The European used-car market at a glance: Hedonic resale price valuation in automotive leasing industry

Sylvain Michael Prado

No 2009-22, EconomiX Working Papers from University of Paris West - Nanterre la Défense, EconomiX

Abstract: In the leasing industry, the risk of loss on sales at the end of the contract term, as well as pricing are critically impacted by the forecasted resale price of the asset (residual value). We apply the Hedonic methodology to European auto lease portfolios, in order to estimate the resale price distribution. The Hedonic approach estimates the price of a good through the valuation of its attributes. Following a discussion on Hedonic prices, we propose an operational model for the automobile resale market. The model is applied to four European countries (France, Germany, Spain and Great Britain), and distributions are calculated on two vehicle versions (Audi A4 & Ford Focus) allowing a comparison of market depreciation patterns and residual value risks.

Keywords: Hedonic model; residual value; automotive market (search for similar items in EconPapers)
JEL-codes: C51 G12 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec
Date: 2009
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Persistent link: http://EconPapers.repec.org/RePEc:drm:wpaper:2009-22

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