’t just hypothetical, it’s cash you won’t see again. 

• When financing or leasing — Payments often factor in depreciation, so you’re effectively paying the car’s value decline. This means a large portion of what you pay monthly doesn’t go to petrol or comfort — it’s depreciation biting your wallet. 

• Insurance risks — If your car gets written off, insurers pay current market value — which may be significantly less than what you owe, leaving you with a shortfall. 

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What It Means for TDG Clients & Car Buyers

At TDG, we believe in helping people make smart decisions — and understanding depreciation is key. Whether you’re buying new or used, upgrading or trading in, knowing how value drops lets you plan ahead.

• Think long-term: choosing a car that holds value well can save or earn you tens of thousands when it’s time to sell.

• Keep records: service history and good maintenance add value — and make resale easier.

• Plan your exit: If you know you’ll sell within a few years, aim for models and conditions more likely to hold up.

By factoring depreciation in early, you’re not just buying a car — you’re managing a long-term investment.

SOURCE: CARS.CO.ZA