In my newest book, Introduction to Management Accounting, I discuss the depreciation of fixed assets. Since I am working on a previously unpublished version of this book, I was keen to provide more up to date information than before so I went to the Parkers Car Price Guide and found the latest new and second hand prices for three car marques: BMW, Volvo and Porsche.
There is nothing startling with what I was doing except that this morning I came across an article in The Times newspaper that was bemoaning the depreciation rates being suffered by various cars, including the Volvo S80 and the Porsche 911. Since I had chosen the BMW 320d as the basis of my work, I thought I would prepare a work book and summary of these three cars.
One of the things they said in The Times was that the Volvo S80 is worth just 19.3% of its new price and the Porsche 911 is worth 55.3% of its new price … they didn’t say how old these cars were; but you will see in my dashboard summary, below, that after 7 years, the Volvo S80 drops to 35.64% of its new price whereas the Porsche 911 reaches 41.68% after seven years. The seven year old BMW 320d is worth 45.89% of its new price. I have based my values on what Parkers Price Guide calls Private Good: a car in good condition in a private sale.
Here is my dashboard:
Interesting, I think!