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The Cost of Driving a Car Off the Dealer's Lot
Author(s) -
WOOD WILLIAM C.
Publication year - 1994
Publication title -
journal of consumer affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.582
H-Index - 62
eISSN - 1745-6606
pISSN - 0022-0078
DOI - 10.1111/j.1745-6606.1994.tb00818.x
Subject(s) - value (mathematics) , business , database transaction , asset (computer security) , transaction cost , operations management , economics , computer science , statistics , computer security , finance , mathematics , programming language
This paper examines the loss of value incurred when a consumer takes retail delivery of a car. Statistical tests of percentage and absolute losses from taking retail delivery show the loss of value is not unique to new cars and is actually more pronounced for older used cars. analysis of this loss shows the effect is not as great as is commonly believed and is more due to transaction costs of the deal than to any underlying loss of asset value of the car. The implication is that consumers wishing to avoid a large percentage loss of value on a transaction cannot easily do so by avoiding the new car market.