A Guide to Car Depreciation

By Joe Markzynski
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Find out how car depreciation works, the three biggest factors that contribute and how you can slow it down.

Car depreciation is a painful yet inevitable factor dreaded by all new car buyers. Find out more about below:

What is car depreciation?

Car depreciation occurs the very second a car is driven away from a car dealership. New cars immediately decrease in value, with the value of the car ebbing away in the months and years afterwards.

There isn’t one set average for how much cars depreciate in value, but it’s generally agreed that after three years, many can have lost around 50% of their purchase price.

The total depreciation that your car suffers is the difference between what you paid for it and what you’d make for it if you sold it later down the line.

Depreciation is caused primarily because once an owner leaves with the car, the car ceases to be ‘new’. This alone means a hit on value, but there are also three other factors.

What factors affect car depreciation?

Running costs

While you might find a bargainous car – either new or old – if it was originally an expensive model, other costs will remain expensive. Getting the car serviced, for example, or needing to replace parts, will stay expensive. Be sure to consider this upon finding a bargain, as it only adds up to a great deal if you can afford the running costs to keep the car in top condition.

Price

Of course, car depreciation is dependent on the initial value of the vehicle. A 50% depreciation on a £8,000 car is of course far less money than the same depreciation on a £25,000 car. So, whilst percentages are useful to look at, applying that value to any car you might have in mind to buy as new will be more useful.

Quality

Pre-internet, a car buyer was relatively limited as to what they could find out about a new car.

However, there is a now a plethora of guidance and information out there, all of which helps buyers to make a more informed decision. This is great news for buyers, as seller must be a lot more up-front and honest about the quality of the car. This ranges from its past service history to how well the previous owner has taken care of the car on a day-to-day basis, not to mention how much other people are paying for that car.

There is also the quality of the manufacturer and brands themselves to consider, though it’s worth noting that rules and regulations now mean that the vast majority of models are safe to drive these days.

Let’s now take a look at which cars have depreciated the most and the least in 2017.

The worst depreciating cars

Compiled by WhatCar in the Autumn of 2017, the worst depreciating cars currently on the market are as follows.

- Renault Zoe i-Dynamique Nav Quick Charge, with a depreciation after 3 years of 84.0%.

- Nissan Leaf Visia, with a depreciation after 3 years of 80.6%.

- Alfa Romeo Mito 1.3 JTDM-2, with a depreciation after 3 years of 79.3%.

- Vauxhall Astra GTC 1.6 CDTi 16V ecoTEC SRi, with a depreciation after 3 years of 76.7%.

- Fiat Punto 1.4 Pop+, with a depreciation after 3 years of 76.8%.

- Peugeot 308 1.6 Blue HDi 100 Active, with a depreciation after 3 years of 74.7%.

- Peugeot 508 2.0 BlueHDi 150 GT Line, with a depreciation after 3 years of 74.4%.

- Alfa Romeo Giulietta 2.0 JTDM-2, with a depreciation after 3 years of 74.1%.

- Citroën C4 1.2 Puretech Edition, with a depreciation after 3 years of 74.0%.

- Skoda Rapid 1.4 TDI CR 90 SE L, with a depreciation after 3 years of 74.0%.

Affecting factors on these cars include cramped interiors, unsupportive seats, excessive amounts of noise when driving and unattractive interiors.

Be aware that on the flip-side of this is that buying a car that is just three years old, rather than brand new, can get you a bargain, especially if it’s been well-maintained.

Slowing down your car’s depreciation

While it is true that there is simply nothing to be done about a new car that suddenly becomes a second-hand car losing value, there are things you can do to slow that process down.

Keep the car in good condition. That goes for both externally and internally. When you come to sell, the first impression of the car will come from it’s aesthetic. This means that a car that is mark, scratch and scuff free will be worth more at sale.

Same goes for keeping the car ‘healthy’; have it serviced regularly, fix any issues efficiently and with a reputable company, and don’t put any undue strain on elements like the clutch or the brakes. Having a comprehensive and detailed record of all MOTs and services can also serve you well, as you can prove unequivocally that the car has been taken care of. Try too, if you can, to keep the mileage down.

Don’t forget that affordable running costs make taking care of a car easier, and that choosing a popular car could well mean that is sells faster, and for a less painful eventually depreciation one day. ?

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