The instant you buy that beautiful new car and drive it off the lot of the car dealership, the value has decreased. In the first five years after a new car has been purchased, the average vehicle depreciates 49.6%. With the price of new cars currently averaging almost $40,000, that is a loss of about $19,000 on average in the first five years of ownership.
If you are set on buying a new vehicle, it is in your best interest to choose a model that is anticipated to hold its value longer, so you do not lose money.
If you are set on leasing a new vehicle, it is also in your best interest to choose a model anticipated to hold its value. Monthly payments are calculated using a formula that uses the predicted worth of the vehicle at the end of the lease, so the more depreciation that is anticipated, the higher the payments will be for you.
Why Do Cars Depreciate?
As a car is used more, it naturally becomes less valuable. The more miles and wear the vehicle receives, the less it is worth because it is more likely that the car will need maintenance or repairs in the near future.
A few different factors cause a car to retain or lose value. Below are some of the reasons a car’s value may fluctuate more or less than normal.
- If a brand has a loyal following, its resale value can be higher because the demand for the brand is higher than the supply in the used car marketplace. Jeep is a good example of this.
- Luxury sedans depreciate quickly because when they are sold they are likely dated, and a used car buyer doesn’t want to pay more for a dated model, even if it is luxury.
- Electric cars depreciate quickly because of outdated technology and the fact that new owners can’t always utilize the previous government incentives.
- A vehicle that is well maintained and driven less will hold its value more than a vehicle that is showing signs of wear and has accrued a lot of miles, even if they are the same age.
How Can I Reduce Depreciation?
If you are wanting to reduce the depreciation of your car as much as possible, here are some tips:
- Park in the garage. If the paint on your vehicle is weathering, your resale value is going to be a lot less than it could be. Consider figuring out an alternative covering for your car if you do not have access to a garage.
- Complete all maintenance. Oil changes and tune-ups may be a slight inconvenience to you at the time, but they are worth every minute they take.
- Keep a record of all services. When you sell the vehicle and you can show the potential buyer the maintenance you have provided to the car over the years, you are adding value to your sale.
- Keep it in shape. Maintain the interior of the car as well. Worn seats or a scuffed dashboard will be a red flag and will not get you a premium resale value. Also, stay on top of maintaining the features; if the CD player, air conditioning system, or power windows are not working properly, you will want to have them fixed before selling to get top dollar.
Which New Cars Depreciate the Slowest?
So which cars will depreciate the slowest and give you the best resale value? Let’s look at some of the 2021 models that are above the rest.
- Best Full-Size Pickup Truck: 2021 Toyota Tundra
- Best Midsize Pickup Truck: 2021 Toyota Tacoma
- Best Heavy-Duty Pickup Truck: 2021 GMC Sierra HD
- Best Midsize Car: 2021 Toyota Camry
- Best Sports Car: 2021 Chevrolet Corvette
- Best Luxury Car: 2021 Lexus LS
- Best Electric Vehicle: 2021 Tesla Model X
- Best Minivan: 2021 Toyota Sienna
- Best Compact SUV: 2021 Subaru Forester
- Best 3-Row Midsize SUV: 2021 Kia Telluride
- Best Full-Size SUV: 2021 GMC Yukon
Which New Cars Depreciate the Fastest?
Two luxury cars and an electric car make up the top three highest depreciating cars. The Maserati Quattroporte depreciates 72.2% over the first five years, followed closely by the BMW 7 Series, which depreciates at 71.3% after five years. The electric Nissan Leaf depreciates 71% after the first five years it is owned.
While a brand new car can be exciting, be sure to walk into ownership knowledgeable about the depreciation your new car will face.
If you decide used cars are a better investment, come visit our used car dealership in Salt Lake City, Utah, or view our online inventory and have a car shipped anywhere in the U.S. If you did decide to purchase a new car, be sure to bring it to our auto shop for quality service to help your new car retain its value as much as possible.