Depreciation black hole

[Daleman]

Everyone seems to be getting good discounts but it is the depreciation that’s the devil whatever price you pay .Doing some quick calculations on the what car depreciation calculator the top spec XC 60 auto diesels costs about £35000 new .They are worth about £12000 after 4 years a drop of £23000.

A basic car cost £26,000 new and is worth about £10,000 after 4 years a drop of £16000
Even taking £5k discount off the top spec car and £4k of the basic car the proportional differential loss remains the same of £6-7000worth of extras on the top spec cars disappearing into a depreciation black hole.

[ITServe]

You have a point, and I always allow for about 3k a year on on a new car (from list price).

But BEWARE what car depreciation index - it really is utter B0ll^&*s.

For instance, I have just sold a 3 year old top spec galaxy ghia x at a very FAIR price, considering its mileage etc and condition (v good) and equipment level for £14,500. (List price 29k new - clearly I didn't pay that and got a good dealer discount from new)

What car claim this car is worth 12k.

Mmm. I sold it within a week of placing a single advert on ebay and had 6 telephone enquiries and 12 watchers.

What car depreciation index is not worth a pair of feid dingo's kidneys. It is the real world market (which it does not track) which are important.

[ITServe]

Oh - just to add another comment - in my opinion it is always better to buy a better specced model rather than adding options to a lower model, as options generally get totally lost in the resale value. The key to getting the best price is advertising to the widest market and finding someone who WANTS your car and your exact spec. Then you will get the best price, and a fair deal. I have found Ebay to be astonishingly good, having sold my last three cars over the past 4 years there, always with good experiences - not by auction but just by placing a classified ad for less than 20 quid, 12 pictures and maybe a short walk around video on youtube with a link from the ad - does the job nicely.

[Daleman]

So the what car depreciation calculator errs on the side of caution with its valuations .Well that’s good I would be worried if you were complaining you got less than they calculated.

I still think it’s a pretty good evaluator when comparing the various models even if it errs on the side of caution.

The facts are simple really the more you pay for a car the more it looses it depreciation.

[ITServe]

Its pretty good as a guide, to compare and I have used it for that. You get the odd quirk in car values though, and I have heard recently from a poster on these forums, that they purchased a brand new discounted XC90 and sold it a year later for what they paid for it.

It depends on supply and demand. I think those cases will be getting a bit rarer with the XC90 prior to the release of a newer model.

So sometimes, if you pay the right price, a really expensive car can hold its value at least as well as a cheaper car.

My example, I lost just under 3k a year on a new Ford Galaxy over 3 years. I expect to lose less than that on a list price £45,000 XC90, about 2.5k a year from the price I am paying (£32,750 ish). So it will work out cheaper for me to own the more expensive car! Odd eh? Having said that it depends on your cash resources, because if you are borrowing significantly more then that cost would have to be factored in too of course. I don't mind tying up a bit of cash in a more expensive car if it will save me some depreciation, and I get the luxury of having a really nice car.

[Daleman]

A local Volvo dealer had a brand new full specification XC90 auto for £25500 a couple of weeks ago so I guess someone would save a bit of depreciation with that .It had very light yellow leather interior which I can’t live with so I wasn’t tempted but the price was right ,cheaper than an XC60 to basic specification.

[ITServe]

If that was the Active Model XC90 then they retail at 31k! You could get them discounted to less than 21k though, although at the moment orders for XC90 and XC60 cars are closed 'till mid March when the new 2011 models are released.

I think a surprising number of people must still walk in off the street to these dealerships and pay near the asking price - worrying, but good for those who got the discounts.

My Dad paid full price for all of his cars, although at 92 he doesn't drive any more. I think he thought the dealerships were honourable and haggling a bit distastefull. Makes me cringe a bit though, thinking of the money the dealerships all made from him! (Mostly Citroens!)

[wimorrison]

Originally Posted by Daleman

Everyone seems to be getting good discounts but it is the depreciation that’s the devil whatever price you pay .Doing some quick calculations on the what car depreciation calculator the top spec XC 60 auto diesels costs about £35000 new .They are worth about £12000 after 4 years a drop of £23000.

A basic car cost £26,000 new and is worth about £10,000 after 4 years a drop of £16000
Even taking £5k discount off the top spec car and £4k of the basic car the proportional differential loss remains the same of £6-7000worth of extras on the top spec cars disappearing into a depreciation black hole.

This calculation seems to be somewhat at variance with what the fleet buyers said about the XC60 last year when they awarded it their accolade

“Based on a three-year/20,000 mile per year profile, CAP predicts the XC60 2.4D and D5 SE versions will retain 44% of cost new, while EurotaxGlass’s predicts the 2.4D SE will retain 46% of its cost. A 47% residual is estimated for the D5 SE – so residuals promise to be best in sector.”

This is one of the reasons I went for the XC60.

[Daleman]

It may be at odds but they seem reasonably accurate in what cars general assessment insofar as the XC60 is one of the best in sector for depreciation with them also. Only the Audi Q5 looks better. The figures are pretty frightening though especially if you go for a full specification car. The only real winner is the guy who buys it a few years down the line for a couple of grand more than a standard spec car.

[Zoidy]

It's sickening to think about how much a car loses value over such a short space of time. I think unless you are changing every 2/3 Yeats then it's best not to worry about depreciation. Just get the car that is going to work for you for the length of time you intend to keep it.

My Nissan Qashqai has dropped from £22000 to £13000 in 18 months so really not happy. Need to upgrade now though with a growing family and I am hoping the XC90 is going to be the family car for at least 5 years and will retain it's value much better.