What is the “car residual value rate”?”

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This post was last edited by cflt111 on 2016-9-7 22:47. What is the \"car residual value rate\"? In mature automotive markets such as the United States and Japan, people often consider the residual value of a car as one of the key factors when purchasing one, using it as a basis for determining the price in future used car transactions. 　　Although domestic car consumers rarely take into account the \"residual value of a car\" when making purchasing decisions, it is an important indicator for assessing a car’s cost-effectiveness, as well as a quantifiable benchmark for choosing a vehicle. 　　So, how exactly should the residual value rate be determined? According to relevant data, in the domestic automobile market, the average depreciation rate over the first five years after purchasing a new car is approximately 50%. In the first 1 to 2 years, depending on the specific conditions of different vehicle models, the depreciation rate ranges from 35% to 60%. 　　Through specific examples, an understanding of the residual value rate can be gained. Assume that a new car costs 115,000 yuan, and after three years the price of that model (which may now have an improved version) drops to 100,000 yuan. 　　Generally, used cars are depreciated over a period of 10 years when sold. However, during the first three years, the depreciation rate is reduced by 1.5 times due to low maintenance costs (primarily because there are no repair expenses). In other words, the depreciation rate for those first three years is 4.5 times higher. Thus, if the aforementioned car is sold after three years, its value would be 55,000 yuan (purchase tax is not taken into account in used car transactions, while license fees are calculated separately). In terms of the residual value rate, this corresponds to 55%. 　　If the value of this vehicle does not decline over three years, then its residual value will be 115,000 yuan × (1–45%) = 63,200 yuan. The residual value rate is 65%. 　　The residual value rate for cars is generally calculated over a period of three years, and is referred to as the “three-year residual value rate”. Similarly, by extension, there are also residual value rates of four years, five years, six years, and so on. 　　The \"car residual value rate\" is presented above in the form of specific figures. At the same time, to clearly understand the residual value of a particular brand of cars, it is also necessary to have a basic understanding of that brand’s sales performance for new vehicles as well as its market share. 　　Generally, the higher a vehicle’s market share, the greater its residual value. Vehicles with a good reputation tend to have high brand awareness and stable performance, which provides a solid foundation for an increase in their residual value. 　　In addition, it is also necessary to consider the stability of the market price for that vehicle; if its price tends to drop frequently, then its residual value is generally lower. 　　At the same time, compared to mid-range, high-end, and even luxury cars, economy sedans priced between 50,000 and 100,000 yuan have the smallest difference in residual values among different models. 　　Compared to the first year, when the difference between the models with the highest and lowest residual values was only 8 percentage points, in the second year that difference was less than 10 percentage points. In the price range of 100,000 to 200,000 yuan and above 200,000 yuan, the gap in residual values between two different models can reach up to 16 percentage points, which illustrates the extent of differences in residual value rates for economy cars.