Depreciation, the difference between the acquisition and disposal price of a car, constitutes the biggest element in a company car's wholelife cost, and is reflected directly in lease rates.
Across Europe the average car is worth 64% of its new price after two years, but an investigation of 10 different car segments from mini to large 4x4 has revealed very different patterns of depreciation.
In Italy, for instance, an average small car such as the Fiat Punto or Peugeot 206 retains just 56% of its value after two years, while in Portugal the same cars are worth on average 71% of their new price.
In the lower medium sector cars such as the Opel Astra and Renault Megane are worth on average just 58% of their new price in the UK when they are two years old, compared to 73% in the Netherlands.
The UK also suffers the highest depreciation in the upper medium sector, where cars such as the Ford Mondeo and Peugeot 406 are worth only 56% of their cost new, compared to 69% in Spain.
This is due to the high proportion of fleet sales in these sectors in the UK, where fleet discounts have distressed the cars' used values, according to Rick Yarrow, managing director of Automotive Directions, the company behind europrice.com that compiles and distributes the Eurotax Residual Price Index.
The worst depreciation record in Europe is suffered by luxury cars such as the Mercedes S-class and BMW 7-series that sell for an average of just 57% of their new price when two years old.
Their depreciation is even more extreme in Belgium where they are worth only 43% of their new price, compared to 66% in Austria.
Until these depreciation patterns harmonise, a situation that will require a harmonisation of taxes, new car prices and residual values, the prospect of a single lease rate across Europe for the same car remains a pipe dream. (August 2000)
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