We all want to get the best price when selling a used car. After all, a car is usually one of our most valuable assets, and most sales are the precursor to buying another vehicle – so we want as much cash in our pocket as possible for that next transaction. Understanding your car’s market value is the first step to a successful sale.
When the time comes to sell your car, a valuation will give you an idea of the price to ask when listing your car for sale online, or when negotiating with a car dealer on a trade-in price. Market value for insurance purposes will be determined by your insurer.1
So, knowing how the market values your car can help you determine a fair price, which is a great place to start your sales journey.
Used car values in Australia
In recent years, the market value of used cars in Australia has strayed from historic norms.
“Historically, cars tend to depreciate,” says Ross Booth, Global General Manager of automotive research specialists RedBook. However, the opposite can also occur.
“Used cars can go up in price. We saw that during COVID because the demand and supply equation changed.”
That trend is now in reverse, and by mid-2023, used vehicle prices had fallen by more than 9% in 12 months, representing a gradual return to normality.2
So that’s the general trend. Determining an accurate price tag when it’s time to sell your car is another matter – and it’s not an exact science. There is one golden rule to remember: market value is dictated by the buyer.
“Effectively, something is worth what someone is prepared to pay for it,” says Booth.
What’s the market value of your car?
Landing on a solid estimate depends on your answers to the following questions:
1. How long since it rolled off the dealership floor?
The age of your car is important for a number of reasons, according to Richard Blackburn, National Motoring Editor, News Corp Australia.
“A new car typically loses 30% to 40% of its value in its first three years out of the showroom,” he says. Generally, the older your car, the more it will have declined in value, or depreciated.
2. Is it still covered by a warranty?
Until recently, most cars came with a three-year factory warranty. But engineering improvements mean that the reliability of cars has generally increased, and most manufacturers now offer a warranty of at least five years.3
Buying a car out of warranty exposes the purchaser to the full weight of repair costs on any mechanical failures with their used car, so it’s no surprise that prospective buyers will expect to pay less for a car that’s out of warranty.
“The reality is, as vehicles get older, they need more maintenance, which means more cost. There is greater risk that when a vehicle comes out of warranty, if there’s a problem [the new owner is] on the hook for it,” says Booth.
(Remember, it’s your obligation to ensure a car sold privately is in safe and legal condition;4 check transport department websites for requirements in your area.)
3. Has it been regularly serviced?
If you can hand a buyer a complete service record, you’re in a better position to value your car at the higher end of the asking price range for that make and model.
“If I were buying a used car, regular servicing would be the number one thing that I look for and preferably that it’s been serviced by the brand dealership,” says Blackburn.
4. How many kilometres has it driven?
As the availability of unlimited-kilometre warranties demonstrates, distance travelled is not the ultimate indicator of wear and tear that it once was. For many buyers, though, 100,000km and above will still raise a flag.
If your car falls into this category, remember that not all kilometres are equal.
“The kilometres can be misleading. For example, if a car has been driven country miles, it's under a lot less stress than if it's been driven around the city,” says Blackburn.
“Doing 100k an hour along the freeway puts a lot less stress on a car than stopping and starting.”
Make sure prospective buyers are aware of the nature of the driving you’ve done in the car.
5. What condition is it in?
Just how well have you looked after it? Does the interior smell of wet dog? Is the outside pitted with dings?
“Anyone can have a detail done on their car,” says Blackburn. “But buyers can tell whether someone has cared for their car over the long term.”
He points out that if the interior or exterior appears neglected, prospective buyers might wonder how well you’ve looked after the less visible parts of the vehicle.
On the upside, if you’ve had work done on the car body, or replaced the tyres or significant engine parts, be sure to keep the receipts.
“Buyers will appreciate that you’ve covered that expense, and it’s something they don’t have to worry about,” says Blackburn.
6. What make and model is it?
To begin with, service and spare parts are usually cheaper and easier to find for such brands, and for some people, there’s comfort in going with a familiar, trusted marque.
Toyota is far and away Australia's most popular brand, with almost 3.1 million cars in the market as of January 2023.5
Next comes Mazda, at over 1.4 million, while Holden holds third place, with Hyundai, Ford, Mitsubishi, Nissan, Subaru, Honda and Kia following behind – in that order.5
Lesser-known brands are on the rise though, with the Chinese car maker MG showing a 58% increase in registered passenger vehicles in the 12 months to January 2023.5
7. What colour is your car?
Why do certain coloured cars have better resale value? Strange as it may seem, car buyers in general do prefer certain colours, for reasons of perceived safety, and perhaps also with future resale in mind.
“In Australia, white is the most popular colour at around 30%,” says Booth. That’s not to say that a car in a flashy or unusual colour, such as bright yellow, will necessarily be worth less.
“It might be worth more, but it will tend to take you longer to sell it because you've got to find someone who wants a yellow car,” he says.
How to use online car valuation guides
Bearing the above in mind, it’s time to tap into some of the helpful free car valuation resources you can now find online.
Most of these tools take key details such as your car’s make, model, age, fuel type and body type and use them to provide a price guide for your car. Some provide two values – a trade-in price and a private sale price – or the option of paid valuation reports for a fee. These can be useful ammunition in the negotiating process.
An afternoon spent visiting used car yards in your area, or perusing online car sales sites will also give you a feel for prices being asked for cars similar to yours.
Remember that if you sell to a car dealer, you’ll typically receive a lower offer than you can get via a private sale, given the dealer has their own costs to account for. But it’s a good option for people who aren’t comfortable with negotiating, or who are anxious about getting caught up in a scam.6
Once your research brings you to a ballpark price guide, factor in your answers to the questions above and you’ll have a good idea of your car’s market value.
How to get fair market value for your car
When advertising a car for sale online, transparency and information about your car’s top selling points are key, says Booth.
“Don’t tell me about that model car, I know what a Toyota Corolla is and what it does,” he says.
“What makes a car attractive may be that you’ve been the sole owner of the car, that you haven’t smoked in it, that it has low kilometres, that dogs aren’t regular passengers, that it has very few scratches, or just one small ding on the rear passenger door.”
Be honest, but emphasise the good points about your car. If you’re posting it for sale online, upload plenty of photos – capture the interior, exterior, under the bonnet, with the boot open, and from different angles. Make yourself available to answer enquiries and facilitate test drives.
Can a car be sold for more than its market value?
Technically, no – ultimately, market value is what a buyer is prepared to pay, so whatever a buyer pays is the market value of the car.
It is, of course, possible to sell your car for more than you paid for it – barring a return to the supply chain issues of recent years, though, this is only likely to happen if your car is particularly rare or unusual or if you paid less than market value the first time round. Most of us are unlikely to get that lucky.
Ready to start shopping for your next car? Compare our car policies to see if we’ve got the cover that suits you.
Article by guest writer Natalie Filatoff
1 See our Car PDS for full details
2 Source: Moody’s Analytics – Datium Insights – Moody’s Analytics Used Vehicle Price Index
3 Source: Drive – Every new car warranty in Australia in 2022
4 Source: Qld Government – Selling a used vehicle
5 Source: Bureau of Infrastructure and Transport Research Economics (BITRE) – Road Vehicles, Australia January 2023
6 Source: National Anti-Scam Centre – Losses to car ad scams climbing