Why cars lose their value so fast?

Question

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

Answer 1

>As soon as you drive your brand new car out of showroom, its value starts decreasing. What’s the reason for such fast depreciation?

The value in the showroom isn’t the true value of the car. It is an over-inflated value; the value of the prestige of newness. Once the “new” wears off, the car drops to its true value.