Used Cars - What main factor that affects the price of a second hand car

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Aim

To investigate what is the main factor that affects the price of a second car.

Hypothesis

A number of factors such as age, mileage and engine size all affect the second hand price of car but the factor that I feel affects the price most is mileage the car has done. I believe this to be true because as a car travels more and more miles the engine and the other parts of the car have lot of strain put on them and so begin to wear, which then makes the car less and less reliable. Therefore this is apparent in the second price of the car.

The price spread of the small sized cars will be the smallest. This is because the engine size range of the car small sized cars is quite small and as the small sized cars to not depreciate fast. The large sized car will have the largest price spread, as the engine size range is the biggest and also because luxury cars that are quite expensive tend to have large engines sizes. That is why the price of the large sized cars will be greatest.

Small sized cars depreciate a lot slower in price than large engine sized cars. I believe this because small sized cars have a fairly low price any way and so the price of those cars won't drop as dramatically as others. Also small sized cars have a bigger demand than large cars as large cars are more expensive to maintain and run.

Introduction

In this investigation I will collect information on a sample of cars from a used car database and then present this data many ways such as scatter graphs and cumulative frequency graphs. I will do this to find out what is the main factor that factors the second hand price of a car. Factors that can affect the second hand price of a car are as follows:

Age

A car that is five years old will cost less then the same car which is less than a year old as the five year old car has had more wear and tear so will not be as reliable as it was before, so this will lower its price on sale.

Make

A prestigious make car will cost more than a car that is not so prestigious, even if they have the similar specifications as the prestigious car is very much sort and signifies the owner's wealth and status.

Model

A newer model car will cost more than older model car that has gone out of production as the newer model is more safe and is packed with the latest technology where as the older model will have out dated safety features and technology so would not be in as much demand so the older model will have to sell for less.

Options

The options put on a car determine the price of it, such as a car with low-profile Alloy wheels, Satellite navigation, Upgraded Audio System etc, will sell for a higher price compared to the same car but with standard options as the car with all the upgraded features is more sort after and more impressive than the basic car.

Mileage

A car with a high mileage will sell for a lower price compared to a similar car with a low mileage because a high mileage means more wear on the engine which will reduce the performance and reliability of the car.

Engine size

The engine size of a second hand car can affect it price. As a small engine car would have less power and do more mile to the gallon than a larger engine car with more power but less miles to the gallon.

Colour

The colour of a car could affect its second hand price, for example a car that is bright pink in colour will appeal to less people compared to a more moderate coloured silver car.

In my investigation I will be looking at how the Mileage, Age and Engine size of a second hand car affect its price. I have chosen these factors to investigation as I think they are the most relevant to the price of a car and the most important things to consider when purchasing a second hand car.

Obtaining a sample of cars

From the database of used cars I will collect a sample of 50 cars. I will only use 50 cars in this investigation as I feel that this is enough to get a good outcome from. If the sample I take is too big it will be too had to work with and if the sample is to small then I won't get I reliable outcome.

First I will have spilt the database into groups of small, medium and large sized cars. I will do this so that I can get a sample of cars that covers the range of car sizes and is not concentrated in one particular size of cars. In order to get a reliable sample of cars I will take a stratified sample of 50 cars. This means that the ratio of the different sized cars in the sample of 50 cars will have to be as in the database.

To insure that the sample I take is random and fair, I will first give every car in the database a unique number to identify each by, then I will use the random button on a calculator to pick out the cars in will use in my sample.

What is meant by small, medium, and large size car?

The cars in the used car database are split into groups by the size of their engines. Small cars having an engine size of 1500cc or lower. Medium cars having an engine size that is between 1800cc and 1500cc. Large cars having engines greater than 1800cc.

Presenting and analysing the sample of cars

From the sample of cars I hope to test the hypothesis that have been stated previously and see if they are correct. To do this I have to interpret and analyse the sample of cars in many different ways. I will put the cars ages against the price, mileage against price and engine size against the price.

Using the data collected from the sample of cars I will plot scatter diagrams for, age against price, mileage against price and engine size against price. I will then draw a line of best fit on each scatter diagram in order to able to estimate the prices of others cars, as the line of best fit will show the trend in the second hand price of the cars against each of the factors. Also the line of best fit on the scatter graphs will show which size of car depreciates the fastest.
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From the scatter diagrams I hope to see that the factors of mileage and age have a negative correlation with the second hand price of the cars. As these factors increases, the second hand price of cars should decrease. This should be apparent in the scatter diagrams of these two factors against the second hand price of the cars. In contrast to this, the scatter diagram with engine size against the second price I believe should show a positive correlation, in other words as the engine size of a car increases so should the price.

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