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03-04-2007, 08:30 PM
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Kinda bored and decided to make an equation for the depreciation of value of a civic hatchbck EH2/EH3.Now this isnt very close but it gives you an idea.Assuming a regular hatch is worth $2000 regardless of miles,trim,mods.... i came up with the formula. 12,000(1.127)^-x 2000 being the new price, 12.7% depreciation every year and x being the year after its been manufactured.Sorry for wasting your time!
edit:NEw price 12,000 ,it was a typo
Modified by Felliph3 at 1:13 PM 3/5/2007
edit:NEw price 12,000 ,it was a typo
Modified by Felliph3 at 1:13 PM 3/5/2007
03-04-2007, 11:24 PM
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Re: Info (**DOHC HaTcH**)
POSSIBLY the worst equation ever created.
First let's start off with, 12.7% = .127, not 1.127, I'm not sure where you were going with that.
Second, assuming X is the time (in years) after it's been manufactured, you're raising it to a power that will make the number ridiculously wrong.
Did you just take random numbers and try crunching them?
So I'll take my car for example which is 12 years old, so 12000(1.127)^-12 = $6.37E-50
Woooo, that's some cheap ****.
A more accurate equation of where you're trying to go would be the following:
$12,000
12.7% depreciation
X = years
::Y = .127*X*12000
::12000 - Y = Q
Q = Current value
There's a few problems with the equation though. As you can see by taking the example of my 12 year old car, the value comes back negative. This is because depreciation is NOT a static percentage. It's continuously variable based on a few factors including but definitely not limited to generation.
See, there's no difference between a 95 and a 94 civic, but there's a difference between 95 and a 96 civic. Generation plays a big roll.
According to your equation, any car more than about 8.33333 years old assumed at a static percentage of depreciation at 12.7% will lose ALL of its value by that time.
Also, it doesn't take mileage into account. Obviously any car with 10 miles is worth a lot more than the same make, year, model, and condition but with 100,000 miles - regardless of "how new the engine is" or "how strong it runs."
There's another problem with the equation, it's taking 12.7% and tacking it to the original value, you're not taking into account past depreciation values.
See, according to your equation, @ a static rate of 12.7% depreciation, after 2 years, it depreciated in value 25.4% - which is great, not accurate, but whatever.
The point is simple, it's NOT 25.4% of 12000, it's 12.7% of 12000 + 12.7% of 10,476.
So you'd have:
10,476 total value after 1 year
9,145 total value after 2 years
7, 983 total value after 3 years
Though according to your approach at the equation you'd have:
10,476 total value after 1 year
8,952 total value after 2 years
7,428 total value after 3 years
I think ur approach at the equation is completely wrong - but that's just me talking.
In reality it's VERY hard to come up with a simple equation for depreciation value. You have to take into account all the small things, like the 40,000 dollar depreciation you lose off your Ferrari the second you drive it off the lot.
The algorithms used to create prices on sites such as kbb.com are very complex and basically assign each "option" or variable as the case may be a value (probably 1-50 or some **** like that) and then recompiles it at the end to spit a price back at you. That's about as close as you're going to get with a computer, the rest is determined by condition and such in which a computer can't asses 100% accurately, even w/ stuff like kbb's "excellent", "good", "fair", "poor" bullshit ratings.
Then we have to take into account the quality factor. Many people on this site are Honda lovers through and through. Will only buy Hondas, all domestics such, etc. etc.
They wouldn't pay 10 grand for a 70 'cuda (which recently joined the million dollar car club for certain production years) in mint condition. Others will obviously think 100,000 is a very fair price, etc. etc. Different people will pay different amounts for different cars assessed at the same value. Take you for example, you think that paying 5000 dollars for a 5g hatch is a great bargain, and that a 1997 ITR is worth 20,000 dollars - I'd never pay that much, but others will I suppose as you've told me they were sold.
It's too complex, hardcore mathematicians that worked out the algorithms for kbb couldn't get it right. Neither could the same for dealerships. It won't be figured out in this post. It'll be a far future before it can be determined accurately with a computer.
First let's start off with, 12.7% = .127, not 1.127, I'm not sure where you were going with that.
Second, assuming X is the time (in years) after it's been manufactured, you're raising it to a power that will make the number ridiculously wrong.
Did you just take random numbers and try crunching them?
So I'll take my car for example which is 12 years old, so 12000(1.127)^-12 = $6.37E-50
Woooo, that's some cheap ****.
