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Old 1st June 2005, 11:19   #1
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Arrow How fast does the value of a new car depreciate over a few years?

I am doing some calculations and analysis, and for this I wanted to know how the value goes down. Ok, I understand that for some car (hondas?) the depreciation is slower and for some cars (like Fiat) it happens in a hurry. On an average, my gut feel is, it is something like this..
[code]
Year Value
0 100
1 80
2 68
3 58
4 50
5 44
6 39
7 35
[/code]
Basically saying you can get a 4 year old car at half the cost of a new one and a 7-year old car at slightly higher than a third of the cost of a new one.

Any opinions?

Thanks!
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Old 1st June 2005, 11:29   #2
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But it also depends on where you are buying the car from. If you buy it from Maruti True Value, it will be pretty expensive. Otherwise your data seems to be kind of ok.
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Old 1st June 2005, 11:39   #3
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I disagree ... May be perfect for vehicles under 10 Lakhs
I bought my Accord in 2001 for 17Lakhs on road...
But guess at what price I got for it 3 years later ...
7.3 Lakhs ... Thats a 57% reduction ...
Hence it was valued at 43% of the original value..
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Old 1st June 2005, 11:46   #4
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actually it depends on lots of *IF*

there are several things to consider like
situation of company (daewoo cars prices falled dramatically after Daewoo shut down)
emiision norms (you would get very bad resell value for Euro2 car as compared to Euro3 car)
market prices (if company drops car prices then more people will surely go new car instead of second hand, or if banks offers loans at better rate)
car history (car who had accident will surely bring in less cash as compared to car having no accident)
car maintainance (bad maintained car = low resell value)

so there are lots of conditions
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Old 1st June 2005, 12:10   #5
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Quote:
7.3 Lakhs ... Thats a 57% reduction ...
Thats since the model is discontinued.. I read an advertisement in the paper.. which quoted 2001 City Vtec at Rs.4.49L and a Sonata Gold 2001 at 4.99L thought both cars are segment apart.. similar Accord 2001 model will be available not less then 7Lacs..

Its said that once he car steps out of the showroom the value depriciates by 30%
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Old 1st June 2005, 12:33   #6
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Well used car prices like in any market scenario is demand-supply dependent and there are many possible factors that come into play.

- Location: This is the biggest factor for resale prices in general and for a particular brand too. In Bangalore demand far outstrips the supply - better used car prices. Also typically for same vintage the mileage for cars in B'lore is less compared to other cities.

- Brand image, ASS in the area in question, the company (now Maruti does not phase out its models, so you are sure a car wont be out of market even after 10 years thus resale is higher), market acceptability of the car etc. etc.

then there are usual parameters like vintage, mileage.

The depreciation which Minardi indicated could be the average over brands, segments etc. but then there are huge variations.

~maniac
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Old 1st June 2005, 12:37   #7
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Year 1 cannot be zero, because a vehicle depreciates by about 15 - 20% as soon as it leaves the showroom.

Different segments have different rates of depreciation (I'm sure this has been discussed before) and the A and B segments have the slowest depreciation. As you go up the ladder the depreciation rates increase, which is why you can get a damn good second hand deal on the more expensive cars.
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Old 1st June 2005, 13:38   #8
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Agree with Serious_Maniac here.. In bangalore forget owning a used car.. I wanted to buy a 3-4 year old vehicle with 12k * number of years of miles on it.. The price difference between the new and the used vehicle was just about 20-25%.. Thats when i decided to drop the idea and get a new vehicle for myself..

But there are a lot of factors deciding the price of the vehicle.. All in the following order..
1. Accessories..
2. Maintenance and Running Condition..
3. Accidents..
4. Cleanliness..

Depreciation is a very relative term in the automobile industry.

Gears,
Manish.
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Old 1st June 2005, 14:10   #9
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Quote:
Originally Posted by adya33
n)
emiision norms (you would get very bad resell value for Euro2 car as compared to Euro3 car)
Iam not sure whether this will affect the resalve value. I have not come across a situvation where the emission norms specs are discussed.
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Old 1st June 2005, 18:13   #10
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Quote:
Originally Posted by Surprise
Iam not sure whether this will affect the resalve value. I have not come across a situvation where the emission norms specs are discussed.
I totally agree here - from a consumer point of view Euro II or III or even I does not matter because at no time the government is going to put these vehicles off the roads. Two stroke bikes & mopeds belching smoke are a testimony. so Euro III or not, the resale value is no affected. gaadi mileage achhi deti hai, then it will sell.
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Old 4th June 2005, 21:45   #11
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The total km done, accident history if any, and overall maintenance of the vehicle also contributes towards price depriciation.

Secondly, repainted vehicle definately lowers the price, even if it is just a color change desire by the owner. The general perception is because of some damage , generally paint work is done.
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Old 5th June 2005, 12:51   #12
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Quote:
Originally Posted by Steeroid
which is why you can get a damn good second hand deal on the more expensive cars.

But you need to do your sums re: interet rates for second hand cars and higher maintenance costs. Do a life cycle projection for your ownership period and weigh up options
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Old 6th June 2005, 06:29   #13
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Well there is more than all this...with new cars coming in like Swift thigs are not same.
I went to MUL delaer to chk quote for my 2 month old santro Xing XS. Initially he was excited, coz I showed interest in Swift and was ready to replace new Santro.
My santro (fully loaded) was for 4.5 L on road with accessories like car deck, teflon, seat cover and he quoted 3.1 L.
Anyway, I was not very keen on exchanging santro for swift, but though was checking resale for 2 month old santro.
I would have got better quote before swift launch may be...but I feel resale for santro has / will go down with launch of swift. what say ?
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Old 6th June 2005, 10:09   #14
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Resale price of the car is governed by lots of factors, these can be categorized into:


Manufacturer related

Brand Image of manufacturer - commitment to car, Health of Manufacturer
Car phase out by mfg
Current price, new features introduced
Build quality of car - how well it ages, how much it can handle, etc


Market Related

Introduction of new cars in same segment
Which segment the car belongs to. Higher segment cars depriciate faster
Location - regional Demand/Supply gap, Geographical issues - terrain, humidity, soil, etc
Source of resale car - individual owner, car dealer, Company authorized, certified car seller, etc


Specific Car related

Mileage, No of years, how well it is maintained, History
Taxes, Insurance cover
Accessories
Any accidents/damage/rework required, any repainting done
Emission norm - typically better emission implies better technology and also better mileage, though more expensive
No of owners
Service record, etc

Thx
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Old 6th June 2005, 10:25   #15
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Quote:
Originally Posted by vishaltanksale
My santro (fully loaded) was for 4.5 L on road with accessories like car deck, teflon, seat cover and he quoted 3.1 L.

No way the price could be Rs.3.1 L for a two months old Santro which cost Rs.4.5 onroad. I do not know what that guy has in his mind. Rough calculation is that it should fetch atleast Rs.3.9 Lakhs. If you give similar car to the dealers in Chennai they easily sell it off for Rs.4.1 Lakhs ( No doubt)
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