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When is the best time to sell a car?

Running a car costs money and you can only minimise that cost, not eliminate it altogether. So far so obvious, but it’s amazing how many people spend far more on their transport than is necessary; indeed, overspending is the norm.

One of the easiest ways of slashing your motoring costs is to pick the right time to sell your car, whether that’s in terms of the time of year, or the point in its life when it starts to become too costly to run economically.

Taking the first point – the best time of year – things aren’t as clear-cut as they used to be. Admittedly there’s less demand for convertibles in the winter, but modern drop-tops are so usable all year round, that values no longer fall through the floor once the temperatures drop.

Similarly, while 4x4s used to become hot property as summer turned to autumn, there’s now perennial demand for these most fashionable of cars. Meanwhile, good examples of any family hatchback or estate will readily find a buyer, regardless of the time of year.

But while the season or the weather may not affect your car’s value as much as it once did, its mileage, condition, badge or image will probably have a much bigger effect, as you can read in our blog on how depreciation works .

There is one spike that it’s best to avoid though, and that’s the new-registration points of 1 March and 1 September. At these times, huge numbers of new cars are delivered which means forecourts are awash with used models, making it that much harder for yours to stand out.

Coming of age

Most people offload their car at a certain age or mileage, regardless of whether or not it’s past its sell-by date. But that age and mileage is invariably at a point when the maximum money is lost and the car still has plenty more to give.

Most cars are sold on at 3-5 years old, and 40,000-60,000 miles. Yet a car is typically scrapped when it’s 15 years old and modern motors are designed to last 150,000 miles before any major components have to be replaced.

Putting some figures against this, in rough terms, a premium car typically loses around 30 per cent of its value within the first year, 40 per cent after two years and 50 per cent after three years. A more mainstream model will shed value at an even greater rate.

As the car gets older the rate at which it loses value slows down, to the point where it’s pretty much worthless by the time it’s 10-12 years old.

Taking a Ford Focus as an example, a mid-range model ordered new through a dealer costs around £22,000. After a year its trade-in value will have dropped to just over £11,000 and after two years it’ll be worth around £9,000. By its third birthday, it’ll be worth just £7,500 or so; around a third of its original value.

Do the same figures for an Audi A4 2.0 TDi SE estate, with a new list price of £30,000, and after a year it’s worth £20,000 as a trade-in. Two years on it’s £17,000 and after three years there’s £14,000-worth of equity in it; less than half its original value.

After three years both cars have lost around £15,000, but the more mainstream model has shed a greater proportion of its value. The key point is that both cars have lost around £10,000 in their first year; that’s a lot of cash!

Few people sell their car after the first year though, so let’s run the figures once more, for each car when it reaches five years old. By this point the Audi’s value has shrunk to £7,000 and the Focus is worth just £3,500. After this point, both cars will continue to depreciate, but at an ever more gradual rate.

So the newer your car is when you replace it, the more money you’re losing in depreciation. Having a new car might be more important to you than saving cash, but if money is tight, holding onto it for a few more years should save you thousands.

Which brings us to the killer punch – what about reliability and durability? This is where doing your research at purchase time makes all the difference, along with how well you maintain your car. Opt for a car maker with a reputation for durability and you can expect to get a decade and well over 100,000 miles with little more than routine servicing.

So again, doing some number crunching, let’s take that Focus once more. Keep it for 12 years and 120,000 miles then sell it for £1,000, and it’s cost you £21,000. Do the same with the Audi, but sell it for £2,000, and you’re £28,000 out of pocket. Sounds like a lot of money, but…

Replace the car every three years, and using the depreciation figures above as a rough guide, four Focuses in those 12 years will set you back an eye-watering £66,000 while the depreciation of four A4s adds up to a whopping £72,000.

The difference between these two figures pays for a lot of servicing and new parts, and while you won’t be driving around in the latest model, you will be saving a huge wad of cash.

So to answer the question originally posed, at what point should you sell your car? That depends on how reliable it is, how image-conscious you are, how important saving money is, what you paid for it in the first place and a whole host of other factors.

If saving cash is the most important thing, you should keep your car until it starts to cost you lots of money in repairs – which will almost certainly take a lot longer than you expect. If you’re less bothered about saving cash, it’s time to sell when you’re ready to move on – at which point somebody else can enjoy your cast-off for a bargain price.

* When you do come to sell your car, make sure you read our blogs on how to write the perfect used car advert and how to sell your car.

Richard Dredge

September 2016