Research On Evaluate Used Cars In Chongqing Based On The Viewpoint Of The Replacement Cost Approach

With the consumption concept becoming intelligent, Chongqing citizens have changed their prejudices against the used vehicle. More and more consumers pay their attention to the used vehicle market. So the Chongqing’s used vehicle market has undergone great development in recent few years. But many serious problems are also exposed at the same time, especially in the part of how to evaluate used vehicles. There has been not a unified evaluation criterion and a scientific, reasonable and evaluation approach for used vehicles. This issue is a huge block for the further development of the Chongqing’s used vehicles market.In the face of this, the paper takes used cars in Chongqing as an example to discuss how to objectively and reasonably evaluate used vehicles basing on the viewpoint of the replacement cost approach, which is an evaluation approach in the theory of assets evaluation. At first, we analyze the existing problems during evaluating the used cars in Chongqing. They are unreasonable evaluation approach, nonstandard procedure of used cars’ evaluation and nonobjective gist on how to quantify operational functional depreciation. Secondly, we discuss the influential factors on the price of used cars from the angle of three kinds of depreciation, which are the substantive depreciation, the functional depreciation and the economic depreciation. Thirdly, we study the corresponding solutions of above problems. We set up a standard procedure of used cars’ evaluation and improve the replacement cost approach. After improving, there is not any additional tax in the replacement cost except the lowest price of the new car. Besides, the substantive depreciation can be work out with the accelerated method of depreciation. Meanwhile, we summarize some techniques on vehicle condition appraisal. Basing on it, we learn that how much the used car is needed to fix the bugs according to the vehicle condition appraisal results and use the cost as the operational functional depreciation. In addition, the disposable functional depreciation and the economic depreciation have been contained in the replacement cost. Finally, we evaluate a used car with the improved replacement cost approach and the result is satisfying. So the new approach is feasible.