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Car depreciation: How much is new car worth after
purchase in Uzbekistan?
Alokhon KHUDOYBERDIEV
Tashkent State University of Economics
ARTICLE INFO
ABSTRACT
Article history:
Received October 2023
Received in revised form
15 November 2023
Accepted 25 November 2023
Available online
15 January 2024
Depreciation of a car is a decrease in its value over time.
World practice shows that depreciation depends on the car
model, make, content, and other factors, but the depreciation of
a new car can reach 20% (or even more) after purchase. In the
local market of Uzbekistan due to a shortage of supply of budget
cars, the demand is high. UzAuto Motors is the only budget car
manufacturer in the country. At the end of November 2023, in
the secondary market offer price of new cars is less than one in
the primary market. In this article, this case was analyzed,
calculated the real paying price (in USD) of UzAuto Motors cars
(Onix PR2) considering waiting time. It is found that nowadays
people cannot make a profit from resale.
2181-
1415/©
2023 in Science LLC.
https://doi.org/10.47689/2181-1415-vol4-iss10/S-pp285-290
This is an open access article under the Attribution 4.0 International
(CC BY 4.0) license (https://creativecommons.org/licenses/by/4.0/deed.ru)
Keywords:
Car depreciation,
UzAuto Motors,
new car,
real price,
Onix PR2.
Avtomobil amortizatsiyasi:
O‘
zbekistonda yangi mashina
sotib olingandan keyin qancha turadi?
ANNOTATSIYA
Kalit so‘zlar
:
Avtomobil amortizatsiyasi,
UzAuto Motors,
yangi avtomobil,
real narx,
Onix PR2.
Avtomobilning amortizatsiyasi
–
vaqt
o‘
tishi bilan uning
qiymatining pasayishi. Jahon amaliyoti shuni k
o‘
rsatadiki,
amortizatsiya avtomobil modeli, markasi, tarkibi va boshqa
omillarga bo
g‘
liq, ammo yangi avtomobilning amortizatsiyasi
sotib olinganidan keyin 20% (yoki undan ham k
o‘
proq)ga
yetishi mumkin.
O‘
zbekiston mahalliy bozorida byudjetli
avtomobillarga taklif yetishmasligi sababli talab yuqori. UzAuto
Motors mamlakatdagi yagona byudjet avtomobil ishlab
chiqaruvchisi hisoblanadi. 2023-yil noyabr oyi oxirida
ikkilamchi bozorda yangi avtomobillarning taklif narxi
birlamchi bozordagi birdan past. Ushbu maqolada ushbu holat
tahlil qilindi, kutish vaqtini hisobga olgan holda UzAuto Motors
1
PhD student of the Department of Mathematical Methods in Economics Tashkent State University of Economics.
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286
avtomobillarining (Onix PR2) haqiqiy t
o‘
lov narxi (AQSh
dollarida) hisoblandi. Ma
’
lum b
o‘
lishicha, bugungi kunda
odamlar qayta sotishdan foyda k
o‘
ra olmaydilar.
Амортизация автомобиля: сколько стоит новый
автомобиль после покупки в Узбекистане?
АННОТАЦИЯ
Ключевые слова:
Амортизация автомобиля,
UzAuto Motors,
новый автомобиль,
реальная цена,
Onix PR2.
Амортизация автомобиля –
это уменьшение его
стоимости с течением времени. Мировая практика
показывает, что амортизация зависит от модели
автомобиля, марки, комплектации и других факторов, но
амортизация нового автомобиля после покупки может
достигать 20% (а то и больше). На местном рынке
Узбекистана из
-
за дефицита предложения бюджетных
автомобилей спрос высок. UzAuto Motors –
единственный
производитель бюджетных автомобилей в стране. По
итогам ноября 2023 года на вторичном рынке цена
предложения новых автомобилей меньше, чем на
первичном рынке. В данной статье был проанализирован
данный случай и рассчитана реальная цена (в долларах
США) автомобилей UzAuto Motors (Onix PR2) с учетом
времени ожидания. Выяснилось, что в настоящее время
люди не могут получить прибыль от перепродажи.
INTRODUCTION
Brand new car becomes used as soon as it is sold and registered for ownership, and the
cost of new and used cars is based on completely different criteria. Car manufacturers set the
cost (recommended retail price) of new cars based on production costs, labor costs, spare
parts costs, distribution costs, and profit goals. The moment new cars become used after they
are sold, their value is based on completely different criteria
–
supply and demand, value
compared to brand-new ones, reputation, and condition
–
all of which have nothing to do with
production costs. and distribution. Another important point: let
’
s say a particular brand-new
car immediately loses 20% of its value after sale. This is a 20% discount from the
recommended retail price. But who pays the full price for a new car? If there were discounts,
discounts, and other incentives for the new car, which amounted to 12% of the recommended
retail price, then for the buyer the car lost only 8% of depreciation. This point is often
overlooked when discussing the depreciation of new cars [1].
