IMPACT OF SHORT CYCLING ON DEPRECIATION

摘要

When analyzing the economic impact of shorter replacement cycles on fleet depreciation expense, two variables must be considered. In a balanced used-vehicle secondary market for "normal" high-volume vehicles, two distinct depreciation-related factors become economic headwinds when considering shorter replacement cycles. The first is the secondary market price at the beginning of the lease is usually less than the new-vehicle transaction price. Second, the depreciation is downward sloping, but flattens a small amount for each additional month the vehicle is in service.