£13,650.00 + £28,210.00 = £41,860.00
2
£41,860.00
=
2
= £20,930.00
Therefore, from this I have found out that the mean Price When New for a BMW is £20,930.
I then repeated this process for the other makes of cars, to produce another table with all the mean results:
From this table, I created a Dual Bar Graph, to show the comparison between the average prices when new against the average second hand price for different makes.
TABLE SHOWING MEAN PRICES FOR DIFFERENT MAKES OF CARS
GRAPH ANALYSIS
I have chosen to present the data from the table showing mean prices, in a dual bar chart. This is to show me how each make of car is shown in comparison to the price when new and second hand price.
From the graph, I can see that is shows me how certain makes are more expensive than others. However, there is one anonymous result; this is the Rolls Royce car.
Its value when it was new became very expensive; at £94,651.00. This is the anonymous result, as other makes did not exceed passed £35,000.00.
Additionally, to find out the modal type of make, I need to find which make occurs the most from my sample. To do this, I will present each make in a tally chart and mark off each type of make. In the end, I should get a modal make, which occurs more often than any other.
The mode is defined as “the data, which occurs most often.”
There can be more than one mode for a set of data.
TABLE SHOWING A TALLY CHART FOR THE MODAL MAKE OF CAR
From this table, I have found out that the modal make of car is a Ford with 15 cars shown in my sample. I will create a Bar Graph, to indicate how Ford is the modal value.
GRAPH ANAYSIS
I have chosen to do a bar chart, as I see this chart will show me clear, accurate results.
From the graph, I can clearly see that Ford is the modal make of car. There are more models of this car than any other make.
MAKE OF CAR ANALYSIS
The make of a car tell me which Make(s) are shown to be more expensive or cheap more others. For example, worldwide companies such as; Rolls Royce & Porsche are more expensive Makes of cars than the smaller, less profitable companies. Such as, Fiat & Nissan.
Also, the second hand prices of the less profitable companies are at a low cost compared to the Makes of Rolls Royce & Porsche.
Also the greatest value of Price When New is the Roll Royce, at £94,651 and the car that has the greatest value for the Second Hand Price is the Porsche, at £19,495.
This again shows how more beneficial companies are more expensive, but if a car is bought second hand; it shows to be lucrative to the consumer.
The second hand price of these Makes, are generally the average Price When New of the smaller companies of Fiat & Nissan.
PRICE WHEN NEW
2.) The second variable that I think influences the price of a second hand car is
Price when New, this is because, a new price can show how much a car has decreased in value, which is shown in a second hand price.
PRICE DROP
The amount that the car has decreased in value is called Price Drop
Price Drop is calculated by:
Price When New – Second Hand Price = Price Drop Value
For example, the new price of the BMW 316i is £13,650.00 and the second hand price of this car is £6,995.00.
Therefore, I apply the price drop formula to this car:
£13,650.00 - £6,995.00 = £6,655.00
As a result of that, £6,655 is how much the BMW 316i had decreased by.
This answer can be also to be shown as a percentage; better known as
Price Drop Percentage
To work out the Percentage, I take the answer that I obtained from Price Drop and divide this by the Price When New.
Price Drop
Price When New
To finally get the percentage, I multiply the answer I get from that by 100.
For example,
The BMW 316i Price Drop Value was £6,655. Thus, I will use this figure the formula shown above:
£6,665.00
£13,650.00
= 0.48754578, this is then going to be multiplied by 100 to give an overall percentage.
= 0.48754578 x 100 = 48.75% (2 d.p)
I can round this figure up to the nearest whole number, which is going to be 49%
From this I can see that the BMW 316i Price When New had decreased by almost half to get the second hand price.
TABLE SHOWING THE PRICE DROP OF EACH CAR, AS A VALUE & PERCENTAGE
From this the table showing price drop I can see that the majority of cars had a price drop of more than half from the original, price when new. This is probably due to the fact that the age of car affected how much the car’s value decreased by.
For example,
If it was a new car in age, i.e. 1 or 2 years old, the price of that car would not decrease as much as a car that was 9 years old for instance. The 9-year-old car would have a greater price drop. This is because, as the age increases, the value of the car will decrease
We can also see from the table, the Modal Price When New, Median Price When New and the Range of the Price When New.