In Uzbekistan demand for budget cars is high. That’s why their price in the
secondary market is usually higher than new ones, due to a shortage of supply. At the end
of November 2023, in the secondary market offer price of new cars is less than one in the
primary market. The national currency in Uzbekistan is the sum, but products like a car
are traded in United States dollars. The price difference is in USD. In this article, we will
try to answer the following questions:
•
Is it possible to earn money by reselling new cars in the secondary market?
•
Is it true that at the end of November 2023, Uzbek people lost money in reselling
budget cars?
•
What is the cause factor of the price fluctuation in the local car market?
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MATERIALS AND METHODS
The theoretical basis of this study is the work of foreign researchers devoted to the
study of the effect of inflation on consumers and producers. In our work, we rely on such
methods as theoretical analysis, synthesis, comparison, generalization, and comparison.
In the course of our work, we compare offers in the primary market of passenger cars
and new cars in the secondary market, determine their characteristic features, provide
up-to-date statistics on the market, and describe the risks of resale and prospects for the
development of the local market.
Inflation means a steady increase in the overall price level of goods and services in
the economy over time. It is usually measured by the inflation rate, which is a percentage
change in the average price level over a certain period. Inflation can have several
consequences for various aspects of the economy and people
’
s lives [2]:
•
Reduced purchasing power. Inflation undermines the purchasing power of
money. As prices rise, fewer goods and services can be bought for the same amount of
money, which leads to a decrease in real incomes. People may have to spend more on
necessities such as food and shelter, leaving less money for discretionary spending.
•
Uncertainty and reduced savings. Inflation can create uncertainty about future
prices. When people expect prices to rise, they may be motivated to spend money sooner
rather than later, which leads to increased consumption and reduced savings. Such
behavior can hinder long-term economic growth and investment.
•
The impact on people with fixed income. Inflation can be especially severe for
people with fixed incomes, for example, for retirees or those who have fixed-wage jobs. If
their incomes do not grow in line with inflation, their purchasing power decreases, which
•
Distortion of resource allocation. Inflation can cause distortions in the economy,
affecting the relative prices of goods and services. As prices fluctuate, it can be difficult
for businesses to determine the relative profitability of various investments, which can
lead to an irrational allocation of resources.
•
The spiral of wages and prices. Inflation can trigger a wage and price spiral in
which rising prices force workers to demand higher wages. If businesses meet these
wage demands by raising prices, this can create a cycle of wage and price increases,
increasing inflationary pressures.
•
Impact on investments: Inflation affects different types of investments in
different ways. Some investments, such as stocks and real estate, can protect against
inflation because their value can increase with rising prices. However, fixed-income
investments such as bonds may lose value in an inflationary environment as the
purchasing power of their future interest and principal payments decreases.
•
Redistribution of wealth. Inflation can redistribute wealth within the economy.
Debtors tend to benefit from inflation because they can pay off their debts with money
that has less purchasing power. Conversely, creditors such as banks or bondholders may
face a decrease in the real value of the money owed to them.
The Uzbek sum (UZS) is the official currency of Uzbekistan. It is issued and
regulated by the Central Bank of Uzbekistan. Exchange rates for 2023 of United States
dollars to Uzbek sums are taken from the official site of Central Bank [3].
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Graph 1: Exchange rate in 2023.
In Uzbekistan national manufacturer of vehicles UzAuto Motors offers several
models of automobiles for the local market. Most of them are B and C-class vehicles. Only
Gentra, Cobalt, and Demons models are in the highest demand, and customers must wait
six to twelve months for their purchase [4].
Table 1: Offer price of new vehicles (by month).
In the contraction period, customers receive purchase contracts for new vehicles
and according to the clause, 50% of the contract cost will be paid in UZS currency in 7-10
days after contract assignment [6]. After that customers must wait for a supply of his/her
car. Usually, it takes from six to twelve months. In this period the exchange rate will be
changed mostly increased. That’s why
on the receiving day customers, who will pay
another 50% of the contract cost in UZS, practically get the car cheaper than the offer
price. In this case, we do not consider the interest rate of the Central Bank of Uzbekistan.
Theoretically, people can profit from reselling the cars. The main factor, that must
be considered is a future demand-supply curve in the local market.
