should we be concerned about depreciation?

[Juzam Djinn]

guys ive been having problems wanting a car and when i have dat car m afraid of depreciation that even if its set up i wouldnt be able to sell it at the price that i got it. even if its less than a hunred thousand its ok. what is the remedy or this? what is the truth about depreciation?

[alwayz_yummy]

what is the remedy or this?

simple:

get a TIME DEPOSIT OR T-BILLS! bumili ka ng prime location na condo or lot!

what is the truth about depreciation?

siyempre ginagamit kaya kaya nagdedepreciate. simple economics!

[badkuk]

the sad truth is, di ka pa nakakasakay sa bagong bili mong kotse, nagdedepreciate na yan B) not really sure if there's anything you can do about it, that's the nature of things. kaya ako, ilang taon na akong atat na atat bumili ng kotse, kahit used, di ako makabili. why? kasi kuripot, este, wise ako sa money ko B)


pwera na lang siguro kung collector's item ung nabili mong kotse, look somewhere else to preserve/increase the value of your money(property, investments, etc.)

[alwayz_yummy]

sorry kung harsh post ko.. pero un ang simple truth nun.

ako, may 400K dito, binigay sa akin para pambili ng spacegear...pero eto, naka time-deposit pera para kumita muna, at baka gamitin ko nalang sa business... may liteace pa naman ako,e..

[Alpha_One]

siyempre ginagamit kaya kaya nagdedepreciate. simple economics!

A better explanation would be that people don't want a used car as much as they want a new one. If people don't want something, demand drops, ceteris paribus, and the value drops too.

A car's actually a pretty bad investment. Don't expect much on the value of the car, unless it's a classic or a fad car if you're in the States (New Beetle, New Mini, Toyota Prius et al). Returns on investments on vehicles (machines in general actually) come from their output/productivity, and not the market value of the thing itself.

[OTEP]

If you don't like depreciation, buy a used car. You can sell it the next day for even a higher price (if you're a good salesman).

I was asking my dad a few months ago if my commander's brother should buy a W123 Mercedes being sold to him for Php135k. Not having seen the vehicle, my dad just said buy it and if it's no good, just sell it for Php155k in a month or two.

Loan problems hampered the purchase. The Benz was eventually sold by the seller at Php155k (his asking price).

Cars make lousy investments. Either you buy a used one or maintain it very well (long service life) so you don't get hit by depreciation so much.

About the only vehicles that don't change prices in the local market are Land Cruisers and Land Rovers. A '97 Land Cruiser 80 is still doing Php1M on the market today. A '97 Land Rover Defender is around that price also.

[Chip]

agree with all the above. if you dont like depreciation, get a used car. The first owner takes majority of the brunt with depreciation.

now ask yourself, why do you want the car?

If its something to get you from point A to point B, then buy the cheapest yet still well maintained car out there. take into account total cost of ownership. baka nga cheap yung car pero parts are hella expensive plus malakas pa sa gas.

If the car is something you really fancy, like an old classic that you don't see yourself letting go of in the near future, then go for it. passion will beat depreciation hehe

If you are looking for an investment, forget it. Nobody can predict which cars will hold their value over time. Forget all the sales talk people say about cars being an investment, they are not. They are a liability.

[theveed]

A car is an expense, not an investment.

As with any expense, you shouldn't be fussing about depreciation, only resale value.

Like what Chip said, unless you're getting an exotic or rare vehicle, cars are just utilities, technically.

[alwayz_yummy]

sabi nga:

kung may kaaway ka, utuin/samahan mong bumili ng kotse..

atleast di ka halatang galit/gumaganti sa kanya...

[Airwalk]

truth about cars and depreciation? former is the inevitable of latter.

IMO not unless your into investments, a good one that is, would you stop worrying a little less about depreciation..

[mikmik316]

you dont want to worry about depreciation? Make sure to buy a car and promise urself you will use it for 10 years....

Cars depreciate very fast during the first 6 years then suddenly it hits a plauteau.... then give or take it depreciates or appreciates a little.... suddenly mapapansin mo lahat ng tsikot sa model year na yun pare-parehas na presyo....

