Summary
The second energy crisis has strongly influenced not only the sales of new cars but also the prices of used cars. This article describes a simple model of depreciation (with a fixed percentage of the current value) of cars in West Germany, using several characteristics of cars as explanatory variable. The main conclusions are:
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1)
French and Italian cars depreciate more rapidly than other cars;
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2)
After the second energy crisis an extra depreciation in the first year is observed. This implies a collapse of the price level for all used cars as compared to the market for new cars.
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References
Crameret al., Het aantal personenauto's in Nederland, University of Amsterdam, Faculty of Acturarial Science and Econometrics (1973), p. 181.
Out of nine auto brands examined in The Netherlands, the Italian brand (Fiat) appears to have the shortest life expectation and the French brand (Renault) the next shortest. See: C.P. Veerman and P. de Wolff (with contribution of Ch. Schrijver and R. Vellekoop),Levensduur en personenauto's in Nederlands, Interuniversity Interfaculty of Applied Econometrics Delft, Report 1978 no. 28, p. 9.
See for instance H. Theil,Principles of Econometrics, New York (1971), pp. 143 and further.
The linear unweighted average of the relative rise in new prices was 2.6% at the end of the summer and 0.7% at the end of the winter for the cars examined.
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The authors are indebted to Professor J.S. Cramer, Mr. P.H.M. Dekker and Dr. R.G. Kreijger for helpful comments.
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Odink, J.G., van Imhoff, E. Prices of used cars in West-Germany before and after the second energy crisis. De Economist 130, 381–396 (1982). https://doi.org/10.1007/BF02371748
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DOI: https://doi.org/10.1007/BF02371748