Motor vehicle depreciation can be a significant component of total vehicle operating costs. It is therefore important to consider depreciation in economic appraisals of road improvement projects. The results of a study into motor vehicle depreciation in new zealand are presented in this paper. Depreciation equations that predict the rate of depreciation as a function of the vehicle age and kilometerage were developed from resale data. These equations were developed for passenger cars, light commercial vehicles, and medium and heavy commercial vehicles. The stability of depreciation over time was investigated by performing the analysis on data from 17 months earlier. It was found that depreciation was unstable with respect to time, leading to the recommendation that a simpler technique be adopted for calculating depreciation costs. The technique recommended was capitalrecovery, a straight-line depreciation technique that considers theeffect of time on capital. The depreciation equations were used to investigate the allocation of depreciation between time and vehicle use. It was found that the majority of the depreciation costs are due to time, not vehicle use. This paper appears in transportation research record no. 1262, Planning, management and economic analysis 1990.
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