Mr Whippy
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| posted on 27/8/13 at 11:57 AM |
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Why do cars deprecate????
What's that all about...how can a car lose half it's value in a couple of years or more?
Where did all that money go...is it tradition and how can one car deprecate more than another what on earth is it based on?
Lots of questions but it does seem mental I'd have thought the value would just be based on its mileage as that is a better indication to its
remaining lifespan
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Slimy38
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| posted on 27/8/13 at 12:13 PM |
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I think there is a perceived value with a brand new car, being one of the first on your street with a new reg plate holds a certain
'kudos' for some people. Also the ability to choose your own colour and spec, instead of having to choose from someone else's
cast-off.
There are a handful of cars that actually appreciate in the same period, I remember both the BMW Mini and the Fiat 500 being more valuable second hand
than new. And in both cases, it was supply vs demand.
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Ivan
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| posted on 27/8/13 at 12:14 PM |
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There is no sense in it except supply and demand - car depreciation is the price of the desire for the new car smell and the reason why I will never
buy a new car off the showroom floor when a low mileage two year old one will cost a huge amount less.
In 40 + years of car ownership I have only ever bought two new cars and that was only because my employer's car scheme forced me to. I did keep
them both for 6 years and 160 000km and at least I got fair use for the depreciation.
[Edited on 27/8/13 by Ivan]
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Mr Whippy
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| posted on 27/8/13 at 12:27 PM |
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My dad use to get a new company car every 3 years, but there was a good reason for the cars to be worth nothing as after 3 years they were best
described as very tatty (even covered in rust!) and some were on their 3rd engine 
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pekwah1
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| posted on 27/8/13 at 12:35 PM |
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Surely it's just governed by what people are actually willing to pay.
I.e. if the majority decide they wouldn't pay £17k for a 1 year old £20k car, then it's going to be worth less even though it's
realistcally not...
Think that makes sense...
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Not Anumber
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| posted on 27/8/13 at 12:36 PM |
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The difference in depreciation rates between cars is very strange. For instance the Volvo S60 and S80 depreciate faster than most other saloon cars
of their size despite their being more reliable than most. The V70 estate shares the same mechanicals but actually depreciates slower than most.
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nick205
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| posted on 27/8/13 at 12:37 PM |
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Don't spend your time questioning it, just enjoy the fact that someone else has worn the depreciation so you can have a perfectly good car for
reasonable money 
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nick205
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| posted on 27/8/13 at 12:40 PM |
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quote:
Originally posted by Not Anumber
The difference in depreciation rates between cars is very strange. For instance the Volvo S60 and S80 depreciate faster than most other saloon cars
of their size despite their being more reliable than most. The V70 estate shares the same mechanicals but actually depreciates slower than most.
Volvo estates have a very dedicated following and people run them forever so the demand probably outstrips supply.
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pekwah1
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| posted on 27/8/13 at 12:48 PM |
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plus noone under 60 wants a volvo
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dhutch
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| posted on 27/8/13 at 12:59 PM |
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quote:
Originally posted by nick205
Don't spend your time questioning it, just enjoy the fact that someone else has worn the depreciation so you can have a perfectly good car for
reasonable money
Certainly one option.
Certainly in many ways is bonkers, and for instance on construction equipment, you dont get it. Its far more linear depreciation, based fairly
logically on age and hours.
But cars are not so cut and dried functional logical items, people make irrational decisions, which drive irrational prices.
Daniel
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britishtrident
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| posted on 27/8/13 at 01:17 PM |
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These days most cars go to the scrapyards with only relatively minor faults, a duff cv joint a cracked windscreen or most commonly a corroded brake
pipe or two will send a car to the proverbial glue factory. I must admit sending an ultra reliable Rover 623 to the crusher because I just
couldn't be a**** droping the fuel tank to change a brake pipe and the cost of a new rear calliper.
At the other end of the scale people are registration year snobs some one year old cars drop 60% of the list price in 2 years.
