Before embarking on the purchase of a used or new vehicle, it is important to consider reselling the vehicle you currently have. To determine the right price before performing this process, you must take into account a key element: the car discount. The latter determines the loss of your car’s value over time.
- What is it about?
- How do you calculate it?
- What are the most affected vehicles?
What is a car discount?
The discount, expressed as a percentage, represents the vehicle’s depreciation over time. This loss in value is not due to wear or use, but rather to a lower spot market price for the vehicle. In fact, a new or used car that leaves the dealership immediately loses its value. Moreover, this reduction depends not only on the weather, but also on other parameters such as the brand of the car, type of engine, etc.
What criteria should be considered to determine the discount?
From one car to another, the discount is not the same. Some vehicles have a good rating while others have a significant drop. So, to know the drop in value your car will suffer, here are some points to consider.
- car origin It is one of the most important indicators of hair cutting. For example, French brand cars are discounted more than German cars
- Engine type Gasoline, Diesel, Hybrid or Electric Engine? Gasoline engines are better than diesel engines
- Wears : The more the vehicle is used (mileage), the lower its value
- age : A car that is aging sees its opponent grow naturally
- car options : If the car has additional options (integrated GPS, reverse radars, etc.), it will keep more value
- Number of resales : The more owners change a car, the more it is diluted
In addition to these parameters, the color, type of vehicle (SUV, sedan, etc.), model or period of sale are also aspects that affect the depreciation of a car in Argus.
What is the discount for the car in the first year?
The discount is usually calculated when you want to sell your car. As you already know: your car loses value over time. Even if this reduction depends on several factors, the purchase value is reduced between 20 and 25% regardless of the type of vehicle. However, this loss in value has diminished over the years. It is usually established as follows:
- 15 – 30% discount for the first year
- 15% increase after 2 years
- 10% after 3 or 4 years,
- 7% after five years or more
It is necessary to remember that the above statements are general assessments. The actual loss to the value of your vehicle will vary based on the above criteria.
What vehicles can suffer a significant discount?
In addition to the vehicle age criterion, there are some manufacturers and types of vehicles that experience a greater loss in value.
As noted earlier, French brands are more affected by depreciation. For example, Citroën, Renault and Peugeot have an average depreciation rate of 24 to 26% in the year of entry into service.
- Some well-known manufacturers such as Ford, Nissan or Lexus suffer an average of 26% discount.
- Models from Toyota, Hyundai, Opel, Kia, Skoda or Fiat lose an average of 21% of their rating one year after they came into circulation!
- Note: These are the most popular brands that are subject to a high discount rate.
Other parameters can affect the loss of value of your car, and the ratio also changes over time. That is why it is recommended to make a calculation to determine the depreciation value of your car.
As far as vehicle types are concerned, some models also tend to lose popularity quickly. Regarding city cars, you will find in particular Renault Clio 4, Peugeot 208 or Toyota Yaris. In terms of SUVs, you will find Dacia Duster, Renault Kadjar, Nissan Qashqai or Peugeot 3008. In addition, some compact vehicles such as the Volkswagen Golf 7 are also in this non-exhaustive list.
However, it is necessary to understand that the discount simply determines the value of the used or new car. It is not enough to determine the final sale price. In fact, the law of supply and demand plays a role too!
What are the least expensive cars?
Unlike other cars, some cars maintain a good rating when resale.
- Classy German cars : Discount for Audi, BMW or Mercedes during the registration year at rates ranging between 14 and 15%. These are fairly expensive cars that offer good residual value in return.
- Japanese : Japanese brands, such as Toyota, Honda, Suzuki, Mazda or Mitsubishi are well appreciated. Less expensive than the Germans, their models see their consumption rate hovering around 15-20%.
- Dacia : This brand makes a good exception on this list with an estimated Argus loss of around 7% in the first year.
- Luxury brands and sports In this group of cars, you will find Aston Martin, Porsche, Bentley, Land Rover, Ferrari, Maserati, Jeep and others in the range of 4 to 15% discount. Of course, these cars are very expensive.
In short, it is necessary to understand that luxury has a coast. The more expensive the car is to buy, the higher the selling price. These types of compounds make it possible to achieve significant added value. To make a profit, these are the types of cars you can target.
How do you determine the resale value of your car?
Taking interest in depreciating a vehicle generally indicates the likelihood that the vehicle will be resold. In order to have a price basis to trade, you have to consider other factors.
2 criteria for mandatory consideration
The mileage or mileage is a key factor in determining the value of your car. This factor is closely related to the age and use of the vehicle. In typical use, the annual mileage for a gasoline car is 15,000 km and 25,000 km for a diesel. A car with very high mileage is seeing a drop in its market value. In order to hope to sell your car at a good value, you should consider maintaining it well.
- Trader type
Depending on the dealer you choose, you may get a higher or lower price when you resell your car. For example, if you choose a private individual, you will likely have a higher price, because you can negotiate. In this context, administrative procedures will be necessary. In addition to these points, vehicle options as well as the date of entry into the service are also taken into account to determine the price.
Set the price for yourself
Once you know the different criteria, you can take a look at the web to determine the market price of your car. Look for the different details that might lower its price.
Choose online tools
For those who do not want to go into complex calculations or sometimes reversals, there are now many online price estimating platforms. These sites are generally free and provide you with a form in which you will fill in information related to the vehicle. You will quickly get an average price that will help you in the negotiation. However, it is necessary to perform the operation on several platforms in order to get the average price. In addition, some online tools allow you to directly determine the depreciation of your car.
In the end, it must be remembered that a new or used car suffers a loss in value over time expressed as a percentage: this is the discount. This ratio helps determine the value of the car and depends on several parameters such as the brand, model or type of engine. However, the discount is not the only point in determining the true resale value of your vehicle. Other aspects must also be taken into account! Several online tools will help you determine this value.