Why is car depreciation such an important factor when buying a new car?
It is because when buying a new car, you have to factor in how that new car, SUV, or truck will directly affect your long-term cost of ownership as well as the money you hope to recoup as a trade-in or selling to a private owner.
Related article: Car Dealers Caught Overcharging Buyers
Facts About New Car Depreciation
1. Loss of Value Over Time―Cars typically lose value as soon as they leave the dealership. On average, new cars depreciate by 20-30% in the first year and about 50% over five years.
2. Your Overall Cost of Ownership―What few car owners do not realize in many cases until it is too late is that aside from major repairs, car depreciation is often the largest single cost of owning a car, surpassing fuel, insurance, and regular maintenance costs.
3. The Impact on Resale Value―A car with slower depreciation retains more of its original value, making it a better investment if you plan to sell or trade it in later. However, cars with high depreciation rates may result in a significant loss when reselling.
4. Loan Considerations―The new car price tag coupled with its expected depreciation can put you in an awkward financial state where your loan balance exceeds the car's value.
5. Insurance Premiums―Car depreciation directly affects your car’s value should an accident lead to a replacement.
6. Better Financial Decisions―Significant car depreciation works in the favor of shoppers of lightly used cars due to the steepest depreciation has already happened.
7. Some Models More So Than Others Suffer Steep Depreciation―It is important to bear in mind that factors such as reliability, parts cost, popularity, lack of demand, and being an EV rather than a gas-only model plays significantly on depreciation.
Which leads us to the value of knowing what car, SUV, and truck models automotive experts found depreciated the most to help you make a more informed decision that aligns with your financial goals and future needs.
The Top 10 Luxury and Top 10 Non-Luxury Vehicles That Devalue the Most Within 3 Years, Including the Top 10 Models That Do Not
That said, here is a timely and informative YouTube video from the Car Help Corner channel that reveals what the experts found and why you should avoid or buy these vehicles provided by the Car Help Corner host in three useful categories.
For your convenience, a summary is provided so that you can skip ahead of video and find out what models are those best to avoid and those that are closer to an investment worth considering.
Avoid These Cars That Lose 50% Value in Under 3 Years!
New Car Depreciation Warning Summary
The cars, SUVs, and truck models Consumer Reports and CarEdge say depreciate the most categorized:
Top 10 Luxury Vehicles That Devalue the Most
- Mercedes-Benz GLE-Class: 47% Depreciation converting to approximately $40,000 depreciation.
- Audi S8: 47% Depreciation converting to approximately $65,000 depreciation with 33% of that within the first year.
- Maserati Levante: 47% Depreciation converting to approximately $55,000 depreciation.
- Land Rover Range Rover: 47% Depreciation converting to approximately $68,000 depreciation.
- Audi S5: 48% Depreciation converting to approximately $30,000 depreciation.
- Alpha Romeo Stelvio: 49% Depreciation converting to approximately $28,000 depreciation with 30% of that within the first year.
- BMW 7-Series: 49% Depreciation converting to approximately $65,000 depreciation.
- Tesla Model X: 50% Depreciation converting to approximately $45,000 depreciation.
- Maserati Ghibli: 50% Depreciation converting to approximately $56,000 depreciation with 35% of that within the first year.
- Audi Q8 Etron: 51% Depreciation converting to approximately $42,000 depreciation.
- Mercedes EQS (an Honorable Mention in the comparisons): 47% within the first year followed by 65% within 3 years.
Top 10 Non-Luxury Vehicles That Devalue the Most
- Ford Escape: 38% Depreciation converting to approximately $15,000 depreciation.
- Dodge Charger: 40% Depreciation converting to approximately $19,000 depreciation.
- Nissan Murano: 41% Depreciation converting to approximately $19,000 depreciation with 30% of that within the first year.
- Ford Expedition: 42% Depreciation converting to approximately $33,000 depreciation.
- Buick Enclave: 42% Depreciation converting to approximately $23,000 depreciation with 40% of that within the first two years.
- Chrysler Pacifica: 44% Depreciation converting to approximately $22,000 depreciation.
- Jeep Grand Cherokee: 45% Depreciation converting to approximately $25,000 depreciation with 32% of that within the first year.
- Nissan Armada: 47% Depreciation converting to approximately $33,000.
- Nissan Leaf: 49% Depreciation converting to approximately $19,000.
- Hyundai Kona: 51% Depreciation converting to approximately $19,000 with 33% of that within the first year.
Top 10 Models That Devalue Significantly Less
- Toyota Highlander: 23% Depreciation converting to approximately $11,000.
- Honda HRV: 23% Depreciation converting to approximately $6,700.
- Toyota Rav4: 22% Depreciation converting to approximately $8,200.
- Toyota Corolla: 20% Depreciation converting to approximately $5,000.
- Ford Ranger: 20% Depreciation converting to approximately $8,800.
- Toyota Sienna: 18% Depreciation converting to approximately $9,700.
- Toyota Land Cruiser: 18% Depreciation converting to approximately $21,000.
- Toyota Supra: 18% Depreciation converting to approximately $11,000.
- Toyota Tacoma: 17% Depreciation converting to approximately $7,800.
- Ford Bronco: 16% Depreciation converting to approximately $16,000.
As a comparison to last year: The worst cars that lose the most value in the first year of ownership. Plus, the best cars to buy that have the least depreciation in the first year of ownership.
Timothy Boyer is an automotive reporter based in Cincinnati who currently researches and works on restoring older vehicles with engine modifications for improved performance. He also reports on modern cars (including EVs) with a focus on DIY mechanics, buying and using tools, and other related topical automotive repair news. Follow Tim on Twitter at @TimBoyerWrites as well as on Facebook and his automotive blog "Zen and the Art of DIY Car Repair" for useful daily news and topics related to new and used cars and trucks.
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