Depreciation over a car's life cycle

pburns

Something those in the trade might answer - does a new model have an IMMEDIATE effect on s/h prices of a current version. I reckon it's a bit more complicated and gradual than that. If a car has been around for a few years, I think s/h values start to ebb downwards anyway. Loyal devotees to the brand will be looking to trade in and may want a change. Newer competitors will have been introduced probably eclipsing existing rivals. I reckon residual values really start tumbling when versions of the new model start hitting the market...

Of course this varies according to market segment, marque etc. But to take an example - I reckon values of the current Avensis are past it's peak. The new Passat is out and the Mondeo is imminent. Other competitors from Laguna(ahem!) to Mazda 6 to Accord will start appearing. Prices will gradually soften for the Avensis & will take a hit once the next model is launched. But they'll take another, possibly more significent hit once Avensis mk III models start appearing s/h.

Is thiks scenario any way accurate?

maidhc

pburns wrote:

But they'll take another, possibly more significent hit once Avensis mk III models start appearing s/h.

The bottom seriously fell out the market for Mk1 Avensi when the Mk2s became available secondhand. I don't doubt the same won't happen when a Mk3 will come, but that is a good bit away yet.

Don't forget though the Avensis' main competitor, the Passat, is getting a name for being a bit rubbish. I know several people, my grandfather included who hope to be offloading sooner rather than later.

Maybe people will finally realise the Mondeo is actually the best of the lot, and its resale prices will go up!

BrianD3

Another factor is that many punters are ultra conservative which means they're suspicious about new models and want to stick with what they know. I remember when the Avensis Mk1 came out circa 1998 I heard lots of people (incl some motoring journalists) bemoaning the demise of the Carina E and saying that the Avensis was a step backwards. This may have kept Carina E values up for a while until the Avensis started to become accepted.

Even more bizarrely when the original Nissan Primera was introduced people were saying that the old Bluebird was better. Which was nonsense. A lot of this was taxi driver/pub talk of course.

maidhc

BrianD3 wrote:

Another factor is that many punters are ultra conservative which means they're suspicious about new models and want to stick with what they know.

That is a pretty reasonable thing to do though.

Most cars get some important revisions in the first 12 months. E.g. the 1997 Vectra got new seats, the Avensis 2.0TD got a revised head to cure an overheating problem, VVTi engine blocks were replaced left right and center, the VW Touran got a revised flywheel. The 1997 passat had a lot of electrical problems early on, while the electric handbrake in the new Passat doesn't really work, etc.