For many families, purchasing a car is a significant turning point in their lives, and everyone is usually thrilled about the experience. You must realise that the value of any car decreases with time, regardless of whether it is a brand-new luxury car or a used one. Depreciation of a car can be defined as the difference between the purchase price and the sale price of the car. Immediately after the vehicle leaves the dealership, its value begins to decline. The rate at which cars depreciate varies depending on the model and brand.
After a new car is purchased, its price is predicted to decrease by 10% to 15% every year. That is primarily the case during the initial years, though. Following that, a car’s average depreciation often “levels out.” After five years, you should anticipate a 60% decrease in the value of your vehicle. Some cars may hold their worth pretty well, while many deteriorate rapidly. A number of variables, including age, model, mileage, and accident history, affect this. Both buyers and sellers must comprehend the several elements that affect the depreciation rate of cars in order to make well-informed choices that support their objectives. The complexities of how and why cars lose value can have a big effect on a car’s total cost and perceived worth.
Factors Affecting The Car Depreciation Rate
Car depreciation and resale value are influenced by numerous factors. Some of them, including the make, model, and body, are associated with the vehicle’s initial construction. Other factors include age, maintenance history, and mileage (miles travelled). The following are some of the top factors influencing car depreciation:
Make And Model
A car’s depreciation rate is significantly influenced by its make and model. Some brands are better at holding their value than others because of their reputation for dependability and resilience. Although luxury cars are frequently thought of as being of superior quality, their greater maintenance and repair costs might cause them to lose value more quickly.
Age
The age of the vehicle is determined from the day it was sold to the original owner. It will be tough to acquire a reasonable deal if your car is more than five years old. When searching for a used car, one must look for vehicles that are no more than three years old.
Mileage
A car’s value is meant to decrease with the number of miles it has travelled. A car with high miles may lose value in the market, even if it appears to be pristine and has no history of accidents. However, the type of car determines whether the mileage is high or low. A car is more likely to depreciate if its mileage is higher than usual.
Defunct Car Models
A number of car manufacturers have stopped producing cars entirely. The features available in that vehicle are already outdated and will continue to deteriorate over time. The rate of depreciation increases with the degree of obsolescence. As a result, driving a car from an outdated brand would result in a larger annual car depreciation.
Service History
When it comes to maintenance, a car with a complete service history and services performed at licensed repair outlets only would depreciate more slowly. A car that receives regular maintenance at licensed facilities is thought to be worth more than one that doesn’t. A buyer of second-hand cars in Kerala will therefore be prepared to spend more for such a vehicle. Additionally, because the manufacturer is protecting the vehicle against any flaws for a longer length of time, cars with extended warranties also sell for more money.
Vehicle Features And Options
The depreciation rate of a car can be significantly impacted by additional features in the car. Superior upholstery, high-end entertainment systems, or advanced safety technology may help a car hold its value better than a typical model.
Number Of Owners
Another significant element that depreciates cars is frequent ownership changes. When you compare a car that has had several owners to one that has just recently joined the used car market, even though they are the same model and have the same number of kilometres on the odometer, the former will fetch less money. This occurs as a result of the discrimination associated with cars that have had several owners. The majority of individuals will sell a car quickly if they believe it has many issues. This is further supported by the assertion that if someone purchases a car with the intention of selling it quickly, it is likely that they did not invest the time and effort required in maintaining it.
Customisation
Car owners enjoy personalising their vehicles to suit their tastes. Although some car purchasers might think that cars with more modifications wear out faster than factory-original cars, these changes aren’t necessarily directly related to the car’s value. In the long term, using non-manufactured parts might also cause various problems for the vehicle, particularly for off-road or racing vehicles. However, employing the appropriate customisation tools can divert prospective customers’ attention from the value.
Length Of Warranty
Many consumers are drawn to cars with longer warranties because they provide them with peace of mind about possible maintenance and general wear and tear. In most cases, extended warranties can reduce the rate of depreciation.
Condition And Maintenance
A car’s depreciation is greatly influenced by its upkeep and condition. A car with a spotless record and regular maintenance will be worth more than one with a history of mishaps or neglect. Your car can stay in good condition and reduce depreciation with routine maintenance including tyre rotations, brake inspections and oil changes.
Conclusion
Owning a car inevitably leads to depreciation, but being aware of this can help you manage its impact on your finances. Depreciation can be minimized through regular maintenance, selecting reliable models, and considering fuel economy. Both buyers and sellers can navigate the used automobile market more skillfully if they understand the factors influencing depreciation. For those looking to buy and sell used cars in Kerala, emphasizing positive features and regular maintenance can significantly boost a vehicle’s resale value. Buyers, too, should grasp these elements to negotiate the best price and choose a car that retains its value over time.
