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by Eva Fox December 03, 2019

The residual value should be characterized as a formula for determining the value of an asset that takes into account various types of depreciation. To determine this value, you need to know the initial value of the asset and the amount of accumulated current depreciation.

The residual value makes it possible to calculate the approximate price for which you can actually sell a car.
In many ways, the determining factor in calculating the residual value is the depreciation of the car. The residual value is the difference between the amount of car purchase and its depreciation.

According to experts, in the first 3 years, the loss of the value of the car from its original price is the largest.

The manufacturers themselves and their pricing policy have a big impact on the cost of a used car. If a company launches an objectively revalued car on the market, this will necessarily entail a rapid drop in its value. If the car company wants to occupy a large market share, then it produces a very affordable model. If you buy such a car, ceteris paribus, it is the owner of this car will suffer the least losses.

Also important is the massiveness of the car. Traditionally, small demand in the secondary market is observed for those vehicles that are little familiar for consumers. A man doesn’t want to risk it and is afraid of buying such a vehicle. In the event of a breakdown, it will be difficult to find spare parts, few repair specialists, non-standard components, etc.

One of the key components in the formation of residual value in the secondary market is reputation.

If you plan to buy a used car or rent a car, then a car with a high residual value will be the best option. That is, a high residual value is an excellent indicator for a vehicle.

As we all know, the main component of an electric car is a battery, which means that the quality of the battery directly affects the residual value of the car.

Just a few days ago, several organizations, including the China Car dealer Association, estimated the residual value of a number of cars over 3 years of ownership in China. Based on the results of these assessments, Tesla Model X received the highest residual value, which is 63.9%.

Tesla Model X able to hold almost 64% of the value after 3 years of ownership and this is twice or even more times more than other vehicles

The second hand value in China, like in others country has a strongly related to the Brand value also demand of the market. This also applies to cars. And the technology of the vehicle play a major role of the second hand value. Tesla is a high-tech car in which consumers are very interested.

Featured image: U/akkellan on Reddit

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