Car Shopping: What You Need to Know About Vehicle Depreciation

When it comes to significant purchases, apart from a home, they don’t tend to get more significant than a new vehicle. However, unlike a home, a vehicle is a depreciating asset, which means that it will lose, not gain, value over time. 


That’s why, if you’re planning to buy a new vehicle any time soon, you should know a bit more about depreciation and the factors that affect it.


What is vehicle depreciation?

Vehicle depreciation normally refers to the drop in value between the time that you purchase the car and the time that you come to sell it on. So, if, for example, you buy a car for $30,000 and you sell it three years later for $15,000 it will have depreciated by 50 percent in that time.


What is the average rate of depreciation?

On average, a brand new vehicle will depreciate by around 10 percent the second you drive it out of the car showroom. Once 12 months are up, it will likely have depreciated by a further 10 to 15 percent. The first there years of a new car’s life are the steepest in terms of depreciation, but the vehicle will continue to lose value as the years go on.


Why does vehicle depreciation happen?

Vehicle depreciation comes about as a result of wear and tear on the vehicle, as quell as the fact that newer models will have more desirable features that make the old car less desirable with buyers.

Do all cars depreciate?

Basically, yes. There are rare cases when a car is manufactured in such low quantities that it becomes a collector’s item and as a result can command a high price, sometimes even more than it sold for originally, but that is not the norm, Even prestige cars like Audi cars and BMWs will typically depreciate over time although often to a lesser extent than more affordable cars.


What are the biggest causes of depreciation?

The main factors that can lead to vehicle depreciation include:


  • Age. The older a car is the less value it is likely to have.
  • Appearance. If a car has a worn appearance, it will be less desirable.
  • Fuel efficiency. When a vehicle is not cost-effective to run, it will rapidly start to depreciate.
  • Make and model – less popular makes and models will depreciate more quickly than more popular ones for obvious reasons.
  • -Maintenance. A car that has been looked after well will typically depreciate more slowly than a neglected one.
  • Modifications. Cars that have been cared for and fitted with expensive modifications like new windows and the latest tech will on average depreciate more slowly.
  • Mileage. Lower mileage means slower depreciation.


Should I still buy a new car?

If you can afford a new car and you are looking for the latest specs, then you may still find it a better deal than buying a used car. However, if you just need a reliable vehicle to get you around you may find that a used car that has already experienced the bulk of its depreciation will represent a better deal.



Featuring the Jeep Wrangler, the least-depreciating vehicle in America for several years running.  

Read how the truck is as a diesel over here in this full review!

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