[squala]

Factors contributing to car depreciation

1. Age and mileage
2. Wear & tear and lessening of rigidity (caused by collisions)
3. Introduction of a newer model
4. Cost of maintenance (1/2 the reason of Nissan low resale)
5. Hearsays/rumors/gossips (ditto)
6. Withdrawal of car company from country (like Alfa Romeo)

[ale828]

almost all cars depreciate but there are certain cars that have very minimal depreciation. Buying 2nd hand will help lessen the depreciation. try to buys cars that are considered in demand and probably will still be in demand in a few years time. Cars like the 92' honda hatchback. a friend of mine bought it before when it was in the people's car program for 180K. he sold it for 170K 2 years ago. The Miata is similar, it was being sold around 500K++ when it was last sold here, those last few models still fetch around 500K+.
Rule of thumb is try to buy cars that have known low depreciation, like Toyota and honda. car manufacturers like Nissan, previous mazda (except miata), some mitsubishi, hyundai, kia, daewoo, all american cars, other car manufacturers.

[ale828]

almost all cars depreciate but there are certain cars that have very minimal depreciation. Buying 2nd hand will help lessen the depreciation. try to buys cars that are considered in demand and probably will still be in demand in a few years time. Cars like the 92' honda hatchback. a friend of mine bought it before when it was in the people's car program for 180K. he sold it for 170K 2 years ago. The Miata is similar, it was being sold around 500K++ when it was last sold here, those last few models still fetch around 500K+.
Rule of thumb is try to buy cars that have known low depreciation, like Toyota and honda. car manufacturers like Nissan, previous mazda (except miata), some mitsubishi, hyundai, kia, daewoo, all american cars, other car manufacturers.

[oldblue]

best way to beat depreciation, buy a car for keeps: crdi sedans and suvs.

if going for gasoline, go only for the popular ones like civics, corollas, vios, jazz. city? ewan ko parang hindi for keeps.

with some korean cars, ok lang naman depreciation since acquisition price is low din naman.

yes a car is not an investment, but it's not also an expense (at least, that's how I view it). it's a tool to make you more money. the convenience in having one for you to go to work daily, to get promoted, to get productive, that's good enough benefit.

am not really into that point a to b thingy, but it's important along with some luxuries hehehe, dapat all-powered and comfort, and as much as possible brand new dapat. yun paghawak ng problematic car whether 2nd hand or bnew lemon, grabe yan. you'll lose more. time is the most important thing for me. losing it tosome fixing/repairing sessions, kakainis sobra.


sometimes nga naiisip mas lamang yun tao na sabay binili isang brand new getz + isang brand new vios, kaysa sa tao na bumili ng isang brand new fortuner. puwede palitan each day tsikot niya, hindi malaspag kagad and maintenance cost, parts cost, insurance cost are lower. and madali pa-i-weave in and out sa sobrang jampacked na Manila streets .... and parking! sobrang useful little cars sa mga parkings lalo na kung nagmamadali ka na.

[slamtaz]

afaik, depreciation is supposed to be a scientific & user specific approach as to how you can gradually & methodically assess the value of a certain asset.. many factors (i.e. mostly mentioned above) contribute to whether an asset depreciate faster or slower than another..

why, even money is considered to depreciate by financial experts due to inflation or even its relation to other currencies. so if you think your money is growing just because you put it in interest bearing instruments, well, guess again. if the interest (i.e. net of taxes & opportunity loss) is less than the percentage of inflation, then your money is actually losing value..

it is actually the amount of depreciation (i.e. depreciation = original cost - net value) which is considered expense. in most cases, the amount charged to expense is very much related to the projected useful life and/or degree of use of the asset whereas, the longer the projected usefule life, the lesser the assets depreciates overtime.

this explains why cars are usually considered expense, due to the rapid depreciation based on its use wherein its original cost or value will almost always be immediately reduced right out-the-door..

in a way, depreciation is also a relative term, because it depends on the owners view of the asset.

