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  1. Join Date
    Jun 2005
    Posts
    14
    #1
    hi! a newbie here wanting to know how does one arrive at a fair market value of a car. Say a 2004 CRV bought at 1.3M, how much would be its market value a year after? Is there a standard formula for depreciation that is used by insurers and banks to determine it? thanks a lot!!

  2. Join Date
    Oct 2002
    Posts
    1,306
    #2
    Wala yatang standard formula. Estimate-estimate lang yan, tsaka it depends sa model/make, mileage and overall condition of the car. Example, American and Korean brands have lower resale value compared to their Japanese counterparts.

    Though, most people just do it the easy way. Consult the local ads.

    In rare cases, some vehicles even appreciate. Like when taxes get jacked up and the prices soar (remember a few years ago, the 'excise tax').

  3. Join Date
    Aug 2004
    Posts
    22,710
    #3
    You can consider at least a 20% depreciation for the first year or two for almost any car. So that SHOULD put the CR-V at 1.1million.

    The net depreciation for Honda and Toyota over 5 years or more, though, is very VERY low. Take for example, the VTi, which is still selling for 40% the original price for a 1997 model, meaning a net depreciation of only 8% per year. Whereas Nissans depreciate at 11% or so and Ford Lynxes at around 12+% per year over five years.

    The 1st gen City's depreciation is silly. Only about a 7% drop per year for Type Zs. (At least according to asking price). But true value for those cars is much lower than the owners are actually asking for them (should be 50k or more less than the asking price). This is just based on ads. Actual vehicle value for Toyotas and Hondas should be around 20-50k lower than in the ads, while for Nissans, Fords, etc., around 25k.

    Not that you'll get many old Honda owners to budge on the price, though. That's what fuels the mystique of the secondhand Honda market... where a 5 year old SiR can still sell for 60-70% of its sticker price. The more people who want the car, the sillier the secondhand price is. It won't necessarily be worth that much, but you'll have to pay that to get a good model.

    Ang pagbalik ng comeback...

  4. Join Date
    Jun 2005
    Posts
    14
    #4
    hello bry and niky! thanks a lot for your informative response. I guess a baseline 8% depreciation for every year would indeed be a reasonable figure to apply in estimating used car prices which i would apply from hereon. The reason i asked is that i can not seem to decipher a pattern/logic into the pricing of cars in the ads where a 100k price difference on basically the same car model. at least i know better now......

  5. Join Date
    Oct 2002
    Posts
    3,144
    #5
    ang alam ko, 20 for the 1st year, then 10 every year onwards...

  6. Join Date
    Jun 2005
    Posts
    4,313
    #6
    Fair Market Value (FMV) is defined as the estimated amount at which the property might be expected to exhange between a willing buyer and a willing seller, neither being under compulsion, each having reasonable knowledge of all relevant facts and with equity to both.

    The prices in the ads are the asking prices. So pwede pang tawaran yun. Normally they compute based on depreciation, condition and on the accessories / improvements added on the car. Kung anong price ang napagkasunduan nyo, that's probably the fair market value.

  7. Join Date
    Aug 2003
    Posts
    1,621
    #7
    if you have a 1997 civic VTi that the owner is disposing of because of emerging problems, and a 1996 civic VTi where ALL the major high-mileage maintenance has already been done, then the '96 would command a higher price than the '97, all other things being equal.

    that's why the service record, mileage, or barring these two (no service record, mileage can be tampered) an experienced mechanic to look over the car is more important than the actual year of the car (within reason).

    that said, what i'd do is cut-and-paste all the Buy&Sell ads into Excel and derive a mean and standard deviation. you can bet your candy ass that cars of a given year whose price falls outside the normal range are either garage queens (if cheap..) or lovingly-maintained (if expensive).

    OTOH there also are these car owners who have an unrealistic expectation of their vehicle selling price ("I just spent 250,000 overhauling the transmission of my Opel Omega, therefore I should add 250,000 to the asking price.")

  8. Join Date
    Aug 2004
    Posts
    1,626
    #8
    Market Demand also plays a very important factor in pricing a used vehicle.

    Quoted from one of the car sites:
    1) 1999 Honda Civic Sir 1.6L, mileage-67,000 kms, price-480k
    2) 2002 Mitsu Lancer 1.6L, mileage-36,000 kms, price-470k
    3) 2004 Chevrolet Optra 1.6L, mileage-14,000 kms, price-480k

    note the difference on the year, model, mileage.. but the asking price of a 6yr old SIr is within the range of a 3yr Lancer and a 1yr Optra..
    So bottomline is...kahit pa napakaganda ng car mo at yung price mo is below fair market value, mahirap din sya ibenta if there's no one willing to buy it...

  9. Join Date
    Aug 2004
    Posts
    22,710
    #9
    Yup... the standard per year depreciation of the car VARIES per model and per MANUFACTURER. That's why Nissans get an average of 12-13% depreciation instead of a more realistic 8-10%, because everyone thinks they're lemons. Optras and old Daewoos are worse, because everyone is CONVINCED they're lemons. Brand new cars, however, like Redhorse said, should lose about 20% in the first year, then after 2 years, just calculate it as a 10-12% per year drop from sticker price. Difference in price between 1-2 year old secondhands is very minimal, then it starts dropping by the third year. I THINK. This isn't accurate, but it's an okay rule of thumb up to six years. After eight to ten years, the price starts leveling out, as not many people are willing to sell below 150k. Plus 10% depreciation at ten years gives you ZERO pesos. :lol: At those ages, compute ALL cars at about 7-8% per year depreciation only. For really old cars, there's a basement price that people are willing to sell at, and it's more a matter of haggling than actual market value, because there's no realistic market value for any sub-million peso car over ten years.

    For special cars and cars in demand, the price will stay high no matter what. That includes older MBs, Jaguars, BMWs (higher end ones, 3-series depreciate a bit more, Honda SiRs, Mini Coopers, VW Beetles (should be selling for scrap prices, but still fairly priced nowadays) and diesel SUVs.

    I just bought a car over fair market value (Nissan AD Resort 2000) at 160,000. Calculating from brand new price 360k + Camper Shell accessory at 20k, I paid 42% of the sticker price, with a net depreciation of 8.5% a year. I should've only paid 140-150k at 12% depreciation, but I paid extra for the nearly flawless body panels, which saved me maybe 15k which I would've spent for a repaint. Bummed out, though, I found a small dent in the front fender at the corner afterwards, but the sides are much straighter than any other AD Resort I've seen for sale. AD Resorts were initially cheap, but are selling for more than they should because they're in demand and very hard to find. :D

    Ang pagbalik ng comeback...

  10. Join Date
    Nov 2006
    Posts
    103
    #10
    ang pricing ng 2nd hand cars dto sa pinas more of relative to the demand of the car for sale...lets take teh 92-95 civic hatchback for example...bnew then costs 330k...today, 2nd hand 92-95 model hatchback, umaabot pa ng 200k. grabe taas ng value ng hatchback

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Vehicle Fair Market Value