The depreciation league table: different countries, different values
New research reveals different total costs of ownership of company cars in different countries. The study by Carspring in the UK found huge variations in the depreciation of new cars over a three year, 56,000km ownership period, even between neighbouring nations.
At one extreme, cars in China lose only 29.42% of their value over this holding period, while at the other end of the scale and planet, the value of cars in New Zealand plummet by 53.67%. Among major western economies, the UK fares poorly, with vehicles losing 51.9% of their value over three years, and the USA is similar, with used cars selling for less than half (50.82%) of their new price after three years. New cars in Germany and France face very similar depreciation patterns, losing 41.1% and 40.05% of their value respectively after 36 months.
“The fluctuating value of used cars around the world has always mystified buyers and experts alike,” said Maximilian Vollenbroich, co-founder of online used car dealership organisation Carspring. “But we took it upon ourselves to make the complicated simple and present a snapshot of the current global value of used cars.”
From Singapore to Norway
Carspring looked at the top selling car brands in 40 countries, and as closely as possible used a similar range of makes and model to establish its depreciation league table. The prices of secondhand cars are retail values, based on used cars currently available, plus those sold in the past 12 months from both online outlets and brick and mortar retailers in five of the biggest cities in each country.
The calculation of the average percentile devaluation is the ratio of the used retail value to the official new list price. For greater accuracy, fleets would have to compare their acquisition price, after discounts and rebates, with the residual value achieved through trade sale or auction. Fleets also have to confront greater losses from typically keeping their vehicles for four years rather than three, and 100,000km.
It’s important to note, too, that the devaluation percentages can mask differences in performance in terms of actual money lost. Used car prices are highest in real terms in Singapore, Denmark and Norway due to local taxes – in fact, Singapore is the most expensive country to buy a used car for every model in the survey, due to the country’s exceedingly high taxes on vehicles.
Local tax regimes may also dampen the enthusiasm of multinational fleets and leasing companies for the cross-border sale of end-of-contract company cars. Remarketing managers must, however, be tempted to exploit opportunities that suggest an Opel Corsa is worth €8,290 in Germany and €11,800 in the Netherlands at three years/56,000km; or a used Volkswagen Golf sells for €12,900 in Italy, but €15,900 in France.
The UK situation
Carspring also analysed the rate of depreciation across the top 13 selling brands in the UK, and found sharp differences between popular brands. MINIs, for example, only lose 46.8% of their value over three years, while Toyotas are worth 25.41% of their new price. Audi, Volkswagen, Ford and Vauxhall suffer the least depreciation of the major fleet brands in the UK, but all come close to losing half of their value, if not more, in just three years and 34,700 miles.
Copyright: Carspring.co.uk
