Cars Depreciate Most in the First Year of Ownership

The first year of ownership is a crucial time for any car, and it's where the majority of depreciation happens. In fact, according to data, a new car can lose up to 20% of its value in the first year alone.

This is largely due to the initial drop in price after purchase, known as the "new car depreciation." It's a common phenomenon that affects most cars, regardless of make or model.

The good news is that depreciation slows down significantly after the first year, allowing owners to enjoy their vehicles without worrying about a rapid loss of value.

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The cars that depreciate most are a surprising bunch. Luxury cars like the Maserati Quattroporte and BMW 7 Series are at the top of the list, losing nearly two-thirds of their value after five years.

The Maserati Quattroporte is the worst offender, with an average depreciation of 65% and a whopping $90,588 difference from its MSRP. It's not surprising, given its high-performance engine and less-than-excellent long-term reliability.

Other luxury cars like the Maserati Ghibli and BMW 5 Series also experience rapid depreciation, losing 61.3% and 58.8% of their value respectively after five years.

Here's a list of the top 5 cars that depreciate the most, based on data from iSeeCars:

It's worth noting that even some popular luxury brands like Audi and BMW experience significant depreciation, with their cars losing 56.3% and 55.3% of their value respectively after five years.

If you're in the market for a new car, it's essential to consider the long-term costs and potential depreciation of the vehicle. Buying a car with good residual value can save you money in the long run, but it's also essential to research the car's reliability and maintenance costs to ensure you're making a smart investment.

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Luxury cars are notorious for losing their value quickly. Maserati's Quattroporte, for instance, loses nearly two-thirds of its value after five years, with an average depreciation of 65% and an average difference from MSRP of $90,588.

The BMW 7 Series and 5 Series also experience rapid depreciation, losing nearly 60% of their retail price. This means that if you buy a BMW 7 Series for $109,000, you can expect to lose around $65,400 of its value after five years.

The Maserati Ghibli takes the third spot with a depreciation rate of 61%, and the Cadillac Escalade ESV follows closely in fifth place with a 59% depreciation. This is a significant loss in value, especially considering the high prices of these luxury cars.

Here are the top 10 luxury cars that depreciate the most, based on data from 2018:

It's worth noting that while luxury cars depreciate quickly, some models like Porsche and Jaguar can last much longer and even be a good investment in the long run.

Electric vehicles (EVs) are among the fastest depreciating cars, losing approximately 49% of their value over five years.

This rapid depreciation is largely due to limited demand and government incentives encouraging consumers to purchase new electric vehicles.

The Nissan Leaf, for example, lost a staggering 72% of its value after just five years, making it one of the biggest losers in terms of depreciation.

Here's a breakdown of the average 5-year depreciation for different electric vehicle segments:

The Tesla Model S is a prime example of electric vehicle depreciation. It loses an average of 55.5 percent of its value over five years.

This significant drop in value is largely due to the rapid evolution of technology in the electric car industry. What was once the most advanced powertrain tech can quickly become outdated.

The Model S's aging design is another factor contributing to its depreciation. Despite Tesla's efforts to update the tech underneath the surface, the car's appearance remains unchanged.

An average price difference of $60,145 from the Manufacturer's Suggested Retail Price (MSRP) is a stark reminder of the Model S's depreciated value.

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The Nissan Leaf (First-Generation) is a prime example of electric vehicle depreciation. The first-gen Nissan Leaf lost approximately 72% of its value after five years.

This significant loss in value is largely due to the rapid pace of EV technology advancements. The 107-mile range of the first-gen Nissan Leaf was impressive back then, but it quickly became outdated with the arrival of newer, longer-range electric cars.

Cars that are in high demand, have reputable badges, and are renowned for reliability, quality, and safety tend to depreciate the slowest.

The worst depreciators, on the other hand, often have coveted badges, but their exorbitant new prices result in a substantial plummet in value when seeking a second owner.

Mainstream models from well-established brands can suffer from accelerated depreciation if they lack aspirational value in their badges and don't match the performance or quality of 'in-demand' brands.

Cars with high new prices tend to lose a lot of their value over time, making them poor investments for some buyers.

The value of a car is also influenced by its badge, with some brands retaining their value better than others, especially if they're well-known for reliability and quality.

Car depreciation is the difference between the price you've paid for your car and its value when you sell it. If you've bought a car for $100,000 and then sold it for $20,000 in 10 years, your car has depreciated by 80%.

The average age when vehicles reach their lowest residual value is 20-23 years. However, this varies significantly from brand to brand, with Porsche and MINI costing the least when they're 15 years old.

Trucks, truck-based SUVs, and sports cars retain the most value. In contrast, luxury cars like the Maserati Quattroporte lose nearly two-thirds of their value after five years, with an average depreciation of 65%.

Here's a list of the top 10 cars that depreciate the most:

The residual value of a car is an essential measurement when looking to lease a new vehicle. If two models cost the same but are expected to have a different residual value in a few years, your monthly payments will also differ.

If you're looking to buy a car with good residual value, you're in luck - some brands hold their value much better than others. In fact, trucks, truck-based SUVs, and sports cars retain the most value.

Toyota is one such brand that has a strong reputation for reliability and low maintenance costs. Its residual value is 11.3% after 19 years, meaning it still holds 88.7% of its original value. This is a significant advantage over other brands that depreciate faster.

Land Rover is another brand that holds its value well, although its residual value is lower than Toyota's at 6.1% after 21 years. However, its strong brand image and luxurious features make it a desirable choice for many buyers.

BMW is a luxury brand that tends to depreciate more quickly than Toyota or Land Rover. Its residual value is just 6.2% after 21 years, leaving 93.8% of its original value behind. This is likely due to the fact that luxury car buyers often prioritize features and technological improvements over price and maintenance costs.

Here are the top 5 car brands with the best residual value, based on data from over 72 million units analyzed between 2019 and 2022:

The top 5 car brands that depreciate the most are Toyota, Honda, Ford, Chevrolet, and Nissan. These brands hold a significant share of the market, but unfortunately, their vehicles tend to lose value quickly.

Toyota's Corolla model loses up to 60% of its value within the first five years of ownership. This is a staggering amount, considering the Corolla is one of the best-selling cars globally.

Honda's Civic model depreciates by around 50% in the same time frame. The Civic is a popular choice among car buyers, but its resale value is a concern.

Ford's F-150 model loses around 45% of its value within the first five years. The F-150 is a best-seller in the US, but its depreciation rate is higher than expected.

Chevrolet's Silverado model depreciates by around 40% within the first five years. The Silverado is a popular choice among truck buyers, but its resale value is a concern.

Nissan's Altima model loses around 35% of its value within the first five years. The Altima is a mid-size sedan that is known for its reliability, but its depreciation rate is higher than expected.