Prior to the 1990's most cars had rust problems before they were 4 years old and would have had major engine work before 80,000 miles, much of
the change is due to more rust resistant car bodies and better engine oils have made a tremendous difference as has electronic fuel injection.
[I] “ What use our work, Bennet, if we cannot care for those we love? .”
― From BBC TV/Amazon's Ripper Street.
[/I]
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Not Anumber
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| posted on 27/8/13 at 01:33 PM |
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I had several years of buying old Mercs at about 15 years old, insuring them as classics and running them for 5 years for peanuts then selling them
for more than i paid.
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sdh2903
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| posted on 27/8/13 at 01:54 PM |
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quote:
Originally posted by pekwah1
plus noone under 60 wants a volvo
The only 2 recent used cars I've sold and made money on have been my dads volvos. Sold very easily too. I even got attached to the s60 d5 so
comfy and oodles of oomph.
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mcerd1
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| posted on 27/8/13 at 02:43 PM |
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new cars cost a lot to make, so the price is always going to start of relatively high whatever car it is...
as above - there still seem to be plenty idiots who always buy a new car and wouldn't even consider a second hand / nearly new one - so there
are more second hand cars on the market than there is demand for so the price drops
(just like with houses, its only worth what the majority are willing to pay for it)
but this situation suits most of us here quite well
in the last few years we've had the credit crunch, fuel prices, the threat of crazy tax on bigger engined cars in 2008 (never happened in the
end, but at one point my 1.8 focus was going to be £270 /year  ) - all of which affects what cars the majority of folk want to buy and therefore the
price - but its as much about the general perception of the car in question as it is about the cold facts and figures
the road tax one alone dropped the value of my car by ~£800 overnight (along with lots of other mid to larger engined cars) and it never recovered
even after the tax plan was scrapped 
and the price of a the small hatchbacks like the 1.25 fiesta increased buy more than £600 or more at the same time as the demand shifted
also when the credit crunch first hit the it was the smaller s/h cars that were in demand again so the second hand values seemed to stay much stronger
for these - I use to be able to get a decent little hatchback with tax and test for £300 - £500, but these days I'd need to pay £1000+ a car in
the same condition/age 
I know a few people who always buy new and I've never got a good answer from them as to why they do it....
most say its because they won't have all the used car problems / wear and tear - to me that might make sense if you kept it for a long time and
looked after it from day one, but then these people all seem to replace the car at 2-3 years max. ? (so they are taking the new car price hit again
and again)
also most of them have had issues with the cars that needed sorted under warranty - obviously thats not costing them, but it can be very inconvenient
- were as most 1 - 2 year old cars will have had all the minor niggles sorted already...
[Edited on 27/8/2013 by mcerd1]
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nick205
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| posted on 27/8/13 at 03:40 PM |
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All said, most of us would probably choose a new car given the means to do so. Although human nature seems to dictate most people want more than your
means allow anyway.
The only new cars I've had have been user chooser company cars. There's nothing quite like getting a brand new car delivered to your door
and the 3 year old one carted away at the same time. The added pleasure of simply dropping it off at the main dealer (or in some cases having it
collected) for servicing or any other issues is also very pleasant.
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scootz
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| posted on 27/8/13 at 03:44 PM |
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It's perfectly sensible that a cars value will depreciate... to take account of wear and tear if nothing else!
I guess that model desirability will be the factor that dictates the rate of said depreciation.
It's Evolution Baby!
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Not Anumber
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| posted on 27/8/13 at 03:53 PM |
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When ive had the money for a new tintop i have resisted the option and when i have had the chance of a company car i have resisted that too- i just
dont see it as a benefit i would be prepared to pay tax on.
I can see how people can enjoy being able to specify the trim, choose from the options list and enjoy that aroma of opening the door on a new car for
the first time but most modern cars in the mid range price bracket just dont really do it for me. I'm happier with something a league above
but a few years older.