The Modal Price When New is the value that occurs the most. This is from the car Rover 623Gsi, which is £24,086. This value appears twice in the table. Therefore, it is entitled as the Modal Price When New.
Furthermore, the Median is defined as:
“the middle value when the data is arranged in order of size.”
If there is an even number of values in the data, then the median is the mean of the middle two values.
This is calculated by making the table in numerical order by Price When New.
I then look for the middle value, as the total number of cars is 93. There cannot be two values in the data that require a mean.
£5,340 £5,495 £5,599 £5,715 £6,009 £6,295 £6,590 £6,645 £6,795 £6,864 £6,899 £7,310 £7,403 £7,440 £7,518 £7,600 £7,799 £7,840 £7,864 £7,995 £8,272 £8,595 £8,601 £8,680 £8,710 £8,748 £8,785 £8,900 £9,105 £9,125 £9,524 £9,525 £9,565 £9,795 £9,960 £9,995 £10,150 £10,351 £10,420 £10,423 £10,800 £10,810 £10,954 £11,225 £11,598 £11,695 £11,800 £12,125 £12,350 £12,590 £12,895 £12,999 £13,175 £13,183 £13,230 £13,355 £13,435 £13,510 £13,586 £13,610 £13,650 £13,740 £13,800 £13,850 £13,975 £14,065 £14,325 £14,425 £14,486 £14,505 £14,875 £14,950 £15,405 £15,800 £16,000 £16,139 £17,490 £17,780 £17,795 £17,915 £18,140 £18,580 £18,675 £19,530 £21,586 £22,980 £24,086 £24,086 £26,425 £27,855 £28,210 £32,995 £94,651
From the numerical data shown above, it is clear to me that, £11,800 is the Median value for Price When New.
Finally, to work out the Range of the Price When New, I look at the highest value in the data and subtract that from the lowest data.
In this case, it will be:
£94,651 - £5,340 = £89,311
GRAPH ANALYSIS
I put the price when new into interval values to present my graph.
As shown below:
TABLE SHOWING PRICE WHEN NEW INTERVALS AGAINST AVERAGE SECOND HAND PRICE
I have chosen a scatter graph to represent this variable; to show the contrast between the price when new and the second hand price.
The scatter graph tells me that it has a low positive correlation from the line of best fit. This means that the graph has not got a strong relationship between the price when new and the second hand price. It also means that as data from one set increases, as does the data from the other set.
The points plotted are very close to the straight line (line of best fit). This shows a trend of strong evidence between the price when new and the second hand
PRICE WHEN NEW ANALYSIS
The New Price of Car shows me how much a car costs and how much it has decreased by to obtain the cost of the second hand price. It has shown me that the New Price effects the second hand price by how much the car’s value reduces.
As there were two identical values, this is then known as the mode or modal value.
The Modal value for the Price When New is £24,086
The median shows the middle number in the data, to give an estimate of what the car prices are like.
The Median value of Price When New is £11,800
The range shows the measure of spread, this is how close the data is in relation to the mean.
The Range of the Price When New is £89,311
AGE OF CAR
3.) The third variable that I think influences the price of a second hand car is the Age of a car, this is because, the age shows how old a car is in comparison to the second hand price.
In theory, a newer aged car would cost more than an older car, this is for the reason that, the older has lost its value of the years.
I am going to produce a table with my findings of how the age affects the second hand price and analyse the quantitative, numerical data in a bar graph format.
TABLE SHOWING THE AGE OF THE CARS IN COMPARISON TO THE AVERAGE SECOND HAND PRICE
To find the average of the second hand price from the age. I collected all the second hand prices for every car that was 1-year old for instance, and found the mean of the second hand price for that particular age. I then found the frequency for that age.
I repeated this process, to the largest number of years that a car was, which was 10 years old.
I put my findings in the table shown above. From which I will plot onto a bar graph.
From the table, we can work out the modal age of the selection of cars.
MODE: 3 5 8 8 9 9 10 11 11 18
From the order shown above, I can see that there is more than one modal value, these are:
8,9 and 11. These are the modal values for the frequency.
I then look across the table to find out the modal ages, which are:
MODAL AGES: 2 years, 3 years, 4 years, 5 years, 7 years, & 8 years old.
