Why Does a New Car Lose Value So Quickly?

We all know that a new car loses value the minute you drive it off the car lot, but why? Well, there are a number of reasons:

• New cars are sold at or near their manufacturer's suggested retail price. This includes the cost to manufacture, ship, warehouse and sell the car. The dealer purchased the new car at a specific price, which, if they wish to make a profit, they must sell to you at a higher price.
• Just like any other mass-produced product (i.e. electronics and appliances), once you open and use the item, it is no longer worth its original value when a new product is still available.
• Many people prefer to be the original owner, and are willing to pay a premium for that privilege. Once a car has a used label, it will be overlooked by shoppers willing to pay full price for a new car.
• There is the perception that new cars are more reliable, while an old car is going to leave you stranded on the side of the highway on any given day. The reality is that new and old cars get flat tires, and their engines will seize without regular maintenance. Because of this perception, many people will blindly trade up at the dealership, trading in their old car for less than it is actually worth.
  

As you can see, there are many reasons that a car loses value. What are your experiences with buying and selling new and used cars? Please post in the comments below.