Why Does Volvo Depreciate So Much?
3 Answers
Because Volvo uses significant price reductions to achieve better sales. Here is relevant information about Volvo: 1. Background: In 1927, the first Volvo car was introduced and mass-produced. As Volvo's sales continued to improve, by 1935, Volvo separated from SKF and became an independent automotive group. Before 1998, Volvo Cars not only produced passenger vehicles but also expanded into aerospace and various industrial equipment manufacturing. In 1998, Ford Motor Company acquired Volvo Cars' business, including the ownership of the Volvo brand. In 2010, China's Geely Group purchased Volvo Cars' business and brand ownership from Ford. 2. Safety: Volvo's safety has always been widely recognized as outstanding. Among its entire brand lineup, the XC90 is particularly renowned as the safest car in the world. In the most stringent IIHS crash tests in the U.S., the XC90 consistently achieves top-tier ratings every year, continuously setting new records for itself.
My Volvo lost half its value after just four years of ownership, what a huge loss. Why does it depreciate so drastically? I think the high maintenance costs are the main reason - replacing a headlight can cost 20,000-30,000 yuan, and repairing a bumper is even more expensive than BBA models. When second-hand buyers hear about these steep ownership costs, they bargain extremely aggressively. Plus, Volvo's new car discounts are massive nowadays, often reaching 70,000-80,000 yuan off. When new cars are this cheap, used car prices naturally can't hold up. Another issue is its awkward brand positioning - it's not as luxurious as Mercedes-Benz or BMW, nor as practical and value-retentive as Toyota or Volkswagen. The small market presence means fewer potential buyers. With electric vehicles dominating the market now, although Volvo is transitioning, its older gasoline models are being outright abandoned by the market, making resale particularly difficult.
Volvo's rapid depreciation is actually related to its market strategy, where the manufacturer frequently engages in price wars. You see, new cars often come with discounts of up to 100,000 yuan, which stimulates sales but directly drags down the used car market. Moreover, its resale value has always lagged behind German and Japanese brands, failing to make it into the top three among luxury brands. Maintenance costs also hold it back—I've checked the parts-to-whole ratio data, and the parts are outrageously expensive, making used car buyers wary of unaffordable repairs. Additionally, the slow product updates don't help. The old S90 was quite popular when it first launched, but after five years without a major facelift, the arrival of new models immediately slashed the old one's value. Coupled with the current impact of electric vehicles, the depreciation of fuel-powered luxury cars has generally accelerated. Buying a Volvo really requires mental preparation for a 50% drop in value within three years.
