Car valuation has turned out to be a complete, prolix process comprising a hell of a lot of factors. Two headlines are changing customer preferences and shifting dynamics across the entire car market.
Buyers’ needs are different from prior years, as many focus more on innovation and sustainability. This shift in tastes doesn’t just move passing trends; it reverberates through the earth and has lasting effects on what cars are worth.
However, the price of a car is based on demand/supply economics. Consumers, manufacturers, and dealers need to know how these factors impact the valuation of a car. In this guide, we will look at the ways these two basic influences can impact car evaluation.
Article Summary
The Changing Consumer Preferences
Consumer tastes have changed dramatically. These changes are a result of tech advancement and new lifestyle trends.
Aesthetic and functional shifts
There has been a shift in customer preferences towards vehicle look and feel along with its functionality. Primarily, this means more SUVs, as buyers in markets around the world continue to resonate with their mixture of interior versatility and position from high. Interior flexibility is A key reason why crossovers are becoming more popular. This reinforces the previous icon, stating that it garners numerous customers for other vehicle types, increasing their valuation.
Since people still love them so, just a little lap time generally does not mean the depreciation they face is as fast in sedan or convertible variety, but under normal circumstances, an SUV can retain value better after new due to demand perception convenience applies.
On the other hand, sedans are becoming less popular, leading to quicker depreciation and poor resale values. Customers nowadays are more worried about the fuel economy, safety, and comfort level inside. The reason these features will increase a car’s value is simple: productivity.
Economic and lifestyle factors
Customer behavior is also greatly influenced by economic and lifestyle factors. Blame it on interest rates, fuel prices and other economic factors that all have an influence over what people decide to buy. For example, there will be high demand for cost-effective yet fuel-efficient vehicles at times of economic downturns from the consumer side. This will impact the value of cars that are less fuel efficient.
Vehicle purchase preferences are a shifting target in the face of lifestyle changes. Invisible Hand is adjusting itself to the new world order. Since those bring the issue of consumption, in urban areas, there is a great preference for EVs and compact cars. Instead, people who work from home are more likely to opt for a car that is comfortable and well-connected – conducive to their long drive.
Technological Innovations
Consumer expectations have changed, and this is in major part due to the modern tech infused into vehicle manufacturing. They are now looking for features such as connectivity and safety, which come from technology in today’s cars, unlike it was then. The infotainment system is the center point of many tech features and one that really gives it away.
Most new cars come with these systems as standard. Touch-screen interfaces and Apple CarPlay are now at that level, no longer luxurious features. That also applies to advanced driver-assistance programs (ADAS). By contrast, we find here that more than twice as many consumers (29 percent) say ADAS systems – such as adaptive cruise control or lane assist – either greatly impact their purchasing decision.
It hasn’t hurt that interest in the debut of autonomous driving technologies was so high, either. Fully self-driving cars are still the stuff of dreams, detours, or nowhere at all yet—and that’s just right now; the semi-autonomous operation has already changed what customers will stand for. A car with these attributes has a higher resale value.
Impact of Market Trends on Car Valuation
Market trends have a significant effect on the value of cars, too. The automotive market is complex, and these are only cursory understandings that vehicle manufacturers, dealerships, or potential customers alike should know. Interacting trends, or the most impactful among them:
Electric vehicles
The advent of electric cars has thrown a major wrench in valuing vehicles. Firstly, the demand for electric cars is increasing. Consumers love them due to eco-sensitivity and low
operational costs. A raft of supportive government policies further bolsters this demand. WEVs now hold a premium over ICE vehicles in the new and used car market. Tesla and other EV models see high residual values.
Likewise, recent electric vehicles come with battery improvements. This improves their range and makes them charge faster, which means they can appeal to more buyers for a higher cost. This equipment allows EVs to be more competitive against traditional ICE vehicles. Finally, the growing installation of charging stations inside a new infrastructure makes EVs more useful to an increased range of consumers, which also supports their valuation.
With changing dynamics in car ownership as a result of the rising popularity of shared mobility and MaaS, there have been valuation implications. One of the ways ride-sharing services like Lyft and Uber are transforming car ownership into a more on-demand model.
The lack of personal cars leads to a decrease in the value of new and used vehicles. But the vehicles are still going to be worth more or hold value. This has had the inverse impact on motorbike value because of adding up to incorporated vehicle accommodations (motorbikes included) being advertised together.
Car subscription models also exist, which provide access to all the different cars on a flexible and ad-hoc basis. The demands of the customers can be met with these options without looking to own a car immediately, which makes them seek the utility and flexibility that come along with vehicle ownership.
Subscribe Cars will improve, and we expect subscription-based vehicles to be better maintained and more versatile than nearly any other class of vehicle on the road right now. So, possibly they may even get a higher valuation simply based on how well this business model fits in with vehicular travel.
Future deployment of autonomous ride-hailing vehicles could similarly disrupt traditional car ownership and valuation. These serving-only cars will be assessed on their ability to provide near-to-on-demand services, not in the manner in which automotive purchases of yore have been made.
Economic Conditions
The value of a car is also predominantly determined by economic reasoning. Those are interest rates, petrol prices, and business conditions. At the top of the list is customers and how altering interest rates impacts car financing costs.
Car loans have become very cheap now, thanks to low interest rates. So, clearly, the demand for and valuation of new vehicles are going up. Conversely, high rates lower demand for car sales and value.
The amount of fuel costs can also reflect the value of certain vehicles. An increasing price will make fuel-efficient vehicles or alternative-fuel-based cars far more attractive and expensive. On the other hand, demand increases, and value is appreciated for less efficient cars, such as SUVs or trucks, when fuel prices go down.
EndNote
Factory options and modifications have always influenced the value of a car, but those trends are heavily contingent on how customers like to build them from their local dealerships.
With more buyers looking to go green and record profits being posted for new mobility solutions such as phones, demand grows (and so does a vehicle’s value) on those that can tick all three boxes.
If they are unable to go with the flow or do not keep up with new trends, the value of these vehicles tends to decrease over time years.
