Nat Thomas Gumtree Depreciation Distress Interview

Nat Thomas Gumtree Depreciation Distress Interview

High levels of depreciation in new cars is creating distress, annoyance and stress amongst Australian consumers and increasing propensity to consider the benefits of buying a used car. In the current economic climate 58% of Australians believe it makes more sense to buy used rather than new when it comes to buying a car.

Nat Thomas, Corporate Communications Manager at Gumtree.com.au, "We have seen enormous growth of people coming to our cars classified business over the last 12 months looking to find a bargain and save themselves the very high levels of depreciation you see with new cars."

Aussies have become increasingly frustrated with car depreciation as the current economic climate forces consumers to tighten their wallets.
9 in 10 Australians (88%) think that a brand new car depreciates as soon as it leaves the dealership
39% of Australians think that they are simply throwing money away when buying a brand new car

Reasons people are looking for used rather than new:
69% of Australians recognise that purchasing a used car enables them to buy something they wouldn't normally be able to afford
60% feel that buying used enables them to negotiate a good price
On average Australians will spend $5,200 per year running a new car even before depreciation is taken into account
79% of motorists cite depreciation as a key consideration when replacing their vehicle

Australian made cars are the biggest depreciation offenders.
Putting further pressure on the local car manufacturing industry is the fact that seven of the top ten depreciating cars on Australian roads are Australian manufactured.

Interview with Nat Thomas

Question: What are the common trends in regards to car depreciation?

Nat Thomas: We recently conducted some research in order to understand how Australian car owners feel about the issue of depreciation. We found some interesting insights into depreciation and the attitudes of Australians; interestingly almost 90% of people believe that a new car depreciates in value as soon as you drive it out of the dealership.


Question: How does car depreciation affect consumers?

Nat Thomas: It is a real issue that affects people negatively in a very material way as the research found that 50% of Australians felt annoyed, stressed or even depressed about the issue of car depreciation.

Question: How is Australia reacting to depreciation?

Nat Thomas: The survey provided interesting insights into the alternative option of buying a used car rather than a new car; 69% of people recognised that when buying a used car there are significant benefits especially that you are able to buy a better car that you wouldn't normally be able to afford, brand new. Buying second hand allows you to upgrade your car simply by buying a used car rather than not being able to afford a new one.

60% of people feel that buying a used car means you can negotiate a better price than when buying a brand new car where the prices are naturally higher and your less likely to get a better deal.


Question: Which types or brands of car depreciate the most?

Nat Thomas: We found the top 10 worst performing cars in regards to depreciation (pictured). If you were to buy a brand new Ford Falcon five years later it would only be worth 39% of what you paid for it, when you purchased the car. This percentage of depreciation applies to a range of cars including the Ford G6 Sedan which only retains 43% of its value, five years on. The depreciation rates are very interesting as there are a huge number of the most popular Australian cars that loose a significant proportion of their value in the first few years of ownership.

The depreciation rate of used cars is not only dependent on the make and model of car, but also its condition, the number of kilometres it has and the general availability/desirability of that make and model.


Question: Does a brand new car depreciate as soon as it is driven out of the dealership?

Nat Thomas: This is a very wide spread view with 90% of respondents and I think it is definitely true because 90% of respondents can't be wrong. The common belief backs up the truth of the matter which is that brand new cars depreciate much faster than used cars. On a new car the depreciation is instant because as soon as you buy that car it loses value, almost straight away. Everybody is aware of this although some people accept this depreciation as a part of the deal when buying a new car.

The question you have to ask yourself is "Why would you buy a brand new car, when you can buy a used car and get better value because you are able to buy a car that is materially worth more for a lower price than if you were to buy it new?"


Question: What tips does Gumtree.com.au suggest for used car buyer?

In support of Australians looking to buy a used car Australia's leading free classifieds website, Gumtree.com.au recommends: 1. Meet the seller: Meet the seller and ensure the car is the same as the one listed on the registration certificate. Inspect the car in full daylight to easily identify possible defects under the bonnet, any rusting under the car or dents in the exterior. Take a friend if you can, to help inspect the car.
2. Test drive cold: Arrange to test drive when the engine is completely cold, which will give you a good idea of how the car starts. Test drive the car in all gears and on a range of road surfaces to identify any potential issues.
3. Check the history: Get the car's Vehicle Identification Number (VIN) and check the history of the vehicle with your state database.
4. Independent inspection: It might be worth the investment to have the car inspected independently. If there is any hesitation from the seller it is likely they are hiding something. Gumtree.com.au lists a range of service providers you can choose from in your local area.
5. Negotiate: Negotiate the price based on your research into the average market prices and if you found any faults with the car. There is usually leeway for bargaining.


Question: Why and how can buyers check the history of a second hand car?

Nat Thomas: Why you should check the history of a second hand car before buying is so that you make sure what you're buying is what you think you're buying. It is all well and good if you take the sellers word for it and I believe in general, trust does go a long way, and most of the time people's intentions are fairly honourable; but why live in doubt?

You can take the Vehicle Identification Number (VIN) and have it checked by third party organisations and that will give you the history of the car including how many owners it has had and other essential information when making a sound purchase decision.


Question: What tips do you have for sellers that are listing their car for sale on Gumtree.com.au?

Nat Thomas: 1. Be honest about the condition of the vehicle by disclosing any faults with the car upfront as the whole process will be far smoother and this will save time in the long run and increase the chances on your car being sold.
2. Set a fair price that reflects the car's actual value because if you try and get a bit more than the car is actually worth it will take a lot longer to sell and in fact you might not sell it at all, at the higher price.
3. It is really important to use as many clear and key photographs of the car to showcase the condition; online customers really do shop visually and they want to get as close to the actual car, as they can through looking on the site.

Gumtree.com.au

Interview by Brooke Hunter