We recently published a post outlining the primary factors that affect depreciation. As a follow-up, we’ll now be taking a look at several frequently asked questions on the same topic:
By How Much Does a Car Depreciate Per Year?
Depreciation per year varies massively from one vehicle make, model and year to the next. However, estimates suggest that the average vehicle depreciates in value by 12% to 15% per year. Depreciation always tends to happen faster during the first few years after a call rolls off the production line.
How Much Value Does a Car Lose in Its First Year?
This is where depreciation tends to be most rapid of all, though again depends on the car in question. Average first-year depreciation varies from 15% to as much as 40%. As this constitutes depreciation of many thousands of pounds, it should be taken into account before buying a new car.
How About After Three Years?
Depreciation begins to slow after the first couple of years, but is still fairly quick during the third year. Most cars will have shed at least 50% of their initial value by the end of the third year, though it can be as little as 20% or as much as 70% in some instances.
Does Initial Purchase Price Affect Depreciation?
It’s often assumed that the more you spend on a new car in the first place, the more likely it is to hold onto its value. In reality, it often turns out to be the exact opposite. Luxury cars and even supercars can plummet in value at the same rate as their conventional counterparts. If not, considerably faster in many instances.
How Long Should I Hold onto My Next New Car?
Value for money means considering how much use you get out of your car for the price you paid for it. If you buy a new car and sell it two years later for 50% less, you’ll be looking at a big loss. If you hold onto it for 10 years and sell it for 70% less than its original purchase price, you’re technically getting much better value for money.
Which Cars Depreciate in Value Slowest?
The answer to this question varies enormously from one point in time to the next. It is therefore advisable to consult the official Reliability Index before shopping for a new car, in order to find something that will hold onto a decent chunk of its value.
Is There Anything I Can Do to Prevent Depreciation?
Sadly, preventing depreciation altogether is out of the question. However, there are steps that can be taken to effectively minimise depreciation with all cars. Examples of which include regular servicing and maintenance, keeping the mileage low and ensuring it remains as pristine as possible, inside and out.
Can Depreciation Be Reversed?
Last but not least, the answer to this question is the same as above. Depreciation cannot be reversed, but it can be slowed with preventative measures. Once something has occurred that could affect the resale the value of a car, there’s not a great deal that can be done about it.
