'Guesstimating' car's depreciation
How much will my new 2009 Toyota Matrix depreciate in the coming three years?
If only there was a fool-proof method for making such calculations. At best, determining how much a vehicle will depreciate over time is nothing more than educated guessing. The educated part involves determining how that particular model has performed historically in retaining resale value. The guessing part involves predicting what the new-car market will be doing one, two or three years down the road; what competitors will be added to the segment that might dilute demand for your model; if fuel prices will be up or down, and so forth. Estimating future resale values is more intuitive than it is scientific.
You can actually do the research yourself. Edmunds.com provides historic pricing information as far back as 2000. You can find the original retail cost of a 2006 Matrix. I chose the XR trim with automatic transmission. I entered this information onto the "Contact Us" page on the Edmunds Web site and submitted it. I received an answer within 36 hours. When new it had an MSRP of $17,570. According to Edmunds, that same car today with average mileage and in average condition has a trade-in value of $9,767 and a private party resale value of $10,743. Choosing the private party sale value as the mean value (Dealers will ask for more when retailing it), that 2006 Matrix depreciated about $6,800, or 38 percent, over three years. I asked Autotrader.com to run a history for me and they said that on average a comparably equipped 2005 Matrix is worth about $2,000 less today than the 2006. That works out to about 50 percent depreciation over four years.
If you were considering buying a new Matrix or any other new vehicle today, you could always ask your financing agent to obtain the one-, two- and three-year residual values for whatever car you are considering. The Automotive Lease Guide, or ALG, makes such estimates and updates them every two months. They are used for computing lease payments. Any financing agent that offers leasing should have access to the most current ALG.
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