The Price of Cars

How do cars retain value over time?

Since moving to Sri Lanka, I have not owned a car. Mostly due to my work circumstances. Parking in Fort is difficult and expensive. And it has always been easier to hail a taxi.

But is it cheaper?

A friend and I were debating this. If you own a personal car, there is the initial price, fuel, insurance and maintenance. The actual value of the vehicle offsets these costs. Which you would sell later. If you ride taxis, there is a taxi fare. For fairness, we should also consider other factors. For example, if you ride taxis, there is the “comfort benefit” of not having to drive. Conversely, if you own a car, there are conveniences like storage and consistency.

My friend and I agreed on most of the costs and benefits. But one factor we could not agree on was the “value” of the car.

My friend claimed that “in Sri Lanka” cars were investments “like land”. And usually the value of a car went up or at least stayed fixed. You could buy a car, and then hope to sell it in a few years, “for the same price”.

This seemed a bit sanguine to me. But rather than dismissing the claim, I thought of pulling some data to answer the question: How do cars retain value over time?

Methodology and Results

I scraped newspapers and magazines online for buy and sell advertisements for used cars. I tracked the averages of buy and sell prices for various makes…