Below is a tally hart which shows the totals of all of the different cars that were given to us
From the tally chart I am going to pick the three most popular cars makes to conduct my investigation on. These will be
These cars were picked because they have the largest amount of information to plot graphs with and there is a wider range of information to conduct the investigation with. For example if I chose to investigate Rolls Royce it would not be effective at all because there is only one Rolls Royce and there is not a large enough spread of data so the three most popular cars have been chosen.
Ford
The graph shows the second hand price (SHP) plotted against the age. There is negative correlation and shows the depreciation of the car when its age increases. The depreciation line shows the price of the car decreases the most when the car is newer. This can be explained because when a car is new lots of people will want it and also lots of people will have one so the price will depreciate slower as the age increases.
The graph above shows the SHP plotted against the mileage the graph is similar to the graph which compared the SHP and the age of the car. The graph shows that then the mileage of the car increases then the SHP will decrease. But there are two anomalous prices in the graph which have been highlighted these cars have a higher price than cars that have done roughly the same mileage, this could be explained because the cars have a lower age and are still relatively new.
I have found that using the SHP of the car is not accurate because for example if a car originally start out at 50,000 pounds when new and then lost 5000 in one year to have 45,000 SHP and then a another car that was 10,000 when new lost 2000 pounds to become 8000 SHP you would think that the first car had a faster depreciation than the second price but if you use the formula PPL=(P-SHP)/P where PPL = Percent price lost, P= Price when new, SHP= second hand price you will see that the first car looses 10% of its value but the second car looses 20% of its value. Therefore it is important to use the PPL instead of the SHP because it is more accurate and more reliable. The graphs will be drawn again using the PPL instead of the SHP.
Price when New – Second Hand Price
Price when New
The two graphs positive correlation and they are more accurate than using the SHP. The trend lines are nearly the same and both graphs have a close Y intercept with each other, the graph against age has a Y intercept at 0.4229 and the graph against mileage has a Y intercept at 0.4323. This could show that the cars initially lose up to 40% of their original value when they are purchased.
The values are very close together and I am going to find the standard deviation for the percent price lost for all Ford cars to see how close the data is, to find standard deviation you use the formula
I have used the formula in the spreadsheet package =STDEVA(value1,value2,...) and found that the standard deviation from the mean percent price lost is 14.63%.
Vauxhall
I am carrying out the same procedure as on the Ford cars and I have produced the two graphs as the Ford. Percent price lost against Age and Percent price lost against Mileage.
The two Vauxhall graphs are in a similar pattern to the Ford graphs but the Vauxhall graph for PPL against Age has a greater gradient that its Ford counterpart and this means that the Vauxhalls lose more percent of their initial new price and backs up my hypothesis that the make of the cars affect their second hand price. The Vauxhall graphs have a weaker correlation than the ford graphs
The Vauxhall cars have a 15.95% standard deviation from the mean this is higher than the Fords standard deviation and shows that the Vauxhall cars have a larger standard deviation which means that they're is a greater spread therefore there is a larger difference in price in the Vauxhall
Rover
The Rover graph for age against percent price lost is very interesting because most of the cars have lost over 70% of their value and there are more cars that have lost over 70% of their value than the Ford or Vauxhall cars. The gradient for the Rover cars is 0.074 which is higher than the other 2 makes of car, this shows that the SHP of a car is varies on the make of the car. The Rover cars have a 17.66% standard deviation from the mean PPL which shows the price lost is more spread out than the other cars, for example there is one car that has a PPL of 23.20% and another that has a PPL of 87.65% this shows the results are very spread out
Conclusion
In conclusion given the time restraints that I have had I have been relatively successful in supporting my hypothesis. Given more time I could have investigated engine size because I think that is also an important factor. And I could have represented my data in different forms. In conclusion I have discovered that
- There is positive correlation between the percentage price lost and the age of the car
- There is positive correlation between the percentage price lost and the mileage
- I have discovered that the cars lose the most value in the first 3 years (Ford, second hand price against age)
- The make of the car affects the second hand price and the percentage price that is lost.