Your guide to car depreciation in 2023

What is car depreciation?

Car depreciation refers to the decline in value that occurs over time. This reduction in value is primarily influenced by factors such as age, mileage, condition, market demand, and the overall reputation of the make and model.

Depreciation is often expressed as a percentage of the car’s original purchase price. The rate of depreciation can vary widely depending on various factors, including the brand, model, and market conditions. Generally, new cars experience their highest depreciation in the first few years of ownership.

As the car gets older and accumulates more mileage, its value continues to decrease. Resale value is typically lower than the original purchase price due to wear and tear, technological advancements, and the availability of newer models.

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What affects a car’s depreciation rate?

There are several factors that affect a car’s depreciation over its lifetime, including:

• Mileage
• Reliability
• Number of owners
• General condition
• Service history
• Length of warranty
• Desirability
• Size
• Fuel economy

Considering these factors when buying or selling a car can help you make informed decisions and understand the potential depreciation rate.

Tips for minimising depreciation of your car

To minimise depreciation and maximise the value of your car for longer, consider the following tips:

• Control mileage – keep your mileage low to reduce the chance of wear and tear
• Prompt repairs – this will ensure that any damaged parts won’t get damaged further
• Opt for nearly new or used – avoid steep depreciation by purchasing a nearly new or used car
• Skip unnecessary modifications – spoilers or wide wheels that can decrease resale value for those who aren’t interested in such modifications
• Sell your car at the right time – capitalise on seasonal demand by selling convertibles in summer and 4x4s in winter
• Choose popular colours – stick to popular colours as unique shades may deter potential buyers
• Consider leasing – leasing eliminates concerns about depreciation since it’s factored into monthly payments and you don’t end up selling the car in the end anyway
• Research resale values – before purchasing, research depreciation rates of older models and similar vehicles so you have the most information as possible
• Optimise options – select desirable features for the car type, such as metallic paint for executive cars or built-in sat nav for mainstream cars
• Maintain full service history – keep all car documents and service records in one place to provide peace of mind to potential buyers.
• Sell before replacement model – sell your car well before the arrival of its replacement model in showrooms.

How does usage affect your car’s depreciation?

Understanding the impact of running your car is crucial when considering depreciation. The mileage you put on your car plays a significant role. A car driven 10,000 miles per year will depreciate more than one driven only 1,000 miles annually due to increased wear and tear.

Maintenance and repairs also influence depreciation. A well-maintained car retains its value better than one that is neglected. Additionally, fuel economy matters. Cars with better fuel mileage depreciate at a slower rate compared to those with poor fuel efficiency. Ultimately, the money you spend on running your car directly affects its depreciation.

In general, cars driven more frequently depreciate faster. Cars used for short distances or only on weekends tend to have higher resale values than those driven long distances or on a daily basis.

How much does a car depreciate per 1000 miles in the UK?

The depreciation per 1000 miles can vary significantly based on the car’s make and model. On average, a vehicle can depreciate by approximately £0.67 per mile travelled.

Worst cars for depreciation

Cars that tend to depreciate the fastest include luxury cars, sports cars, and certain models from specific manufacturers.

Luxury cars

Luxury cars are known for experiencing steep depreciation. Some examples of luxury cars that depreciate quickly are:

• BMW 7 Series
• Mercedes-Benz S-Class
• Audi A8
• Jaguar XJ

Sports cars

Sports cars typically depreciate faster due to their high initial cost and limited market appeal. Some examples of sports cars with rapid depreciation are:

• Chevrolet Camaro
• Ford Mustang
• Nissan 370Z

Specific brand models

Certain models from various manufacturers may depreciate faster than others. Here are a few examples:

• Fiat 500 – This compact car experiences rapid depreciation due to its small size and abundance in the used car market.

Sell my Fiat 500

• Land Rover Discovery Sport – This luxury SUV can depreciate quickly due to reliability concerns and high maintenance costs.

Sell my Land Rover Discovery

• Chrysler 200 – The Chrysler 200 Sedan depreciates rapidly due to its discontinuation and perceived lower quality compared to competitors.

It’s important to note that depreciation rates can vary depending on factors such as mileage, condition, demand, and the overall state of the used car market.

Best cars for depreciation

Cars that tend to depreciate the slowest or hold their value well include certain segments such as electric vehicles (EVs), high-end luxury cars, and certain models from specific manufacturers. Here is a breakdown:

Electric vehicles (EVs)

EVs have shown a trend of depreciating slower compared to traditional internal combustion engine vehicles. This is due to factors such as increasing demand, government incentives, and advancements in EV technology. Some examples of EVs that hold their value well are:

• Tesla Model S
• Nissan Leaf
• Chevrolet Bolt EV
• BMW i3

High-end luxury cars

Certain high-end luxury cars have better resale value compared to mainstream models due to their exclusivity and desirability. Examples of luxury cars that depreciate slower include:

• Porsche 911
• Mercedes-Benz G-Class
• Audi R8
• Bentley Continental GT

Specific models from manufacturers

Some models from specific manufacturers have a reputation for holding their value well. Here are a few examples:

• Subaru WRX – known for its performance and all-wheel drive capability, the Subaru WRX retains its value better than many other compact sports sedans.
• Toyota Land Cruiser – the Toyota Land Cruiser is renowned for its durability and off-road capabilities, contributing to its strong resale value.

Sell my Toyota

• Honda Civic – the Honda Civic has a reputation for reliability and retains its value due to its wide appeal and strong brand reputation.

Sell my Honda Civic