Reconditioning costs and your vehicle’s value

You’ve seen that tooth whitening commercial, the one where the pretty girl gets a phone call from her friend who says, “Road trip! Two hours!”

Immediately the attractive, well dressed model (who clearly does not have a job that requires any sort of vacation request) worries about her not recently whitened teeth. If only the rest of us were so pulled together all the time!

It’s kind of like that with cars too.

Our vehicles take a beating. Our busy lives see us running here and there, loading up on kilometers traveled, through snow, ice, rain, road salt, beating rays of sun. Then there are the little daily insults: the shopping cart bangs, the door dings, bumper scuffs, kid snacks ground into carpets, car seats digging into seat surfaces… All these are par for the course and our vehicles stand up to the challenges with surprising stoicism.

Still, when it comes time to consider selling your vehicle, you have to take a critical look at your vehicle and see its bumps and uglies and determine what needs to be fixed up, repaired or replaced. In general, these items will fit into a few major categories: mechanical safety related items, functions and features of optional equipment and aesthetic appearance of exterior and interior vehicle finishings.

In Ontario, the Ministry of Transportation has set the standards for Safety Certification, a long checklist covering all of the safety related systems that make your vehicle go. It is standard practice for car dealers to offer vehicles for sale “safetied”, with the inspection certificate being required for a new owner to license plates on the vehicle (as is vehicles must be moved using either a trip permit or dealer plate). On a five year old used vehicle, for example, the cost to perform the inspection and the required repairs could easily be $800-2000, without any major or evident deficiencies. Brakes and tires are the most common items needing repair or replacement, since these are friction parts which are destined to wear down as the vehicle travels and ages.

For the past decade or so, manufacturers have been adding more and more convenience, electronic and communication related features to vehicles. Some of these are little luxuries that you may be fine to live without should they stop working while you own the vehicle, but a new owner is pretty likely to want to enjoy if they are paying for a vehicle that is equipped with them. Things like computer and communication technology, navigation systems and electronic monitoring systems form part of the vehicle’s value when it is sold new, and whether or not they work, and how well, are factors that savvy buyers are going to consider before making an offer on your used vehicle.

If your car or truck were in a showroom today, it is likely that it would have to spend some time at an “auto spa”, or a detail shop where it would be cleaned on the interior and exterior, have stains or signs of wear inside corrected and be buffed or polished to remove fine scratches and bring back that glossy new car finish. If there are any dents, dings, scuffs, deep scratches, rust or other signs of damage, those would be removed, repaired or the item in question would be replaced. In short, the average used vehicle on the road today would need a car makeover to get to “showroom ready” state.

If you intend to sell your vehicle directly to another private person, think about the things that are most noticeable as flaws, and determine the cost to take care of those items. Don’t underestimate the value of having the work professionally done, and keep receipts and invoices to help show the steps you took to recondition the vehicle.

If you are using a wholesale car buying service like CarBuyCo, or using our auction service, you should consider selling your vehicle “as is”. The only exception is anything you can have fixed under your insurance, to increase your vehicle’s value without adding out of pocket expense for you. Remember that wholesale buyers often have their own detail and/or mechanical shops, and get good trade pricing at body shops and parts suppliers. Plus, in some provinces, dealers who buy your vehicle to sell on their lot are required by law to pay for and perform a current safety inspection anyways, and they can usually get that done at a lower cost than the average person can, since they often employed certified technicians at their dealerships.

At the end of the day, reconditioning (including mechanical safety) is probably the single biggest expense in remarketing a vehicle, and is the number one factor in determining the total spread between a car or truck’s wholesale value and its end retail selling price. It is not uncommon for a 2-5 year old “middle of the road” vehicle to have a wholesale value that is $3000-5000 lower than the advertised retail selling prices, and in older or more expensive vehicles, or those which require body work or other visible repairs, that value can drop further.

So despite the commonly held belief that selling your own car is easy, there are factors many people don’t consider that impact what price you should ask, what you may be asked to fix by any potential buyer, and how long it takes to sell your car based on the supply and demand and the desirability of your particular vehicle. It’s certainly a task that takes some work, and for some people, selling your car to a professional or wholesale buyer can save you lots of time, efforts and money.