Depreciation

Podcast Episode: 0306
Why do our vehicles lose Value even when new?

     Ever wondered why your brand new car loses value the moment you drive it off the lot?  The moment you grab those keys, it’s like you just threw away thousands.  Why does a freshly bought car lose 10-30% of its value instantly? AutoLooks talks about depreciation, it’s essential to understand what makes a vehicle's value plummet. 

Understanding Vehicle Depreciation: A Deep Dive
 
           "Everett J explores why your car loses value the moment you own it."
 
     It's a frustrating reality: the moment you drive a new car off the lot, its value plummets. AutoLooks delves into the concept of depreciation, shedding light on why this phenomenon occurs in the automotive industry and how it impacts every car owner, regardless of their financial status.

The Nature of Depreciation
     AutoLooks opens with a relatable observation: the second you purchase a vehicle, it’s already worth less. "Once you grab those keys, you're the first owner of that vehicle, and the value drops instantly," he explains. This phenomenon raises a crucial question: Why does a car lose so much value so quickly?

The Financial Reality
      As Everett recounts his personal experience with homeownership, he reflects on how people often overlook the true costs of owning tangible assets. "I sold my house after ten years and walked away with only $3,500 after all expenses," he shares. He points out that cars are notorious for being a financial burden, with many owners losing significant amounts of money on their vehicles.

​         "Car ownership can be one of the worst pitfalls that keeps people poor," says                         financial expert Kevin O'Leary. This sentiment resonates with Everett, who notes                 that outside of rare collector cars, most vehicles depreciate rather than appreciate             in value."

Factors Influencing Depreciation
     AutoLooks breaks down the various elements that contribute to a vehicle's depreciation:

- Brand Value: Luxury brands tend to hold their value better than mainstream options. For example, a Lamborghini retains value due to its exclusivity, while a Kia does not.

- Production Volume: High production numbers can lead to lower resale values. "How many Corollas are out there?" he asks, illustrating that common vehicles are less likely to appreciate.

- Vehicle History and Rarity: Unique vehicles with compelling histories can become valuable over time, but this is the exception rather than the rule.

The Resale Market Shift
    The automotive market has seen significant changes, particularly during the pandemic. With supply chain issues, the availability of used cars diminished, leading to a spike in their value.

         "Now, people are more educated about which vehicles are reliable and which                       aren't, affecting resale values significantly,"
​           - Everett notes.

     AutoLooks encourages listeners to educate themselves on vehicle reliability and depreciation trends, highlighting resources like CarComplaints.com. As the market continues to evolve, understanding these factors is essential for any car buyer.
 
      Reflecting on these insights, Everett emphasizes the importance of making informed decisions when it comes to car purchases. Whether you're a first-time buyer or a seasoned car owner, understanding depreciation can save you from financial pitfalls in the future.

Everett J.
​#autolooks