As soon as you drive your brand new car out of showroom, its value starts decreasing. What’s the reason for such fast depreciation?
In: Economics
Lookup “market for lemons”. A car is complicated and it’s difficult for a buyer to know what’s wrong with the car. The seller knows what’s wrong but won’t always be honest. So you’re taking a risk as a buyer.
When it’s new, you know there isn’t any damage / issues caused by wear or abuse. Also there’s a warranty.
Market forces may dictate used prices to be higher than new prices, though. But that’s the exception.
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