This section mainly focuses on price contributors to used cars. The heatmap above shows the strength of the correlation between various features and price. The correlation coefficient is a measure of how closely two variables are related. One may identify key features that significantly impact used automobile pricing by looking at the price row. Among all those factors, a used car with front-wheel drive will be priced lower by 31.4%. The reasons for front-wheel drive cars being least favored by many car buyers include poor handling and low towing capacity compared to their rivals (Loveday, 2022). Other factors that might drastically reduce price include fair condition (-15.1%), compact size(-14.1%), and higher odometer reading (-12.1%). Most people incline to a larger vehicle since it provides more cargo space and extra room. A used vehicle with a higher odometer is less favored since a car with higher odometer reading usually means a higher cost of maintenance and chances of machanical failure.
In contrast, four-wheel drive is the feature that affects the price in the most positive fashion (+26%). A four-wheel drive vehicle is the most popular type of drive as it has better traction than a front-wheel drive car or a rear-wheel drive car (Loveday, 2022). Other features that have a significant impact on price include like-new condition (+17.3%), and full size (+24.2%). A like-new vehicle is preferred since this eliminates the need for further repair costs for the buyers. A full-size vehicle is preferred since it can be more versatile on a daily basis.
This heatmap suggests that in addition to adapting strategies presented in the previous sections, dealers can get the potentially most selling vehicles by paying attention to the condition, drive, size, and odometer reading. For instance, a four-wheel drive full-size vehicle with like-new condition and a low odometer reading is expected to be sold at a great price soon after arriving at the dealers' lots. What is more, since the market prices this type of vehicle higher, customers are relatively inelastic about this higher price. As for suggestions on how to price the car, if the dealers make procurements on the most popular type of vehicle mentioned above, they have the absolute privilege to price their inventories higher.
Some individuals may believe a myth that the color of a car could make a significant difference in the price, so I investigated the relationship between color and used car price to see if this holds. The heatmap indicates that most colors slightly affect prices in a negative fashion, although almost negligible. However, it is worth pointing out that a white used car is priced higher by the market than those in other colors (+ 13.8%). White cars are more popular due to the fact that dents and scratches are less noticeable in light colors, and therefore less maintenance is required for the paint. In addition to less maintenance, white cars are proven to be safer. White cars have a 12% less chance of accident involvement due to the fact that it provides a lot of contrast between the vehicle and the surroundings, making white cars a lot visible to other motorists on the road (Sweat, 2019). Business insight for dealers based on this study is that they might want to prioritize a white car for more profits. And because customers have a clear preference for white-colored cars, dealers may advertise white cars more (i.e., list white cars at the top of the website) and thus can charge approximately 15% more than the others. Plus, some special white colors such as pearl white or mica white that has four-stage paint coatings will sell at an even higher price.