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Automobile Loss Rates and the Expected Capital Cost of Vehicles: An Empirical Note *
Author(s) -
HENSHER DAVID A.
Publication year - 1987
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1987.tb00655.x
Subject(s) - metropolitan area , economics , life expectancy , capital (architecture) , expectancy theory , stock (firearms) , engineering , medicine , mechanical engineering , population , demography , management , archaeology , pathology , sociology , history
Knowledge of the market loss rate of vehicles is necessary for the determination of the expected capital cost of vehicles, a major influence on vehicle demand. It is also required in its own right for predicting the availability of specific vehicles of known vintage at future dates. We draw on the existing literature on vehicle scrappage and its links with future vehicle prices to provide a simple framework for determining the loss rates and relevant capital costs of the stock of vehicles available in 1982 in the Sydney metropolitan area. The empirical evidence shows that vehicle prices haw an influence on vehicle life expectancy. and that technical deterioration alone is an inappropriate basis for loss rate determination .