Furthermore, I can also see from the table that the median value is shown as:
9 + 9
2
= 18
2
= 9
Therefore, the median frequency is 9. And so, the median ages are 2 & 8 years old.
MEDIAN AGES: 2 & 8 years old
These values show me how the middle ages and modal ages are 2 & 8-year-old cars.
It also shows me the different contrast between the two ages.
GRAPH ANALYSIS
I chose bar chart for this factor, as I think that the age of a influences the price of second hand car by a huge margin.
I can see from the graph that, the newer the car, the more expensive it is and the older the car, the less expensive it is.
This was also a statement in my hypothesis.
I can also see that the 9-year-old cars are more expensive than a 7-year-old car, which does not follow the trend.
This is due to the fact that one of the 9-year-old cars was a Rolls Royce.
The Rolls Royce was £14, 735 when it is second hand. Therefore it puts the average second hand price of a 9-year-old car higher than expected from a 9-year-old car.
This shows weak evidence for the age in comparison with the average second hand price.
AGE OF CAR ANALYSIS
As you would expect, an older car is going to have decreased in value of the years. Which makes the age of the car a main factor. If the age is lower, then it is going to be a better, more renovated car; for example:
If the average 2-year-old car cost £8,000, the price will differ from a car that is
5 year old and cost an average of £4,000. However, in my data, this was not always the case; as it shows how an average 4-year-old car was more expensive than an average 3-year-old car.
The age of a car tells me how a new car in age, will have a higher value in money than an old car. This is because, consumers that what newer, modern cars, are willing to pay more money for them.
Older cars are shown to decrease more in value, as their depreciation values drop and year-by-year, the car loses its value.
PRICE DEPRECIATION
Finally, The amount that a car has decreased in value of a certain number of years is called
Price Depreciation.
Price Depreciation is calculated by:
Price When New – Second Hand Price
Age of Car
For example, the new price of the BMW 316i is £13,650.00 and the second hand price of this car is £6,995.00. Also, the age of this car is 6.
Therefore, I apply the price depreciation formula to this car:
£13,650.00 - £6,995.00
6
= £6,655.00
6
= £1,109.17
I then round this number up to the nearest pound, which is £1,109.
As a result of that, £1,109 is how much the BMW 316i has depreciated by over a six year time period.
I applied this formula to all the data that was given, to show by how much a car depreciates in value year by year.
TABLE SHOWING DEPRECIATION OF EACH CAR
I decided to show the depreciation a table form to make it simple to understand.
The depreciation shows exactly how much a car loses its value every year.
For example,
This shows that the Renault Megane’s depreciation value is £2,058.67 every year.
The age of the car is 3; therefore if I were to deduct the depreciation value from the Price When New 3 times, it would leave me with the Second Hand Price.
£13,175 – £2,058.67 = £1,116.33
= £1,116.33 - £2,058.67 - £9,057.66
= £9,057.66 - £2,058.67 = £6,998.99
If the last answer is rounded up, it will give me the answer of the Second Hand Price.
Which is £6,999.
From this I found the average the depreciation value that represented a specific age.
I had to also determine that I would plot the Depreciation Values in a Bar Graph, to clearly show how each age is affect by depreciation.
GRAPH ANALYSIS
I chose a scatter graph to represent this variable; to show how the age is affected by the depreciation value.
The scatter graph tells me that it has a low negative correlation from the line of best fit. This means that the data in one set increases, as the data in the other set decreases.
The graph has not got a strong relationship between the age and the depreciation value. In general, As the age of the car increases, the depreciation rate decreases. Although this is not always the case.
As the points plotted are not as close to the straight line (line of best fit) as possible. This shows a trend of weak evidence between the age of the car and depreciation value.
MILEAGE
4.) The forth variable that I think influences the price of a second hand car is the Mileage of a car, this is because, the mileage shows how far and how much a car has been used in comparison to the second hand price.
In theory, the less mileage a car as, the more expensive it is expected to be and a car that has had more mileage is more likely to be cheaper than one that has less mileage.
The cars with hardly any mileage are more likely it is to be in better condition.
I am going to produce a cumulative frequency table with my findings of how the mileage affects the second hand price and analyse the continuous data in a cumulative frequency graph arrangement
TABLE SHOWING THE RANGES OF MILEAGE INTERVALS
This table shows the mileage intervals between the quantitative data of cars.
