Choosing the right model derivative beats loading with options for higher used car values

CHOOSING a different standard trim level can be more cost-effective loading a car with optional extras, according to CAP, the used car pricing experts. Optional extras typically retain no more than around 20% of their cost new while a better equipped derivative can retain around 90% of the original additional expenditure. For example, 3 years ago the combined cost of adding cruise control, rear parking sensors, electro-chromic rear view mirror, automatic air conditioning, multi-function steering wheel, interior lights pack and different style alloy wheels to a BMW 318d ES was £1,520. In today’s market, at 60,000 miles, the combined residual value of those features is £300, or 20% of the original cost new. In contrast the cost of upgrading to the SE variant, which has the same list of features as standard, was £1,030, of which £925 – or 90% – has been retained today, at 60,000 miles. According to CAP’s Mark Norman, a better understanding of the true value of options helps car buyers make more cost-effective vehicle purchase choices and they can also benefit by placing more emphasis on the options present on their stock at remarketing time. Mark Norman offers car buyers 4 golden rules to ensure they make the most cost effective choices around the specification levels of their vehicles. • If possible choose derivative uplifts rather than options • Actively market the options on your car when selling it again • Assume most options will have zero value in the open used market • Understand there’s no such thing as an “essential option” Mark Norman said: “Options are now too complicated to expect future buyers to understand the difference between standard and optional features. “For example, on a BMW 318d ES there are 74 cost options, 4 no-cost options, 12 colours, 11 interior trim options and 5 option packs available. “Expecting future buyers to be aware of what came as standard and what may have been an expensive extra is clearly unrealistic and you can be certain that if they don’t know the origin of a feature, they certainly won’t pay any more for it. “That is why it is wise to specifically market the optional features on every vehicle when it is remarketed.” According to Black Book, the benchmark guide to current used values, many options retain so little of their cost new that it is wise to assume zero value in the used market. Factory-fitted Satellite Navigation, for example, can retain as little as 11% of its original cost after 3 years. Mark Norman added: “The trade is also fond of saying some options are ‘essential’ but this tends to be true only in cases where you want to sell back into the franchise dealer network. “Values in the used market, as reported in Black Book, show that in many cases the residual value penalty for the absence of a feature is actually less than the cost of originally purchasing it new.” ends For further information contact Mike Hind, Communications Manager, CAP on 0113 222 2044 / 07710 152030 Follow MikeH_CAP on Twitter Find Mike Hind on Linked In http://uk.linkedin.com/in/mikehind CAP used car pricing and technical information has been trusted by motor trade professionals for more than 30 years. The company provides trusted and accurate pricing and technical information on cars, vans, motorcycles and trucks to the UK automotive industry every day. As well as helping dealers, fleet operators, insurers, vehicle manufacturers and finance providers, CAP information also operates at the heart of many leading vehicle marketing websites and car sales portals, including Britain’s largest – AutoTrader – helping consumers safely make the best informed decisions about their purchase choices. CAP, Capitol House, Bond Court, Leeds LS1 5EZ Telephone: 0113 222 2000 Facsimile: 0113 222 2001 www.cap.co.uk