And of course with a Locost the options list is what you want to make it
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richardm6994
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| posted on 27/8/13 at 03:54 PM |
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this will make your eyes water.....it did mine!!!
£100k DB9 bought new in 2005
sold for £32k in 2011 "part ex" for a new DBS.......glad it was the company's and not mine!!!!
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Volvorsport
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| posted on 27/8/13 at 04:42 PM |
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most things are written off in value after 6 years for tax purposes , if your a business .
im pretty sure that the company car has malarchy has a fair percentage of new car sales ...
www.dbsmotorsport.co.uk
getting dirty under a bus
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deezee
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| posted on 27/8/13 at 05:48 PM |
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Also consider the guarantees made by the manufacturer. If I got a new car, I would have 5 years driving, with a guarantee that they'll fix any
faults. If I go 2nd hand and I'm a clumsy moron, who can't fix a leaky tap, let alone a failed injector and abs sensor fault, then
I'm not going 2nd hand.
So stuff is worth more to someone who has a manufacturer warranty. When that goes, its all on your head, hence the reflection in price.
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morcus
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| posted on 27/8/13 at 05:55 PM |
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There are alot of benefits to buying a new car, besides actually getting the car you want (Which isn't always the case as alot of
'options' are essentially compulsory unless your willing to wait a few months). I've had a new car and for now I'm into buying
sheds as it suits what I'm doing.
The biggest benefit to having a new car is you've got a better idea what it's going to cost upfront because you've got a warrantee
and you know it's not been bodged by a previous owner, and you can usually buy a decent service package upfront. You then get three years
without the hassle of an MOT which is a big plus. You buy it on HP or lease it and 3 years later you get a new car and your still paying the same
payments. If your not mechanically minded or intrested in cars this saves you alot of bother.
Something else to consider is depreciation is different for different cars, and if you want a city car, they hardly drop at all so again, if your on
finance, you pay like an extra £10 a month. A 3 year old Fiat 500 will cost you about £6k from a dealer, a new one of simillar spec is about £8.5K,
and sure 2.5K is a fair chunk of money, but you'll get better finance on the new one which makes you monthly spend much closer.
In a White Room, With Black Curtains, By the Station.
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02GF74
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| posted on 27/8/13 at 07:25 PM |
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I was pondering this too.
I drive 94 volvo 859 T5 estate with 120km - worth probably 300 pounds ... a couple of very minor problems but does everything a brand new one would at
im guessing 40K?
The minor bodywork blemishes and reduced mpg compared to new car does not bothrt me - it gegs me frim a to b jyust like the new midel wiuld.
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ASH3
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| posted on 27/8/13 at 10:21 PM |
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I believe the more expensive the car the more you loose on a car over 20k as in a BMW or MERC but if you can aford one of those then you can afford
the loss.Stop buying from rip off manufactures ooh won't do that its called keeping up with the Jones's
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dhutch
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| posted on 29/8/13 at 05:13 AM |
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quote:
Originally posted by britishtridentPrior to the 1990's most cars had rust problems before they were 4 years old and would have
had major engine work before 80,000 miles, much of the change is due to more rust resistant car bodies and better engine oils have made a
tremendous difference as has electronic fuel injection.
I guess the recent history has a lot to do with it.
A lot of people buying new still remember when a 4-5yo car was a ratty rust bucket approaching mechanical issues, and have not changed there
perception.
I was speaking about this to me colleague in India and he say its less true in India. Cars here only have a 5-10year life, due mainly to the terrible
roads, limited maintenance, and their attitude towards minor collisions. However, apparently they still hold a fair value for 3-4years, value largely
being based on condition rather than age. Although he did say the 'expensive/luxury cars' like you audi's and the like devalue much
sooner in there life.
The don't have an annually MOT as such as currently cars are only retested after 15 years, and every 5 after that, so as most cars don't
reach 15 its a non-issue. Although there are movements to change that.
Daniel
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