Did you recently rush to buy a new vehicle before tariff-related price hikes? A reporter is looking to speak with shoppers who felt pressure to act quickly due to expected cost increases; please reach out to PR@Edmunds.com for more details by 4/24.

Auto Depreciation

oracle_of_rockoracle_of_rock Member Posts: 58
edited September 2015 in General
Would someone explain to me how auto depreciation is calculated? How can a car lose several thousand dollars just by driving it off the dealership propriety? Is there some kind of mathematical formula used to calculate depreciation? How can a well maintained home appreciate (with inflation) in value while a well maintained auto (even a luxury brand) almost aways depreciates with no apparent inflationary involvement?

Comments

  • steverstever Guest Posts: 52,454
    edited September 2015
    Houses just don't wear out like cars and while they may not appreciate in value, old houses typically hold their value okay. And they are (mostly) unique.

    Got a "rare" brand new car in an unusual color with an odd selection of options? Your next door neighbor may buy one tomorrow across town just like it. And then you'll both have used cars, and some people just won't buy used cars. So that limits the value of your car right there. And if you turn around and try to sell it back to the dealer, they'll only be willing to pay wholesale price. That's the biggest factor.

    The warranty clocks starts ticking immediately too.

    The calculations depend somewhat on the car - a luxury car will typically depreciate more than a "common" sedan that has a good reputation for reliability.

    You can calculate expected depreciation with our True Cost to Own tool.
  • texasestexases Member Posts: 11,047
    It's simple - if I can choose between your 1 month old used car or a new car, I'd better pay less for yours or I'm buying the new one. Wouldn't you?
Sign In or Register to comment.

Helpful Tools

Most popular vehicles