best way to beat depreciation, buy a car for keeps

*sir oldblue: though it may seem to disregard the notion of depreciation, i guess you are right in a certain way because, as you mentioned, buy a car for keeps but still, there will be a point in time that you will need to determine its value and that's when the methodology of depreciation comes into play..

just my :twocents: po, i know there is a better way to put it out there

[oldblue]

*sir oldblue: though it may seem to disregard the notion of depreciation, i guess you are right in a certain way because, as you mentioned, buy a car for keeps but still, there will be a point in time that you will need to determine its value and that's when the methodology of depreciation comes into play..

just my :twocents: po, i know there is a better way to put it out there

hehehe. well you're right to put it that way. that's how it's done.

pero picture this for a moment, I have this fil-chinese classmate who is filthy rich but laging luge hehehe. in 1997, he bought a Pentium I computer for his office for the purpose of computerized accounting. i was surprised when I visited his new office last year. the computer is still there, doing the same purpose.

what even surprised me more was his 93 maroon corolla gli, it's still alive and looking good. sabi niya sa kin after so many years of using it, he finally gave the car to his right hand man as reward for his years of loyal service.

in 97, when he was just starting, he only rented a two-story shop in aurora blvd. now he uses 3 prime house and lots in San Juan as warehouses, has got 3 or more trucks (yun lang nakita ko), and supplies some novelty products to popular food chains and top 500 fortune companies here. and guess who's in the top management, my classmate and his right hand man. The right hand man's very happy with his car.

If I'd known any better, the computer and the 93 corolla gli even appreciated in value

[slamtaz]

If I'd known any better, the computer and the 93 corolla gli even appreciated in value

sir, i think someone already posted earlier that if you use your assets as a tool to improve or enhance your over-all productivity, then even if said assets physically depreciate, you still put a correspondingly greater value to said asset in relation to how much it has improved or enhanced your over-all productivity.

so, kahit pa pentium I computer at 93 corolla gli ung ginamit na tools, the value of these assets actually seems more than what they physically look like considering its contribution to the progress the business. this will usually be more the than what they're worth to others who would probably use the same assets in a different way.

sorry kung:offtopic: na po, but if i may add, afaik the value that the pentium I contributed to the company maybe considered a tangible benefit or directly inferred from its use whereas the value that the 93 rolla contributed could be viewed as an intangible benefit or what others may call "goodwill".

of course, people may say that upgrading to the latest computer technology may further enhance productivity, but that is another chapter of the story..

[KoKoNAT]

This thread is fast going OT.

Like someone said above, a NEW car is not an investment, its an expense, like a computer. Certain USED cars can be investments but unless you're a real car enthusiast like Jay Leno, you wouldn't get the ROI that you would expect.

If you are looking for something to invest in, there are better ways out there than in cars.

[n2knee]

guys ive been having problems wanting a car and when i have dat car m afraid of depreciation that even if its set up i wouldnt be able to sell it at the price that i got it. even if its less than a hunred thousand its ok. what is the remedy or this? what is the truth about depreciation?

like everyone says, a car is not a good investment. with the exception of classic cars don't expect it to hold its value in the long term. brand new cars have the highest depreciation rates in the first two years, so if you are concrened about depreciation buy a slightly used one. now if you are using your car for business is another matter. in this scenario you can either make a profit or a loss when the time comes to dispose the car.

someone had mentioned that the usage (mileage or km) dictates the value of the car. that is true. and it is also true that the demand dictates the value of the vehicle. it is called the law of supply and demand. one good example about this is the MKIV Supra. a ten year old supra in good condition still commands top dollar. it was $50k brand new. 1994-1998 TT Supra (stock and unmolested) in good condition is still worth $35k to $45 today. even though the insurance companies tend to disagree (it is 50% lesser in their appraisal software), there are still people who are willing to pay top dollar for a car such as the TT Supra, because it is rare.

finally, and i'd like to emphasize this one. any car is only worth what someone is willing to pay for it, so use the car value guides on the internet or book as reference only, but those are not absolute values. if someone is willing to pay more for a car, which has a lesser market value per the various reference guides then the amount of money exchanged is the true value of the vehicle.