Why your car might be losing value faster than it used to

Your car may be losing value more quickly than it might have done 10 years ago.

Trade Me had compared like-for-like vehicle age cohorts in 2016 and today.

It found petrol vehicles were losing value more quickly than equivalent models did a decade ago.

"It is a market-wide trend for petrol, not a specific impact on older vehicles."

Diesel vehicles in both age groups were holding their value better than they did in 2016.

Hybrids and plug-in hybrids were steady.

"Conventional hybrids and plug-in hybrids show near-zero price drops within the year, insulated by steady demand.

"The takeaway isn't that older cars are disproportionately affected; there is simply a modest signal that petrol models in general are seeing softer price retention than they did 10 years ago, while hybrids and diesels are holding their ground."

AA spokesperson Terry Collins was not surprised and said it was part of a wider market move.

Battery-electric and plug-in hybrid vehicles accounted for 25.2 percent of new light vehicle registrations in September, up from 9.1 percent a year earlier, according to Drive Electric's analysis of NZTA data.

"If you think about electric vehicles, what you had to pay for five years ago and what you pay for today… I'll give the example of a Tesla. When they first came out they were $78,000 or $76,000. Now they're $60,000-something. So if they drop $10,000 off the new market what do you think it does to the secondhand value? The sharp prices and discounting for brand new ones drives down the second-hand market."

He said it was not just that model that was affected by other vehicles as well. 'If you've only got to spend a few extra grand or $10,000 extra to get a new car, why would you spend a lot on a secondhand one?"

He said as modern cars with new features became more affordable it pushed down the values of every other vehicle in comparison to where they were a decade ago.

It was a trend that was likely to continue, he said. "I really think the electrification of our fleet will finally start really taking off meaningfully… the running cost savings are just about a no-brainer.

"With sustained high fuel prices for a while, we buy about $12.1 billion worth of fuel into the country every year, that's the total value of our exports. If we were even to save 20 percent of our fuel by going and moving to electric… that's the whole value of our wine exports. I just think if we can get some ideas around the government, when the penny drops… and people go, 'my God, this is going to work', that's going to change our fleet."

That would create some "weird" vehicle values for a while, he said.

"Go back to the 70s, our last massive oil shock, and how long that went, that created efficiency standards for cars, that got rid of all the pollution in LA, it created efficient fridges, products, everything about storage, it just had a significant long term impact. This, I think, could be of an equal seismic kind of wake up call."

He said it was likely that big V8 vehicles and inefficient six-cylinders were likely to have lower values.

Collins said diesel was a different market because many of the buyers were purchasing for commercial fleets.

Consumer NZ spokesperson Jessica Walker said even before fuel prices increased, 18 percent of owners of cars that were not electric said they were likely to buy an EV as their next car and 25 percent said they were somewhat or extremely likely to buy a plug-in hybrid.

"That same survey found that 96 percent of EV owners would buy another EV - and lower running costs was a key driver for over half of people who had already switched to driving an EV. Since that research was undertaken, we have seen financial concerns about the cost of fuel reach record-highs.

"The cost of fuel is likely to be making electric vehicles and hybrids even more popular now than our December research indicated. That will be a significant factor in what's happening with car values."

Simplicity chief economist Shamubeel Eaqub said it was to be expected that increasing petrol prices would change the desirability of vehicles and make EVs more appealing.

"Their prices are holding, while petrol car prices are falling. This is consistent with lots more hybrid and EVs being imported - both new and used."

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