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Why are used cars having same depreciation as brand new


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I am trying to comprehend. A brand new is the same price as old car by prorating the brand new depreciation value.

 

Many people discourage from buying new by saying you lose 30% value the moment you step out of the showroom.

 

Ive gone through the listings and made comparisons. It's not the case. Used cars sell up to 95% of brand new car value even if 1 year old with over 10k mileage

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Supercharged

I am trying to comprehend. A brand new is the same price as old car by prorating the brand new depreciation value.

 

Many people discourage from buying new by saying you lose 30% value the moment you step out of the showroom.

 

Ive gone through the listings and made comparisons. It's not the case. Used cars sell up to 95% of brand new car value even if 1 year old with over 10k mileage

 

Is It Really Cheaper to Buy a Second Hand Car in Singapore?

https://sg.finance.yahoo.com/news/really-cheaper-buy-second-hand-090022924.html

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Twincharged
(edited)

Excellent intuition. Many people are baffled by this as well.

 

Cars have always been costly in SG and with certain financing restrictions still in place, many people cannot loan up to a certain quantum even if they would like to, and they cannot or will not place such a large sum at one go. The current situation is scary indeed with such strong support for used cars. In the past, when new car depreciation falls near to that of old cars, the tendency was to scrap or export the old cars, but current tendency seems to be to renew.

 

One way to reconcile with the oddity is to consider this: although used cars face immediate higher depreciation than new cars, they face the steep depreciation for a lower number of years, and if renewed and used till the end of 5 or 10 years, their overall depreciation can be lower than new cars. It's not a free pass so have to deal with more repairs and uncertainties.

 

And then there is the next question of what next, after that renewal of COE ends? But I guess we can only live year by year, day by day at a time.

 

I am trying to comprehend. A brand new is the same price as old car by prorating the brand new depreciation value.

 

Many people discourage from buying new by saying you lose 30% value the moment you step out of the showroom.

 

Ive gone through the listings and made comparisons. It's not the case. Used cars sell up to 95% of brand new car value even if 1 year old with over 10k mileage

Edited by Showster
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I assume you included the parf residual in your calculation? And your comparison is against asking price? I know of people who manage to negotiate the prices down by quite a fair bit from asking price, particularly for less common or more exotic cars.

 

When you sell, it tends to be to a dealer and they will push down your price so they can make a spread when selling.

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Twincharged

COE is a major component. You buy COE high dep high. COE at 80K dep 8 K / yr. At current level 50K dep 5K /yr

 

If bread and butter line the dep will be more obvious. So always avoid high COE years unless you die die must have it

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Twincharged

What is the criteria for high COE years and low COE years?

 

COE is a major component. You buy COE high dep high. COE at 80K dep 8 K / yr. At current level 50K dep 5K /yr

 

If bread and butter line the dep will be more obvious. So always avoid high COE years unless you die die must have it

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I've analysed this trend over time, to decide whether to buy new or second hand. In my estimate, the current trend of second hand cars having similar depreciation as new cars has only been around for about 2-3 years, and is most likely due to falling COE prices (sellers who bought at high COE) and loan restrictions.

 

Loan restrictions is a bit of a wild card in that it increased the downpayment requirement, hence the lower absolute price of a second hand car became more important to buyers than the depreciation per year considerations. Also, some second hand dealers came up with shadow financing schemes which circumvented the loan restrictions, hence expanding their customer base.

 

Otherwise, if you look at my experience since 2010, you would see that the normal expectation of second hand cars having lower depreciation generally holds:

 

2010: Bought 3Y old car at $4.6k depreciation pa / same car depreciation per year if new was $8k

2014: Bought 7Y old car at $10k pa / new $20k pa

 

When I was shopping in 2016, I checked prices for 8 cars 4 age points - @ new, 2Y, 5Y, 8Y - and realised that depreciation pa was mostly flat. Hence makes perfect sense to buy a new car in this environment.

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(edited)

it's super easy to understand la simply because there is COE and the car lifespan is 10 years

unless you renew the COE to average out the depreciation.

 

in bolehland ... the more it's used the cheaper it is because used means 2nd hand liao ... lol ...

can resell resell and resell resell ... the 3rd and 4th buyer pay cheaper and cheaper

 

in spore ... a used 4/5 years car can only drive 5/6 years only unless pay another $50k to renew coe

so in spore ... it's a direct STRAIGHT LINE depreciation ... everyone pay the same yearly depreciation for 10 years

 

the only difference is downpayment ...

buy new AD laughing to bank ... buy used ... crook car dealer chop carrot

i would rather buy new if can afford the downpayment instead of kena fcked by used car dealer with their ads on lady owner, doctor/lawyer, got multiple cars, low milleage after magically tweaked to poof 30k-50k km ... [mad]

 

for B&B car ... i can certainly say the depreciation for NEW vs USED is same same but different la

unless you compare high spec car including M, AMG, RS models then used car depreciation is lower

 

bull and horse that's a different category liao

 

I am trying to comprehend. A brand new is the same price as old car by prorating the brand new depreciation value.

Many people discourage from buying new by saying you lose 30% value the moment you step out of the showroom.

Ive gone through the listings and made comparisons. It's not the case. Used cars sell up to 95% of brand new car value even if 1 year old with over 10k mileage

 

Edited by Wt_know
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Twincharged

Just to add on, to renew, there is another paper value depreciation to take, which is the Parf value,

 

Taking that depreciation plus the prevailing PQP at the 10th year, one can then renew for 5 or 10 years.

 

The risk is if soon after renewing, the car is unable to run for reasons like accident, no spare parts, or too costly to repair, the immediate depreciation will be on the owner.

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(edited)

as long as there is MONEY to make

simi sort of money making scheme will emerge

uber la ... leasing la ... internal finance scheme la ... etc

dealer make money, bank make money, middle man make money, how to lower "depreciation"

even buyer want FULL CASH also kena penalty (pay more)

Edited by Wt_know
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In T2's term, it doesn't matter new or old, high or low coe, same or different depreciation, full cash or nothing matter. Period.

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Hypersonic

I am trying to comprehend. A brand new is the same price as old car by prorating the brand new depreciation value.

 

Many people discourage from buying new by saying you lose 30% value the moment you step out of the showroom.

 

Ive gone through the listings and made comparisons. It's not the case. Used cars sell up to 95% of brand new car value even if 1 year old with over 10k mileage

 

The only people that say you lose 30% the moment you drive out the showroom

 

is the salesman that sold the car if the customer regrets buying and wants to sell

 

back to the dealer like kenna overseas posting after buying the car.

 

Or used car salesman when buy cars to sell. When the same brand new car is sold

 

by the used car salesman he isn't going to sell a brand new car at 30% discount.

 

If anyone just bought a brand new car and regrets it and want to sell I don't mind

 

paying 30% less and being the second owner. Just PM me.  [thumbsup]

 

:D

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