UZS
January
February
March
April
May
June
July
August
September
October
November
3LT MT
-
-
-
-
-
-
-
-
-
-
184 750 000
PR1
207 347 000
207 347 000
207 347 000
207 347 000
207 347 000
-
-
-
-
-
211 994 720
PR2
214 748 000
214 748 000
214 748 000
214 748 000
214 748 000
-
-
-
-
-
219 580 480
PR2 Plus
-
-
-
-
221 640 160
221 640 160
221 640 160
221 640 160
221 640 160
221 640 160
221 640 160
Redline
-
-
-
-
230 624 800
230 624 800
230 624 800
230 624 800
230 624 800
230 624 800
230 624 800
LS
211 454 880
211 454 880
211 454 880
211 454 880
-
-
-
-
-
-
-
LS Plus
-
-
-
-
223 824 160
223 824 160
223 824 160
223 824 160
223 824 160
223 824 160
223 824 160
LTZ
231 196 000
231 196 000
231 196 000
231 196 000
-
-
-
-
-
-
239 589 280
LTZ Plus
-
-
-
-
246 981 280
246 981 280
246 981 280
246 981 280
246 981 280
246 981 280
246 981 280
PR
251 142 080
251 142 080
251 142 080
251 142 080
-
-
-
-
-
-
-
PR Plus
-
-
-
-
276 016 160
276 016 160
276 016 160
276 016 160
276 016 160
276 016 160
276 016 160
Redline
-
-
-
-
285 834 080
285 834 080
285 834 080
285 834 080
285 834 080
285 834 080
285 834 080
Onix
Tracker
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Figure 1: Offer price trend of Onix and Tracker 2 options in 2023 (by month).
Considering the above, the real price of new cars is different than the offer price.
The following models are used for calculating the price for customers in USD:
𝑃𝑅(𝑖𝑛 𝑈𝑆𝐷) =
𝑃(𝑡1)/2
𝐸𝑥𝑅(𝑡1)
+
𝑃(𝑡1)/2
𝐸𝑥𝑅(𝑡2)
∆𝑡 = 𝑡2 − 𝑡1
PR
–
real price of new vehicle in USD;
P(t)
–
offer price UzAuto Motors for a new vehicle in time t;
ExR(t)
–
exchange rate UZS
–
USD in time t;
∆
t
–
waiting period for after the contraction of a new vehicle;
t1
–
time of contraction and first 50% payment;
t2
–
time of other 50% payment and supply new vehicle.
RESULTS AND DISCUSSION
The method is implemented for the period from May to November 2023. During
the period exchange rate of USD increased by 7% and the price of Onix PR2 increased by
2% in USD 17 856 USD by Central Bank exchange rate at the end of November (actual
price 219 580 480 UZS).
Table 2: Real price of Onix PR2.
In the secondary market from ads on www.olx.uz, we can see that new Onix PR2s
offered an average price is 17 800 USD. Customers, who got contract in May and got the
car in November and paid according to contract causes, practically purchased new car for
higher price than offering in the olx [5].
Date
USD
Onix PR2 in UZS
Actual price in USD
2023-05-01
11 408
214 748 000
9 412,16
2023-11-30
12 298
214 748 000
8 731,10
18 143,26
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Nowadays, in the local market, there are a huge amount of offers for new import
cars from China. Most of them are electric vehicles. These imported cars changed the
rules of the market.
CONCLUSIONS
The main reason for the market situation is the decree of the President of
Uzbekistan on reducing customs duties on cars with an engine capacity from 1000 to
1200 cubic meters. As a result, the total cost of customs duties will decrease from
39-43% to 19-23% for cars with an engine up to 1000 cubic meters and from 44-52% to
30-36% for cars with a 1000 cc engine 1200 cubic centimeters [7].
Central banks and governments often seek to manage inflation through monetary
and fiscal policies. They can use tools such as adjusting interest rates, controlling the
money supply, or implementing fiscal measures to stabilize prices and promote economic
stability.
In conclusion, we found out that in practice customers pay less than the offered
price when buying UzAuto Motors cars and theoretically this is a gap for making a profit.
Reality shows that the supply of new imported cars has eliminated the possibility of a
positive resale.
REFERENCES:
1.
Gary Wollenhaupt, Jenn Jones. What is car depreciation? From URL
https://www.lendingtree.com/auto/how-much-do-new-cars-depreciate/
2.
David
Floyd.
10
Common
Effects
of
Inflation
from
URL
https://www.investopedia.com/articles/insights/122016/9-common-effects-
inflation.asp.
3.
Exchange rate from URL https://cbu.uz/oz/arkhiv-kursov-valyut/.
4.
Price of new cars from URL http://savdo.uzavtosanoat.uz/#/main.
5.
Ads from URL http://www.olx.uz.
6.
Purchase contract between UzAuto Motors and customer.
7.
Uzbekistan
lowers
car
import
taxes
from
URL
https://daryo.uz/en/2023/06/18/import-fees-are-cut-down-for-certain-cars-in-
uzbekistan.
