- Feb 15, 2020
- Reaction score
- Waterloo, Ontario (West of Toronto)
- '90 Isuzu PU (has to last until my CT arrives), '91 Grand Marquis, '02 Grand Cherokee (I'm so grand I can't stand it), e-bike.
- Retired prof.
"On average, vehicles depreciate more than 20 percent the first year ...."From Erie Insurance;
“The first step in determining whether a car is totaled (or, in insurance terms, a total loss) is to calculate its actual cash value (ACV) at the time of the loss. The ACV is how much your vehicle is worth after factoring in depreciation. On average, vehicles depreciate more than 20 percent the first year and approximately 10 percent each additional year for the first five years according to Carfax data.
HOW IS TOTAL LOSS VALUE CALCULATED?
At Erie Insurance, a claims adjuster assesses your vehicle’s condition. Then, they run the make, model and year of your vehicle through an industry-leading vendor database. The database generates an accurate estimate of your vehicle’s market value based on its mileage, condition, options and other comparative factors. The database also considers the demand for a particular vehicle in your local market. For example, a pickup truck could fetch a higher price in a rural area than in a heavily populated city.
Another factor is the resale value of the parts and the metal. This factor, known as the “salvage value,” is considered along with the cost of repair.
If a vehicle’s cost of repair plus its salvage value exceeds the vehicle’s ACV, it is typically declared a total loss. (One exception is certain state laws that require insurance companies to declare a vehicle a total loss even if the cost of repair and salvage value are less than the ACV.)”
Yes, but why is the average one worth one-fifth less after a year? Comparing with electric cars, forget paint-rash and wheels, which are similar on both. The other (and probably the main) reason for the steep depreciation is that moving parts wear. ICE vehicles have a thousand moving parts; battery ones have ten (my guess). That's why you'd be lucky to save 20% on a one-year Tesla.