Depreciation.

Honest John Back Room » Motoring discussion
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Sun 12 Sep 2004 20:40
Depreciation. - Car
I've just compared the trade value off my present rover in Parkers Sept 04 with Nov 03 guid and according to Parkers it has lost 44% of it's trade value over the last 10 months, and if this continues until Nov 04 it trade value will be 50% of its value in Nov 04.

My dilemna is do I keep the car for another 2.5 years, or do I replace now with say a 2001 51 reg Ford Focus
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Sun 12 Sep 2004 20:57
Depreciation. - DavidHM
The money is already lost: the longer it goes on, the less you will have to lose by waiting to sell, if you see what I mean. Perhaps it would have made sense to sell in November 03, but if it's already lost half its value, then over the rest of its life, it will only lose as much as it has in the last year - so why get rid?

I suspect however that most of the change in trade value is basically a reflection of a correction in the guide, i.e., that Parkers was rather more favourable towards Rovers than the trade in general last year, and is now no longer so. Of course you could expect to lose around 20% of the car's initial value in the normal course of things, whatever it is.

The exception would be if the car was very new in November 03, for instance if it was on an 03 plate. Even then, the depreciation pattern is likely to remain fairly normal and there is no reason to panic sell unless you are dissatisfied with the car in some other way.
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Mon 13 Sep 2004 07:12
Depreciation. - Vin {P}
As David says, you have already suffered the depreciation. Economists would call this a "sunk cost", and it should be disregarded for the purposes of making your choice.

All you can affect from now is the depreciation from now, by choosing whether to sell or not. My view on this is that the depreciation you are likely to suffer from now on is likely to be smaller if you keep an older car than if you buy a new one.

V
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