Dr. Mark Nan Tu

Looking good does not have to be expensive

Most of the people will laugh at me when I tell them that a BMW can be cheaper than a QQ. A BMW 320 made by Huachen BMW in China is sold at around 300,000 RMB. A QQ made in China is sold at 50,000 RMB. So how is a BMW cheaper than a QQ?

Well, if you pay in full price and brought all of them new, BMW is definitely more expensive than a QQ. However, if you get a near used (but near new BMW), it can be cheaper than a new QQ. In Chinese used car market, a 2 year old used BMW320 is around 200,000RMB.

Let us assume that today, you buy a BMW320 at primer condition (as good as new) at the market price of 200,000RMB. A new QQ is sold at 50,000RMB, with all the sales taxes, etc, the new QQ will set you back for 60,000RMB.

One year from today, the BMW is worth around 195,000RMB. The QQ is worth 40,000RMB. Let us do the math here.
Assume 6% interest rate and 0.5% per month.