Depreciation in general

MGrah

Would appreciate some genuine advice on what people believe a reasonable rate of annual depreciation on the average family size car is, and what the influencing factors that change this are (e.g. diesel vs petrol, spec etc)?

Is 20% per year about normal? or is there a figure that could be put on it, €2-€3k. My impression of this was a lot different to a that of a dealer I was discussing the point with today.

Thanks

colm_mcm

I depends largely on what brand the car is, how long the particular model has been out, availability and demand of used examples, and how many extras are added to the car. Base models, or slight upgrades on base models tend to fare best second hand.
Look at it this way. A new "Car X" has a list price of 25,000. Dealers generally discount this particular model by 1,500 for a straight deal. This leaves the general selling price at 23,500. If a dealer had such a car in stock that was registered only a week ago and had done 100km, you wouldn't pay 23,500 for it. You'd expect at least 1,000 off because it's not a new car. this is a practically new car and still in the same registration year.

Now consider a car that's 6 months old and has been traded back into the garage. It would be reasonable to expect the car to be 2-3,000 less than a new one before anyone would buy it.

Now take a car that's over a year old. it'd have to cost 4 or 5 grand less than a new one, wouldn't it? There is no real rule of thumb though, depreciation on cars varies.

OKenora

First year is about 25% imo, it really matters little on whether it is diesel or petrol though if i had to say, then diesels may suffer a lower rate than petrols, but you pay more to start too.

Cars with bigger engines, the 3.2 GTA or 3.0 twin turbo can suffer far more on depreciation than more average cars.

Prestige cars (Porsche, Ferarri) can suffer less but not always

Some makes suffer less than others, generally the budget type makes like Daewoo, kia, SsanYong suffer more than mainstream models from Ford, Vauxhall and VW.

A manafacturer bringing out a new model of a car can also depress prices for the older model.

i.e from all the above it's not a flat figure, it depends on the cars maker, the model and the spec of that model, both engine and trim level.

€30k car after one year on average will be about €22.5k (25%) and after 2 years about €18k (20%) and after 3 about €14k (20%), some fare better than that some worse.

maidhc

General rule:

a) The car you are going to buy "holds it value great"
b) The car you are selling "is hard enough to sell on"

colm_mcm

If you look at first year depreciation, diesels tend to do worse than petrols. an example being Avensis D-4D vs Avensis 1.6, the diesel costs 5k more to start than the petrol, and it's hard to convince someone that they should buy a 1 year old diesel for more money than a brand new petrol.

maidhc

colm_mcm wrote:

it's hard to convince someone that they should buy a 1 year old diesel for more money than a brand new petrol.

Is it?

I'd have thought the markets are very different.

colm_mcm

sure, you have a different type of driver for petrol and diesel. but I find it's very hard to sell a 1 year old diesel (or larger engined petrol model, e.g 1.8 Luna) for more than the price of a new 1.6. It's not just the case with Toyota.

Spit62500

colm_mcm wrote:

sure, you have a different type of driver for petrol and diesel. but I find it's very hard to sell a 1 year old diesel (or larger engined petrol model, e.g 1.8 Luna) for more than the price of a new 1.6. It's not just the case with Toyota.

Will you sell me a 1 year old D4D (with average mileage for a diesel) for 25k? I haven't found one for the price of a new 1.6 (yet)

colm_mcm

new one is 26k since they did the facelift last year!

OKenora

but I find it's very hard to sell a 1 year old diesel (or larger engined petrol model, e.g 1.8 Luna) for more than the price of a new 1.6

Just like it's hard to sell snow to the eskimos, someone looking for a smaller engined car will not be tempted to stray outside that without good reason, just like if they want a petrol they will most likely not consider a diesel.

Same works the other way about, try and sell someone a petrol that wanted a diesel, won't happen either without a big price incentive.

The only people you will convert are those that really don't know what they want, a salesmans dream but a rare commodity these days as everyone knows one website at least that will tell them what to buy and what not to buy. These websites seem to have replaced the "m8 that knows about cars" but he's still about in lower numbers these days.

colm_mcm

the point is, you'll trade a car in at price that you'll be able to sell it on. If nobody'd going to pay over the odds for something, then you can't depreciate it by a small amount like the 3,000 figure given earlier

MGrah

Thanks for the various pieces of advise folks. Maybe I should have been a little more specific with the initial question...

I currently have a '01 Modeo Zetec 2.0TD (before the Tdci engine). I bought this two years ago with 80k on the clock (but a recently replaced engine, still running in) for €11k and am currently being offered approx €5k by large dealers for a trade in (clock now at 110k, engine obviously at 30k). Initially I thought I was in one of two situations, a) I seriously overpaid for the car at the time, or b) am being offered too little and would be a lot better off selling privately.
From the conversations I've had it seems I might actually just be way out with what I expected the car to depreciate by over that two year period, and really in that class I should be expecting that level of depreciation. (c. €3k/25% per annum)

As I look at the real cost of owning a car as the depreciation rather than the upfront investment or the monthly outlay for repayments which are not really an issue, it has made me want to re-evaluate where to be aiming. I'm currently looking at getting an E46 3 series saloon in the €15 - €20k region, but the outcome of this advice may change my mind.

bazz26

MGrah wrote:

Thanks for the various pieces of advise folks. Maybe I should have been a little more specific with the initial question...

I currently have a '01 Modeo Zetec 2.0TD (before the Tdci engine). I bought this two years ago with 80k on the clock (but a recently replaced engine, still running in) for €11k and am currently being offered approx €5k by large dealers for a trade in (clock now at 110k, engine obviously at 30k). Initially I thought I was in one of two situations, a) I seriously overpaid for the car at the time, or b) am being offered too little and would be a lot better off selling privately.
From the conversations I've had it seems I might actually just be way out with what I expected the car to depreciate by over that two year period, and really in that class I should be expecting that level of depreciation. (c. €3k/25% per annum)

As I look at the real cost of owning a car as the depreciation rather than the upfront investment or the monthly outlay for repayments which are not really an issue, it has made me want to re-evaluate where to be aiming. I'm currently looking at getting an E46 3 series saloon in the €15 - €20k region, but the outcome of this advice may change my mind.

The Mondeo unfortunately drops in value like a stone. Good if your buying, bad if your selling. The arrival of the new model in the last month hasn't helped resale value of the older model either, this plus the fact that the TDCi is much greater demand than the old TDDi and the misconception that people have about cars with +100k miles on clock will not help. You might be better off trying to sell the Mondeo privately and then go out and buy the BMW and avail of a straight deal (no trade-in) discount. I reckon you could fetch the same the money in a private sale as you have been offered as a trade-in.