Going That Extra Mile.
The mileage of a used car has a significant impact on its value. But, how much exactly? Those long road trips or daily commutes not only mechanically wear down your car - they directly impact how much your car is worth on the market.
StatsAuto has analyzed 48,000+ car transactions Canada-wide during 2016. On Average:
- Canadians drive 16,750 km per year
- That car next you has driven 104,540 km
- That car next to you is 6.25 years old
- That car is worth about $15,308 CAD.
The numbers just speak averages. However, what is most important is the number 4.3. This is how much percent your cars drops in value every time you drive 10,000km. Therefore the average car which drives 16,750km per year has its value decrease by 7.2% each year. How did we come up with this value? Through what's called a Linear Regression model.
In Statistics, Ordinary Least Squares is a method of estimating unknown parameters in a Linear Regression model.
In this case, StatsAuto has built a model that predicts the movement of Price (Unknown Parameter) as mileage changes ( Known Parameter). To add predictive power to our model we incorporate the Vehicles Manufactures Suggested Retail Price, or simply it's price when it was brand new. The model looks as follows:
In English - the change in price is predicted by the change in Mileage and it's MSRP . We will save you all the statistical principals and key assumptions of the model and cut right to the chase:
Example. You just purchased a beautiful car for your family. It cost you $40,000 CAD. By simply driving it 16,750km expect to lose $2,880 CAD in resale value.
Or more shockingly- $.17 per km driven.
It is important to note that the more expensive your vehicle is the higher the drop in resale value in monetary terms. You may be saying so what!? Well the next time you offer to drive a long distance, consider more factors than just paying for gas. Factor's such as wear and tear on your vehicle and something you probably never considered....the drop in resale value.
That's how much going the extra will costs you !
$40,000 x .072 = $2,880
$2880/16750km = .$1719/ km