Cumulative frequency is extremely helpful when comparing different data sets. Once I have drawn my cumulative frequency graph I am going to add the quartile ranges and the median.
The cumulative frequency table from the table above, can be shown as:
To work out the cumulative frequency, I add on the next frequency number from the data, until I end up with results that match my total frequency.
For example,
3, 4, 5, 6 – to work out the cumulative frequency:
3 + 4 = 7, then 7+5 = 12, 12+6 = 18. This process carries on until the table is filled and the final number in the cumulative frequency table is the same as the original total.
To work out the median from the cumulative frequency, I looked at the last interval value and apply the formula:
100000 + 1
2
= 100001
2
= 50000.5 – this is the value to the median.
The Lower Quartile is:
Median Value + 1
2
50000.5 + 1
2
= 50001
2
= 25000.75 – Lower Quartile
For the Upper Quartile:
Median Value x 1.5
50000.5 x 1.5 = 75000.75 – Upper Quartile
Therefore, the Inter Quartile Range is calculated by:
Upper Quartile – Low Quartile = Inter Quartile Range
75000.75 – 25000.75 = 50000 - Median
GRAPH ANALYSIS
I chose to do cumulative frequency for this graph, as it shows me the comparison of continuous data. It also shows me the box plot/whisker diagram and how this is represented from the cumulative frequency.
The Mileage tells the consumer, how far the car has traveled.
More miles traveled, will decrease the second hand price, but less miles traveled will indicate that the car has been kept in good condition for the consumer to but.
There is also an unlikely chance that something is wrong or broken with the car. It is less likely to wear and tear away.
MILEAGE ANALYSIS
The mileage affects the cost of a second hand car, as it shows the consumer how far the car has traveled. The consumer may only be interested if the car has been kept in good condition and fewer miles were driven. But with the mileage being high, will put the consumer off buying the car, as they will think that the car has been driven too much, is exceeding its value.
NUMBER OF OWNERS A CAR HAS
5.) The fifth and final variable that I think influences the cost of a second hand car is the Number of Owners a Car Has.
The Number of Owner a Car Has tells me that, if more owners own a car; then it tends to lose value. It affects the price of a second hand car, as the more owners a car has, the price of the second hand car is going to decrease. As I am going to explain further.
I found the average second hand price for each number of owners and I will put them in a table and chose to show them in scatter graph.
TABLE SHOWING THE NUMBER OF OWNERS TO THE AVERAGE SECOND HAND PRICE
You can see from the table that as my hypothesis proved to be right.
As the number of owners increases, the second hand price decreases.
GRAPH ANALYSIS
The scatter graph tells me that it has a strong negative correlation from the line of best fit. This means that the data in one set increases, the other set of data decreases.
The graph has got a strong relationship between the number of owners and the second hand price. In general, As the number of owners increases, the second hand price decreases too.
As the points plotted are not as close to the straight line (line of best fit) as possible. This shows a trend of strong evidence between the number of owners and the second hand price.
NUMBER OF OWNERS ANALYSIS
As you would expect, the more owners a car has, lower the value for the car is going to be.
This makes the car cheaper. Which would make it a right reason to sell the car.
Which makes number of owners a main factor in the influences of a second hand price. If number of owners decreased, the car would have a higher value price and it would be an overall, good car to buy on the market.
PROBLEMS
The problems with the data is:
- It was incomplete
- There were more of some makes than others.
- The Age of a Car – There were certain cars that were expensive and I found a anonymous result, causing the prices to be pushed up; which was mentioned in the graph analysis of that topic.
CONCLUSION
In my overall conclusion, I have found out through this investigation that, there are several main factors that affect the price of a second hand car are; the age of the car, how many owners a car has and the price depreciation from when new.
In which, has proven my hypothesis to be true.
However, These factors are more important and have a greater affect on the second hand price than others, this is because, they show the consumer what to look for when buying a car.
These factors change the value of the car’s second hand price.
I found that how many owners, the price depreciation and the age of the car were strong influences, but I think that the mileage and the make of the car were not as strong, as they were shown to be weaker influences on the price of a second hand car.
If I were to improve the investigation, I would take a sample of 20 cars from each make and same colour. I would then take samples of 100 cars, but keep all but 1 variable constant and see the effect.
