What factors dictate the resale value of my vehicle?
Have you ever wondered why some brands will sell for a higher value compare to the other? Have you ever wondered why the imports sell for a higher value compare to the domestics? There is no universal mathematic formula calculating these resale values, nor is there a team of dedicated researchers working around the clock to adjust the ever changing resale value through the magical publication we called the "Black Book". Resale values are influenced by many factors; first of all let's examine the common marketing phenomena called "supply and demand". Through the natural process of auction the selling price of the vehicle is bid up to the amount where the buyers will accept. Much like today's stock market, if the vehicle for sale is short of supply, it will naturally demand a higher amount in monetary value. Imagine a hot stock on the market today where everyone wants to get their hands on, the value will be bid up or inflated beyond the actual value of the vehicle. If there is no demand for particular stock the price will naturally fall.
Another major factor contributing to the resale market is manufacturer's promotions and incentives. Imagine if a vehicle such as GM Cobalt has a $5000 cash back incentive, and 0% financing for 72 month. Why would any one want to purchase a used one, if the used vehicles are not selling well, the only thing you can do as the seller is to slash the selling price again and again hence reducing the resale value of the vehicle. Fleet sales such as rental car agencies will also lower the resale value for a vehicle. If the auction is flooded with Ford Focus for the next two months the market will naturally adjust its resale value since there is the scenario of over supply. A manufacturer's recall or quality control can also affect the resale value for a particular brand, consumer reviews; frequent repairs will affect the resale value negatively as well.
There is also a subtle seasonal affect on resale value when it comes to certain specialty vehicles, for example a convertible will sell for $5000-$10000 less during the winter month compare to the summer. A SUV or four wheel drive vehicle may sell for $3000-$5000 more when the snow is on the ground. The point I am trying to make in this article is don't be influenced solely by the black, blue or red books, there are many factors here at play. Think creatively and think outside the box next time when you are selling or buying your next vehicle.
Author Rick Tao Li, for more useful articles like this one please visit me online at http://www.usedcarsscarborough.com
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