The Impact of Brand on Depreciation in the Automobile Industry
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Automobiles are significant consumer durable investments for many households. This research compares the five-year (2013–2018) depreciation rate of cars and sports utility vehicles and compares true market values from Edmunds.com of four different models across 15 different manufacturers, holding constant engine power/size, color, interior features, number of doors, regional location of purchase, condition of the used car, and used car mileage. The sample includes Audi, Bavarian Motor Works (BMW), Ford, General Motors (GM), Honda, Hyundai, Kia, Lexus, Mazda, Mercedes, Nissan, Subaru, Toyota, Volkswagen, and Volvo. The nonparametric Kruskal-Wallis test was used to compare depreciation rates by automobile brand because of the completely randomized design without a normal distribution assumption.
Recent literature uses theoretical modeling of car values and depreciation to find the optimal resale timing (Alshmary and Calin, 2013). Using stochastic modeling, Alshmary and Calin (2014)...