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RE: Request for Car Depreciation Analysis

To recap, you have supplied the following info to us:
The OMV of this vehicle is $20,000
The COE of this vehicle is $28,000 (Category : B )
This vehicle was registered on 2 / 2003
This price of this vehicle is now : $90,000

Our analysis shows the following :
As of now, if you deregister the vehicle, LTA will refund you a paper value of : $42,833 **
The OMV portion of the paper value is $19,500 (97.5% of OMV)
The COE portion of the paper value is $23,333 (83.3% of COE)
At this point, the Dereg Depreciation is $3,580
The PARF value of your vehicle, when it is 10 years old is $13,000 (65% of OMV)
At the present vehicle price of $90,000
you are buying at a annual depreciation of $9,240
Currently, there are 100 months left before the COE expires.

** paper value means that upon deregistering the vehicle, LTA will issue a certificate with this face value, which is valid for 12 months. It can be used to offset applicable government taxes on vehicles so it can be traded in the open market, at some discount off the face value. eg a $50,000 certificate may be sold for cash at, say, a 4% discount, ie you get back cash of $48,000. The exact quantum of discount depends on the market.

Table Showing Vehicle Price & LTA paper value over time, assuming Vehicle Depreciation unchanged at $9,240

SN	Months Left	Vehicle Price ($)	LTA paper value ($)	Difference ($) **	Depreciation @ paper value ($) ##	Remarks
1	100	90,000	42,833	47,167	3,580
2	99	89,230	42,600	46,630	3,588
3	98	88,460	42,367	46,093	3,596
4	97	87,690	42,133	45,557	3,604
5	96	86,920	41,900	45,020	3,613
6	95	86,150	41,667	44,483	3,621
7	94	85,380	41,433	43,947	3,630
8	93	84,610	41,200	43,410	3,639
9	92	83,840	40,967	42,873	3,648
10	91	83,070	40,733	42,337	3,657
11	90	82,300	40,500	41,800	3,667
12	89	81,530	40,267	41,263	3,676
13	88	80,760	40,033	40,727	3,686
14	87	79,990	39,800	40,190	3,697
15	86	79,220	39,567	39,653	3,707
16	85	78,450	39,333	39,117	3,718
17	84	77,680	39,100	38,580	3,729
18	83	76,910	38,867	38,043	3,740
19	82	76,140	38,633	37,507	3,751
20	81	75,370	38,400	36,970	3,763
21	80	74,600	38,167	36,433	3,775
22	79	73,830	37,933	35,897	3,787
23	78	73,060	37,700	35,360	3,800
24	77	72,290	37,467	34,823	3,813
25	76	71,520	37,233	34,287	3,826
26	75	70,750	37,000	33,750	3,840
27	74	69,980	36,767	33,213	3,854
28	73	69,210	36,533	32,677	3,868
29	72	68,440	36,300	32,140	3,883
30	71	67,670	36,067	31,603	3,899
31	70	66,900	35,833	31,067	3,914
32	69	66,130	35,600	30,530	3,930
33	68	65,360	35,367	29,993	3,947
34	67	64,590	35,133	29,457	3,964
35	66	63,820	34,900	28,920	3,982
36	65	63,050	34,667	28,383	4,000
37	64	62,280	34,433	27,847	4,019
38	63	61,510	34,200	27,310	4,038
39	62	60,740	33,967	26,773	4,058
40	61	59,970	33,733	26,237	4,079	Critical Month *
41	60	59,200	32,200	27,000	3,840
42	59	58,430	31,967	26,463	3,858
43	58	57,660	31,733	25,927	3,876
44	57	56,890	31,500	25,390	3,895
45	56	56,120	31,267	24,853	3,914
46	55	55,350	31,033	24,317	3,935
47	54	54,580	30,800	23,780	3,956
48	53	53,810	30,567	23,243	3,977
49	52	53,040	30,333	22,707	4,000
50	51	52,270	30,100	22,170	4,024
51	50	51,500	29,867	21,633	4,048
52	49	50,730	29,633	21,097	4,073	Critical Month *
53	48	49,960	28,100	21,860	3,775
54	47	49,190	27,867	21,323	3,796
55	46	48,420	27,633	20,787	3,817
56	45	47,650	27,400	20,250	3,840
57	44	46,880	27,167	19,713	3,864
58	43	46,110	26,933	19,177	3,888
59	42	45,340	26,700	18,640	3,914
60	41	44,570	26,467	18,103	3,941
61	40	43,800	26,233	17,567	3,970
62	39	43,030	26,000	17,030	4,000
63	38	42,260	25,767	16,493	4,032
64	37	41,490	25,533	15,957	4,065	Critical Month *
65	36	40,720	24,000	16,720	3,667
66	35	39,950	23,767	16,183	3,691
67	34	39,180	23,533	15,647	3,718
68	33	38,410	23,300	15,110	3,745
69	32	37,640	23,067	14,573	3,775
70	31	36,870	22,833	14,037	3,806
71	30	36,100	22,600	13,500	3,840
72	29	35,330	22,367	12,963	3,876
73	28	34,560	22,133	12,427	3,914
74	27	33,790	21,900	11,890	3,956
75	26	33,020	21,667	11,353	4,000
76	25	32,250	21,433	10,817	4,048	Critical Month *
77	24	31,480	19,900	11,580	3,450
78	23	30,710	19,667	11,043	3,478
79	22	29,940	19,433	10,507	3,509
80	21	29,170	19,200	9,970	3,543
81	20	28,400	18,967	9,433	3,580
82	19	27,630	18,733	8,897	3,621
83	18	26,860	18,500	8,360	3,667
84	17	26,090	18,267	7,823	3,718
85	16	25,320	18,033	7,287	3,775
86	15	24,550	17,800	6,750	3,840
87	14	23,780	17,567	6,213	3,914
88	13	23,010	17,333	5,677	4,000	Critical Month *
89	12	22,240	15,800	6,440	2,800
90	11	21,470	15,567	5,903	2,800
91	10	20,700	15,333	5,367	2,800
92	9	19,930	15,100	4,830	2,800
93	8	19,160	14,867	4,293	2,800
94	7	18,390	14,633	3,757	2,800
95	6	17,620	14,400	3,220	2,800
96	5	16,850	14,167	2,683	2,800
97	4	16,080	13,933	2,147	2,800
98	3	15,310	13,700	1,610	2,800
99	2	14,540	13,467	1,073	2,800
100	1	13,770	13,233	537	2,800

* Preferred time to scrap or deregister the vehicle as the OMV portion of the scrap value drops the next month, when the vehicle reaches 5, 6, 7, 8 or 9 years old

** the difference between the Vehicle Price (ie market price) and LTA paper value (the 'guaranteed' price). The SMALLER the diffence, the LESSER the risk of the vehicle owner.

## Depreciation @ paper value : this represents the bottomline. A high value (closer to the depreciation) implies that this vehicle is a 'safe' asset, ie in a bad market, this vehicle can be scrapped and the owner does not lose much. Conversely, if this value is low, it is a higher risk for the owner in a bad market. eg if an owner were to buy a vehicle at depreciation of $5,000 and the Depreciation @ paper value is $4,800, then it is a safer buy compared with another owner who is buying a vehicle at depreciation of $4,500 and the Depreciation @ paper value is $3,500. This is true in a bad market. In a bouyant market, no one needs to scrap vehicles so this bottomline is not important.