What is the general residual value rate of a car?
2 Answers
Automobile residual value refers to the remaining use value within the specified reasonable service life of the vehicle. "The general residual value rate of a car is 5%. In foreign countries, consumers often consider residual value as the primary factor when purchasing a car. Methods for estimating automobile residual value: There are four methods, including the income present value method, replacement cost method, current market price method, and liquidation price method. Among these, the replacement cost method is the most fundamental and easiest to implement. Depreciation rate: The depreciation rate over 10 years is set at 100%, with 15% as the fixed residual value and 85% as the floating depreciation value. Generally, the depreciation period for used cars is divided into three segments based on the time until scrapping: the first 3 years, starting from the 4th year, and the last 3 years before scrapping. The typical depreciation rates are: 11% for the first 3 years, 10% starting from the 4th year, and 9% for the last 3 years. For the first 3 years, the annual depreciation rate is 11%, totaling 33% over 3 years; starting from the 4th year, the annual depreciation rate is 10%, totaling 40%. The calculation method for the 10-year depreciation value is: valuation = current market price of a new car × [15% (fixed residual value) + 85% (floating value) × (1 - staged depreciation rate)] + assessed value.
I paid special attention to the residual value rate of cars when I last changed my vehicle. Generally, a new car retains about 50% to 60% of its value after three years, but the difference between brands can be huge. For example, Japanese brands like Toyota and Honda can still retain over 60% of their value after three years if well-maintained, while some niche brands may drop to around 40% after just two years. When I bought my new car, I didn’t carefully check its reputation and opted for a cheaper model—only to sell it for 45% of its original price two years later, which I deeply regret. Mileage is also crucial; higher mileage leads to faster depreciation, especially if it exceeds 100,000 km. Market factors play a role too—resale values are higher during economic booms, but during the pandemic, used car prices actually rose. My advice is to check the resale value rankings for your desired model before buying, maintain it regularly, and avoid excessive modifications. This way, you can recoup more of your investment when selling, at least avoiding the loss I suffered.
