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Insights 5 min read

DIMO Insights #7: Mastering the Used Car Market with DIMO

October 2, 2023

How DIMO Can Help You Navigate the Used Car Market and Save Money

If you've ever been in the market for a used car, you know just how unpredictable and messy the process can be. Vehicle valuations can vary widely, and shopping around for the best deal can be time-consuming and confusing. But fear not, because DIMO is here to make your life as a driver easier.

We understand the struggles of navigating the used car market, which is why we're excited to introduce our vehicle valuation solution. With DIMO, you can now stay on top of the market and track the depreciation of your vehicle with ease. Our goal is to help you make informed decisions about when and where to sell your vehicle, whether it's time to trade it in, and even assist you in searching for your next ride based on the data you're already tracking.

Understanding Vehicle Valuations

When you connect your car to DIMO, you'll receive monthly valuation updates from various sources, and on-demand offers from popular used car marketplaces like Carvana, CarMax, and Vroom. But we know that the sheer number of valuations available can be overwhelming and sometimes misleading. That's why we're simplifying things for you.

DIMO categorizes vehicle valuations into three main categories: retail, trade-in, and instant offers (e.g., CarMax, Carvana, Vroom). Each of these categories can have numerous valuations based on your vehicle's condition. To provide you with meaningful data, we clean this information to remove extreme outliers and present you with a high and low valuation in each category.

For instance, let's say you own a 2021 Chevrolet Malibu with 24,000 miles. There are 25 private sale valuations, ranging from $13,350 to $27,595. After cleaning the data, we find that the average valuation is $20,844.16, helping you focus on a more realistic price range.

Valuations for a 2021 Chevrolet Malibu

How DIMO Can Help You Understand Your Vehicle's Value

Our vehicle valuations aren't just for buying and selling; they can also provide insights into how your vehicle retains its value over time. We use the manufacturer suggested retail price (MSRP) as the original vehicle price to calculate the annualized rate of depreciation using the following

Formula for Annualized Rate of Depreciation

This formula helps you understand how quickly your vehicle's value is decreasing and makes it easier to compare valuations for different vehicle ages (n is the number of years since the vehicle was valued at the MSRP). 

Average Annualized Rate of Depreciation Versus Average MSRP for Specific Vehicles

For example, a 2017 Subaru Outback with an MSRP of $33,265 and an average retail valuation of $21,012 after six years translates to an annualized depreciation rate of about 7%, meaning the vehicle loses about 7% of its value per year of ownership. This information gives you a clear picture of how your vehicle's value is changing and can help you plan for future purchases.

Importance of Location

DIMO can also help you compare your valuation to that of similar vehicles in other locations. Sometimes instant vehicle purchase offers take the zip code into consideration, so knowing how your model is selling elsewhere can help you better understand where to sell it. For example, these are the average of instant offers from used car marketplaces for 2018 Tesla Model 3 Long Range Battery trim.

Regional Valuations for 2018 Tesla Model 3 Long Range Battery trim

Discovering Trends in Vehicle Valuations

Our data isn't just about individual vehicles. We also analyze trends in the used car market. For instance, we've found that some high-demand vehicles, like the 2022 Ford Bronco, have experienced significant appreciation in value in just a short time. This kind of information can be invaluable when considering your next car purchase.

Manufacturer Insights

Our data goes beyond individual vehicle models. We can also provide insights into how different manufacturers' vehicles retain their value. For instance, BMWs tend to depreciate quickly, while Toyotas hold their value better over time. These insights can guide your decision-making when it comes to choosing a brand for your next vehicle.

Average Annualized Rate of Depreciation Versus Average MSRP for Manufacturers

In conclusion, DIMO is your go-to tool for making informed decisions in the used car market. Our monthly vehicle valuation reports simplify the process, help you understand your vehicle's value, and provide valuable insights into market trends and manufacturer performance. Say goodbye to uncertainty and hello to confident car buying and selling!

Written by: Jeremy Lerner Senior Data Science Consultant

Jeremy Lerner is a Senior Data Scientist consulting with DIMO. He helped design Ford's BlueCruise and has published several papers and patents on how to utilize connected vehicle data to understand drivers and improve the driving experience. Data-driven simulations are Jeremy's natural playground.

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