Should you downsize your car?

What you need to know:

  • You can test the comparatives by taking your car to a dealer, and seeing what you can negotiate as a straight swap; what is formally known as a ‘trade exchange.’

Hello Paul, I have an old 4WD Station Wagon that still functions well but it is bigger than I need. I was thinking of downsizing for lower running costs and also thinking that if I bought a smaller one for the sale price of my car, I could get something newer. What else should I be considering?   Margaret

Hello Margaret, your logic sounds good, but there are no certainties in the outcome. Some big old cars hold their value well, while others become almost unsellable at a fair price. You might have to discount considerably, and will struggle to get a substitute for the same price, even if it is smaller.

You can test the comparatives by taking your car to a dealer, and seeing what you can negotiate as a straight swap; what is formally known as a ‘trade exchange.’ If the values are not the same, then who will pay who and how much? That will give you a real idea of what the outcome of your plan might look like.

Meanwhile, you know your big old car. You do not know for certain the newer, smaller one that will take its place. In like-for-like use (within their design capacities), smaller cars are likely to be more fuel economical than bigger ones but will also wear out (age) faster.

What will be their reliability and durability for the next, say, four years, and what might be their residual values at the end of that period? There will almost certainly be a difference in their ride comfort (after years of driving a big 4WD, a small car will feel like a roller-skate) and if the two crashed into each other, the bigger one and its occupant(s) are likely to be safer and less damaged. That is not a certainty, but it is a strong probability.

So, while the superficial logic of running-cost savings is apparent, the reality is less simple. Aside from the technical and market factors, your decision will also depend on whether it is essential for you to reduce your motoring costs, or whether you just think it is sensible to scale down your transport to fit current motoring needs.

I hope that gives you some thought starters. To go beyond that, I would need to know exactly what make and model your old 4WD is. Some of those are worth millions and will sell quickly, even when 20 years old or more.

Others fall into a market gap of being too old for rich buyers (who can afford newer) and too expensive to run for budget motorists even if their purchase price is rock bottom. Then, what actual class of car do you have in mind as your runabout?

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