A more accurate equation of where you're trying to go would be the following:
$12,000
12.7% depreciation
X = years
::Y = .127*X*12000
::12000 - Y = Q
Q = Current value
There's a few problems with the equation though. As you can see by taking the example of my 12 year old car, the value comes back negative. This is because depreciation is NOT a static percentage. It's continuously variable based on a few factors including but definitely not limited to generation.
See, there's no difference between a 95 and a 94 civic, but there's a difference between 95 and a 96 civic. Generation plays a big roll.
According to your equation, any car more than about 8.33333 years old assumed at a static percentage of depreciation at 12.7% will lose ALL of its value by that time.
Also, it doesn't take mileage into account. Obviously any car with 10 miles is worth a lot more than the same make, year, model, and condition but with 100,000 miles - regardless of "how new the engine is" or "how strong it runs."
There's another problem with the equation, it's taking 12.7% and tacking it to the original value, you're not taking into account past depreciation values.
See, according to your equation, @ a static rate of 12.7% depreciation, after 2 years, it depreciated in value 25.4% - which is great, not accurate, but whatever.
The point is simple, it's NOT 25.4% of 12000, it's 12.7% of 12000 + 12.7% of 10,476.
So you'd have:
10,476 total value after 1 year
9,145 total value after 2 years
7, 983 total value after 3 years
Though according to your approach at the equation you'd have:
10,476 total value after 1 year
8,952 total value after 2 years
7,428 total value after 3 years
I think ur approach at the equation is completely wrong - but that's just me talking.
In reality it's VERY hard to come up with a simple equation for depreciation value. You have to take into account all the small things, like the 40,000 dollar depreciation you lose off your Ferrari the second you drive it off the lot.
The algorithms used to create prices on sites such as kbb.com are very complex and basically assign each "option" or variable as the case may be a value (probably 1-50 or some **** like that) and then recompiles it at the end to spit a price back at you. That's about as close as you're going to get with a computer, the rest is determined by condition and such in which a computer can't asses 100% accurately, even w/ stuff like kbb's "excellent", "good", "fair", "poor" bullshit ratings.
Then we have to take into account the quality factor. Many people on this site are Honda lovers through and through. Will only buy Hondas, all domestics such, etc. etc.
They wouldn't pay 10 grand for a 70 'cuda (which recently joined the million dollar car club for certain production years) in mint condition. Others will obviously think 100,000 is a very fair price, etc. etc. Different people will pay different amounts for different cars assessed at the same value. Take you for example, you think that paying 5000 dollars for a 5g hatch is a great bargain, and that a 1997 ITR is worth 20,000 dollars - I'd never pay that much, but others will I suppose as you've told me they were sold.
It's too complex, hardcore mathematicians that worked out the algorithms for kbb couldn't get it right. Neither could the same for dealerships. It won't be figured out in this post. It'll be a far future before it can be determined accurately with a computer.
03-05-2007, 09:20 AM
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true thanks for the long post....as far as 1.127 goes its a number i could come up with thats close to 2000 after 15 years,you would have to get a different value for a more accurate answer but it would still be way off.Too many factors.Youre right it cant be done nowadays.Maybe in the future but then again people wont buy hatchabcks then....In this equation i took "2 points in a graph" initial value and current value,had i have 10 points i could come up with a good graph to show the rate of depreciation.No car depreciates at a static rate.A viper probably depreciates not too fast,but say 50 years from now ,in the same exact condition it would be worth a lot les just because of technology,gas prices/fuel, and other things.
03-05-2007, 09:41 AM
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Re: (Felliph3)
<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote, originally posted by Felliph3 »</TD></TR><TR><TD CLASS="quote">true thanks for the long post....as far as 1.127 goes its a number i could come up with thats close to 2000 after 15 years,you would have to get a different value for a more accurate answer but it would still be way off.Too many factors.Youre right it cant be done nowadays.Maybe in the future but then again people wont buy hatchabcks then....In this equation i took "2 points in a graph" initial value and current value,had i have 10 points i could come up with a good graph to show the rate of depreciation.No car depreciates at a static rate.A viper probably depreciates not too fast,but say 50 years from now ,in the same exact condition it would be worth a lot les just because of technology,gas prices/fuel, and other things.</TD></TR></TABLE>
50 years from now a viper as it sits will be worth billions.
50 years from now a viper as it sits will be worth billions.
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