You've chosen the make, model and colour, now comes the fun part -- selecting options for your new vehicle. But before opting for all the bells and whistles, think about resale value. Just like renovating a house, some upgrades pay off, while others just cost you.
When it comes to buying used vehicles that are only three or four years old, consumers have high expectations. "We've become a society of people who all want the latest and greatest," says Mark Campbell, of Campbell Auto Sales in Barrie, Ont., and a director with the Used Car Dealers Association of Ontario.
Today's new gadget will be the must-have item in the used car lot a few years down the road, so it pays to understand what's hot and what will add value to your new vehicle when it comes time to sell.
Which vehicles are good investments?
First, some vehicles themselves are a better investment than others. Peter Pauls, of Peter Pauls Inc. in Winnipeg, and a director with the Used Car Dealers Association of Manitoba, recommends staying away from domestic vehicles if you plan to sell it in a few years. Imports are the best bet, especially if you do a lot of driving. Pauls points to the difference between a Toyota Corolla and Chevrolet Cavalier, each with 200,000 kilometres. "The Cavalier is worth very little money, whereas the Corolla is still a very attractive vehicle."
Campbell agrees: nothing beats a Toyota. He says that while the Toyota Matrix and Pontiac Vibe are both trendy cars and cost about the same to buy new, "the Toyota will fetch more in resale." Do your homework, he advises: "Whatever the hottest new vehicle is now, then two or three years down the road, that will be the hottest used vehicle."
Also, examine the issues shaping the market and consider how they will affect the sale of used vehicles. "Fuel economy will probably top the list -- the price of gas is not going down," says Pauls. (Don't make the mistake that many consumers do in thinking a smaller engine automatically translates into better fuel economy. Compare the consumption numbers and you might be surprised to discover that a six-cylinder engine can be more economical than a four-cylinder.)
Which options pay off?
Automotive Lease Guide publishes a list of the estimated resale value (in U.S. dollars) of some of the most popular options. Power seats come in at number one. For an additional investment of $200 or $300, they retain 63 percent to 80 percent of their value after three years. CD changers are a close second for an initial investment of $250 to $400.
Alloy wheels and leather upholstery also promise payback of close to or more than 50 percent. However, navigation systems and rear-entertainment systems, such as DVD players, requirement hefty investments -- $1,750 and $1,500 respectively -- but only net returns of between 16 percent and 25 percent.
Keep in mind, however, that the long-term value of options varies with the type of vehicle and its typical consumer. For example, larger engines add more pull to pick-up trucks and sport utility vehicles (SUV) but have little muscle in the compact car market. "If they're looking at a SUV, they really ought to consider four-wheel-drive. Even if they're not going to use it, it boosts resale value," says Campbell. He also recommends safety features, such as anti-lock braking systems (ABS): "Especially in minivan, safety and security is where it's at."
If you're looking to recoup your investment, be realistic. While luxury vehicles are expected to have all the high-end options, from leather seats to power everything, low-end vehicles are usually attractive because of their reasonable price. A fully-loaded car won't necessarily be a draw for lower-end, second-hand buyers unless the selling price is competitive.
Air conditioning is a must. In fact, few vehicles come without it these days. Still, there's nothing like a warm breeze blowing through your hair and the sun beating down on your head. Factory-installed sunroofs are a huge draw on the used-car lot.
Window and door handles are passé. Instead, car buyers expect power locks and windows, as well as remote keyless entry. CD players are hardly a luxury these days. How many drivers actually get excited about a tape deck? Go for the CD player, or better yet, upgrade to a six or 10-disc changer.
When it comes to family cars, automatic transmissions are king. In contrast, the resale value for sports cars isn't hindered by a manual transmission (in fact, many drivers prefer the performance it offers). If you're buying a luxury vehicle, don't scrimp on the interior. Leather appeals more than cloth during resale.
Even if you don't have kids, if you're buying a minivan, go for the DVD player. "It's a hot button with mothers, and they're really the ones who make decisions," says Campbell.
Of course, the value of some options, such as heated seats, heated mirrors or ABS brakes, depends on where you live. In warmer climates, they have little appeal, but in sub-zero temperatures, heated seats are a must, whether you're driving a BMW or a Ford Focus.
Remember, just because an option is popular, doesn't mean it will add to the resale value of your vehicle. While many dealers charge more for keyless entry, power windows and rear defoggers, they're something most buyers take for granted. "They may help you in selling that vehicle, but they're not necessarily going to bring in more money," says Pauls.
Buying in bulk
Choosing options isn't as straightforward as compiling a wish list and placing the order -- even a seemingly inexpensive upgrade can end up a major investment. That's because manufacturers usually group together related options in packages that can cost thousands. The idea is to reduce manufacturing costs and, of course, generate more cash. As a result, you may find yourself spending more or compromising on your wish list.
One thing you shouldn't compromise on, and one of the best things you can do to boost the resale value of your vehicle, is opt for an extended warranty. It sends a strong message to future buyers about how the vehicle has been looked after. In addition, keep good maintenance records, says Campbell: "A log really goes a long way in getting more money as a trade in." Think of it as an ongoing investment that pays off in spades --experts say a used vehicle with a warranty and maintenance log can fetch $2,000 or $3,000 more than an otherwise comparable vehicle.
Michelle Warren is a writer in Toronto.