A car's resale value ranks high among the priorities of Malaysians when it comes to making a purchase. So much so that sometimes the fixation of it borders on obsession.
Ask and a number of the public will bring up second-hand potential as part of the vehicle's overall value-for-money package.
Yet despite its importance, the cause and effect of a fluctuation in market value is often poorly understood.
Recent postings on social media highlights this conundrum with talks of the supposedly greatly depreciated price of Proton Holdings Bhd's (Proton) X70 sports utility vehicle (SUV) in the second-hand market.
This incident makes for a perfect case study when trying to understand how the resale market operates and why it should not be a buyer's sole standard to decision making.
The X70 was big news when it was first launched, being the first model in production through the nasional automaker's partnership with Zhejiang Geely Holding Group Co. (Geely).
It was the brand's proper premium model with its price for the features you were getting in a SUV being a major draw. Locally there was nothing like it at the time and still remains an extremely competitive model today in the C-segment SUV market.
Last week Proton announced that the model maintains its strong market standing for recording 95,100 units in sales since its launch.
With such pedigree, netizens have been trying to understand as to why the landmark model doesn't hold a value that's closer to when it was first launched or even to a brand new X70.
The concern is unfounded and prices are actually healthy all things considered despite whatever deduced reasoning one may have in mind.
Depreciating asset
It needs to be accepted that cars unlike investing in property and gold are a depreciating asset. It is generally understood globally that a car loses 20 to 30 per cent of its price value the moment it leaves the dealership and onto the customer's ownership.
That value further drops an estimated 15 per cent for every subsequent year. It is common for a model to have its price slashed to around 50 to 60 per cent from when it was new by the time it hits the half decade mark.
That is assuming the model doesn't get embroiled in any mishaps such as a bad accident history or known major issues with the model in the market, among other factors which we will get into later, which could cause it to further devalue.
Models that go on to hold a high value after years of being in the resale market need to meet certain conditions: they are either mostly classic and iconic, or simply those that hold extremely strong market demand - the latter is usually mass market movers.
The X70 is no longer the new kid on the block. The SUV was launched on December 2018 making the model almost 6 years old now.
If you want to get technical, the X70 which is based on Geely's Boyue model in China was first launched in 2016, making it close to a 8 years of age.
Buyer's market
It is currently available in four variants: 1.5L TGDI Standard two-wheel drive (2WD), Executive 2WD, Executive all-wheel drive (AWD) and the Premium 2WD.
Proton has since done away with the older 1.8 litre turbocharged and direct-injected four-cylinder petrol engine in favour of the newer 1.5-litre direct-injection TGDi turbocharged three-cylinder engine during the model's refresh back in 2022.
All variants have maintained a price of RM99,800, RM109,800, RM115,800 and RM123,800 respectively throughout pre- and post-update.
According to myTukar and Carsome's listings a second-hand 2020 X70 can go for as low as RM69,900 and as high as RM116,800.
mudah.my has some 2018-2020 models of the X70 listed for as low as RM47,800 for the Standard 2WD, RM49,800 for an Executive 2WD, RM56,700 for the Executive AWD, and RM58,000 for a Premium 2WD - in some sites the latter is going for as low as RM57,000.
A 40-50 per cent dip for an almost 4-year-old model is well within estimates. Even the Executive and Premium models with more than a 50 per cent drop are limited outliers among the lists while also sporting an obsolete engine.
In contrast a 2023 X70 model has the a retention, with the awareness that dealerships or sales agents do use listing sites to sell their units as well, almost as high as 90-100 per cent for being priced anywhere along its original price RM113,000 to RM123,800.
There is even a listing at RM127,152 which goes above Proton's official listed pricing.
What all these means is that there is no cap or minimum when it comes to listing in the second-hand market.
Sellers can price it however they choose, but in the end it is up to the buyer to decide if they're willing to pay the listed price.
Individuals can always ruin the market by pricing their wares at an extremely low price down to RM1 though we wouldn't know why anyone would do that if not for a publicity stunt.
Cars listed on sites like myTukar and Carsome have to also go through a major certification process. Eventually they'll aim to average out the price so that they won't make a loss and possibly sell all available units.
The latter would not be possible if prices are so wildly imbalanced. It is also to their benefit that prices do not go below a certain earning threshold.
Nothing is fixed
Using Proton cars as a comparison, one may be compelled to make a distinction between the pre-facelift X70's second-hand price with that of the brand's other models.
We circle back to the core factor of what makes a model retain as much value as possible or in some cases even raises it above their initial pricing: rarity and volume demand.
Proton's customers are mostly made up of the economic-conscious class. This means the majority will buy into the A and B-segment vehicles which are primed for the mass market.
By default the X70 isn't a volume seller because of its C-segment positioning. It also wouldn't make much sense to compare it to the B-Segment X50 SUV and the A-Segment Saga sedan's sales.
A frontrunner in the B-segment SUV category, the X50 is available in four variants with a starting price from RM86,300 onwards.
The model contributed significantly to Proton's November success with 2,115 units sold. Despite launching almost two years after the X70 (in October 2020) the company says the compact SUV model has since remain a customer favourite having sold a total of 102,325 units overall.
On the otherhand the Saga, as part of Proton Intelligent Energy Synergy (PIES) models (which also includes the Iriz, Persona, Exora) continue to record impressive growth compared to YTD 2022, with a 34.3 per cent growth.
Showcasing its enduring popularity among Malaysian car buyers the Saga stands atop of the PIES model having the highest units sold (6,349) and taking the lead as the second-highest model sales for the year.
A check of the two models show their second-hand value potentially maintaining close to a 100 per cent while further dropping down the line the older the model gets.
Thus, the X70's 95,100 units in sales since its launch is already highly commendable. This is made even more impressive that its second-hand value remains consistent with the newer makes leaning on the high side.
Proton has also long been aware of this. On top of that the models are all due for an update some time soon which would again greatly affect the resale value of the models and their year of make.
Much Ado About Nothing
While there are benefits for considering a car's potential second-hand value in the long run most of the time it is the bane of banality you'll be experiencing.
Putting too much weigh into returns while optimising value will eventually lead you to be sandwiched between an unnecessary dilemma. On one end there's so many uncertain variables to consider, while on the other extreme there are only a handful of sure-fire models (the A and B segments mostly) that will maintain a consistently solid resale value.
By virtue of being risk-averse the only rationale decision is to choose a car that you know people are going to want when you're going to sell it off. That however would also mean you're going for a model that everyone else is while severely limit your purchase decision.
Essentially if it is joy you're looking for then it is best to put aside, if not forgo entirely, the consideration of second-hand value altogether if you're looking for a new vehicle to own.
Different people have varying needs and different cars can fulfil them but only when you allow yourself to make the most out of your choice.
Otherwise there would be no need for anyone to shop around for a suitable car since certain models of certain make within a set price range would usually dominate the market in terms of volume and returns.
We should also be more realistic with our expectations and ask what sort of returns do we truly anticipate from our purchase. Such is with the latest panic involving the X70.
Buy a car that you will enjoy or one that suits your actual needs instead of how well it would sell once you're done with it.
It is highly impractical to only buy a car hoping it would indefinitely retain 100 per cent of its sales value and serves no other purpose than to deliberately further limit yourself.