How do you calculate the discount on a car?

Before you proceed with the purchase of a used or new car, it is important to think about the resale of the one you currently have. To determine the right price before performing this operation, you must take into account one essential element: the car discount. The latter determines the loss of value of your car over time.

  • What is it about ?
  • How to calculate it?
  • Which vehicles are most affected?

Explanations!

What is the car discount?

The discount, expressed as a percentage, represents the depreciation of a vehicle over time. This loss in value is not due to wear or use, but rather to the decrease in the immediate market price of the vehicle. In reality, a new or used car that leaves the dealership loses value immediately. Moreover, this reduction depends not only on the weather, but also on other criteria such as vehicle make, engine type, etc.

What criteria must be taken into account to determine the discount?

From one car to another, the discount is not the same. Some vehicles have a good rating, while others suffer from a high reduction. So to know the decrease in value that your car will suffer, here are some points to consider.

  • Origin of the vehicle : it is one of the main indications regarding haircuts. For example, French brand cars are more discounted than German ones
  • The engine type : petrol engine, diesel, hybrid or electric? Petrol engines are better than diesel engines
  • Wear : the more a car is used (kilometres driven), the more its value decreases
  • age : A vehicle that ages sees its discount grow naturally
  • car options : if the car has additional options (integrated GPS, reversing radar, etc.), it will retain more value
  • The number of resales : The more owners the car changes, the higher its reduction percentage will be

In addition to these parameters, the color, the type of car (SUV, sedan, etc.), the model or the period of sale are also aspects that affect the depreciation of a vehicle at Argus.

What is the discount for a car in the first year?

The discount is usually calculated when you want to sell your car. As you already know: your car loses value over time. Although this reduction depends on several parameters, the purchase value falls between 20 and 25% regardless of vehicle type. However, this loss in value diminishes over the years. It is usually established as follows:

  • 15 – 30% discount the first year
  • 15% extra after 2 years
  • 10% after 3 or 4 years,
  • 7% after five years or more

It is important to remember that the above data are general estimates. The real loss in value of your car will vary according to the above parameters.

Which vehicles can get a significant discount?

In addition to the criterion of the age of the vehicle, there are certain manufacturers and types of cars that suffer a greater loss in value.

As previously mentioned, French brands are more affected by the drop in value. For example, Citroën, Renault, Peugeot have an average depreciation rate of 24 to 26% in the year they are put into service.

  • Some well-known manufacturers such as Ford, Nissan or Lexus get a discount of 26% on average.
  • Models from Toyota, Hyundai, Opel, Kia, Skoda or Fiat lose an average of 21% of their rating a year after entering circulation!
  • Note: these are the most common brands subject to a high discount rate.

Other parameters can affect the loss of value of your car, and over time the percentage also changes. Therefore, it is recommended to make a calculation to determine the value of the depreciation on your car.

As far as vehicle types go, certain models also tend to lose popularity quickly. In terms of city cars, you will find in particular the Renault Clio 4, Peugeot 208 or Toyota Yaris. In terms of SUVs, you will find the Dacia Duster, Renault Kadjar, Nissan Qashqai or Peugeot 3008. In addition, some compacts such as the Volkswagen Golf 7 are also on this non-exhaustive list.

However, it is important to understand that the discount simply determines the value of the used or new vehicle. It is not enough to set the final selling price. In fact, the law of supply and demand also comes into play!

Which cars are the cheapest?

Unlike others, some cars hold a good rating when resold.

  • Advanced German cars : Audi, BMW or Mercedes discount in their registration year with percentages between 14 and 15%. These are quite expensive cars, which in turn provide a good residual value.
  • The Japanese : Japanese brands such as Toyota, Honda, Suzuki, Mazda or Mitsubishi enjoy a good rating. Cheaper than the Germans, their models see their depreciation rate hover around 15 and 20%.
  • The Dacia : this brand represents a good exception on this list with a loss in value to Argus estimated at around 7% in the first year.
  • Luxury brands and sports : In this series of cars you will find Aston Martin, Porsche, Bentley, Land Rover, Ferrari, Maserati, Jeep and others in the order of 4 to 15% discount. Of course, these cars are expensive.

In summary, it is necessary to understand that luxury has its coast. The more expensive the car is to buy, the higher the selling price rises. These types of vehicles make it possible to create significant added value. To make money, these are the type of cars you can target.

How to determine the resale value of your car?

Taking an interest in the depreciation of a car generally refers to a prospect of withdrawal of the latter. To have a price basis for trading, you need to consider other parameters.

2 criteria to consider

The distance traveled or mileage is a significant factor in determining the value of your vehicle. This factor is closely related to the age and use of the car. In typical use, the annual mileage for a petrol car is 15,000 km and 25,000 km for a diesel. A car with too high mileage sees its value drop on the market. To hope to sell your car for a good value, you must therefore think about maintaining it well.

  • The type of dealer

Depending on which dealer you choose, you can get a higher or lower price when you resell your car. For example, if you choose a private person, you are more likely to get a higher price because you can negotiate. In this context, administrative formalities will be necessary. In addition to these points, the vehicle’s capabilities and the date of commissioning are also taken into account when determining the price.

Determine the price yourself

Once you know the different criteria, you can take a look online to determine the price of your car on the market. Look for the various details that can lower the price.

Choose online tools

For those who do not want to go into calculations or sometimes complex reflections, there are now many online price assessment platforms. These sites are generally free and offer you a form where you fill in the information regarding the car. You will quickly get an average price, which will help you in the negotiation. However, it is essential to perform the operation on several platforms to obtain an average price. In addition, some online tools also allow you to directly determine the devaluation of your car.

Ultimately, it must be remembered that a new or used car suffers a loss of value over time expressed as a percentage: this is the discount. This percentage helps determine the value of a vehicle and depends on several parameters such as make, model or engine type. However, the discount is not the only factor in determining the real retrocession value of your car. Other aspects must also be considered! Many online tools will help you determine this value.


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