Second-Hand Markets and Resale
Depreciation and Resale Value
New goods lose value as they age, and how fast they lose it influences the true cost of ownership.
What happens to value over time.
Depreciation
A car may lose a large share of its value in the first few years.
Residual value
The price it can fetch when sold later.
Factors
Brand, condition, mileage, model demand and maintenance history.
Insight
Cost of ownership is purchase price minus resale value, plus running costs.
Two cars
One brand keeps its value, so its true cost per year is lower despite a higher price.
Judging cost only by the purchase price
Resale value matters.
Key takeaways
- Goods lose value with age.
- Residual value varies by brand.
- Condition affects price.
- True cost includes resale.
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