South Africans have long had love affairs with German cars; they are perceived to be aspirational, luxury vehicles boasting superlative build quality.
The three most popular German brands – namely BMW, Mercedes-Benz and Audi – all produce premium cars, with an upmarket image, magnificent engines, superbly crafted interiors and good safety features.
Which is all very well. But which brand has the best and worst resale value? The answer to this question – which may well surprise you – can help a motorist select his or her next German luxury vehicle.
According to Darryl Jacobson, managing director of True Price, Mercedes-Benz rules the resale roost, BMW vehicles have the worst resale value while Audi slots in neatly between the two other Germans.
His findings are based on an analysis of True Price data. In order to provide motorists with realistic (and free) vehicle evaluations, the True Price team attends hundreds of bank repossession auctions each year. They document each and every price paid on auction, and so the True Price database contains the actual prices paid on thousands of individual vehicle auctions.
Jacobson has analysed this data. “Then we calculated the actual price achieved on auction as a percentage of the original list price. Mercedes-Benz is the clear winner when it comes to resale values,” he explains.
The total vehicle parc was used in this exercise. “We didn’t limit our analysis to certain models or certain body types. We compared our entire Mercedes-Benz database to our entire BMW database and our entire Audi database,” he explains.
At a percentage of the original list price of 70.10%, Mercedes-Benz is truly head and shoulders above the competition. Jacobson says he was not surprised to see the three-pointed star fare so well. “Everyone – both young and old – loves a Mercedes-Benz. Mercedes-Benz vehicles have long held their value, and I strongly believe that they always will. It has been interesting to see younger buyers avidly bidding on Mercedes-Benz vehicles in the last 10 years; the company has done an astoundingly good job of making its product range relevant and enticing to a large audience,” he notes.
Audi clocked in second, at 62.49% of the original list price. “We see a lot of bidding on Audi models on auctions,” Jacobson reveals. “It’s the vehicle of choice for many younger professionals. It’s also popular with families, who maintain that the vehicles are spacious and comfortable while offering good aftersales support from the dealer network. An Audi is perceived to be a ‘safe bet’ on auction. Dealers also know that they should be able to move the vehicle fairly easily (although, it must be said, not quite as easily as a Mercedes-Benz).”
Coming third with 58.65% – and therefore having the worst resale value amongst the German trio – is BMW. “This will no doubt surprise many die-hard BMW fans. But it does make a certain amount of sense. Although the BMW vehicles are still popular on auction, they seem to have lost their lustre when it comes to exclusivity, desirability and the bragging rights that go with owning one of these vehicles. In fairness, the 3 Series is still very sought after. The 5 Series is not quite as desirable, and the 7 Series has always been challenging when it comes to resale values. Plus, buyers feel that the X derivatives (the X3 and X5 especially) are too expensive,” Jacobson explains.
According to Jacobson, resale value should be one of the single most important factors to consider before purchasing any vehicle. “The majority of vehicles are depreciating assets. The exception to this rule is a classic or collector’s car. The longer you own a vehicle, the less it will be worth. In fact, depreciation is the single biggest cost factor when it comes to vehicle ownership. It is far more significant than the cost of servicing and maintenance, for instance. Yet some car buyers forget about this important aspect of vehicle ownership when making their choice,” Jacobson points out.
The consequences of ignoring vehicle resale values can be dire. “You will get a much lower trade-in price when the time comes to sell. That much is obvious. However, consider also the fact that the vehicle could be stolen or written off. Your insurers will pay you a market-related value … and resale value plays an important role here!” Jacobson notes.
Based on the findings of the True Price study, Jacobson says that going the Mercedes-Benz route is a safe bet. “Based on our analysis, if you’re shopping for a German car, it would be prudent to buy one with the three-pointed star. You will minimise your risk of the vehicle depreciating too much,” he concludes.