Research: Which Cars Suffer From Depreciation the Most?

When looking for a new or used car, it’s always essential to consider how much a car depreciates. An unseen force impacting every car, depreciation, will cause your vehicle to lose value as time goes on. To help you along your car-buying journey, we have prepared a guide on what cars depreciate the most.

Car Depreciation and Residual Value Explained

To better understand why a vehicle loses value over time, familiarizing yourself with a few definitions is good. While these concepts are not exclusive to vehicles, their effects can be strongly felt during car ownership.

Depreciation: A principle that is prevalent in accounting. When applied to cars or other goods, depreciation describes how much value has been lost over time.

Residual Value: If you’ve leased a vehicle, you should be familiar with this term. The residual value goes hand in hand with depreciation, as it describes the expected value of a car at the end of its lease term. By knowing the average annual depreciation of a car, dealerships can come close to giving an accurate residual value.

These Cars Lose Their Value the Quickest

Top 5 Car Brands With the Best Residual Value

If you are looking for cars that depreciate the least, here are the top car brands you should consider. Unsurprisingly, Toyota takes the top spot with its constant ability to deliver long-lasting cars at great prices.

How to Calculate Car Depreciation

Calculating your car’s depreciation is simple. All you need to do is find the fair market value of your car, matched to its options and miles, as best you can. Once you find that number, you subtract it from your purchase price to see how much your car depreciated. The loss in value will be most significant in the first few years of ownership but will eventually level off around the five-year mark.

Additionally, if you want to purchase a new car, you can see its depreciation by checking what older models are going for. MSRPs for new cars don't increase significantly year over year. As such, you can look back two or three model years and compare the fair market value to the cost of a new model.

10 Cars With the Fastest Depreciation

Not all cars depreciate the same. Typically, luxury models will take a more significant hit than regular economy cars. Below, we have highlighted the cars that depreciate the most. Most will look at value after five years when comparing car depreciation figures.

10. BMW X3

With an average five-year depreciation of 66.5%, the BMW X3 is the SUV with the most extreme depreciation in the industry. As with many other BMWs, the luxury compact SUV suffers from a high cost of ownership, exasperating the depreciation.

9. Lincoln MKZ

The only American model to make the list, the Lincoln MKZ offers a relatively affordable price as a luxury sedan. While the MKZ comes with entry-level luxury, the depreciation rate rivals many of its higher-priced competitors. It boasts an average five-year depreciation of 67.1%.

8. Mercedes-Benz S-Class

The pinnacle of luxury cars for many, the Mercedes flagship cannot escape the poor depreciation rate that plagues all luxury cars. Over five years, the S-Class exhibits 67.1% depreciation. Accounting for its nearly six-figure starting price and the multitude of costly options, an S-Class owner can quickly lose over $70,000 in depreciation.

7. Volvo S60

A leader in both safety features and Scandinavian luxury, the Volvo S60 suffers from a five-year 67.8% depreciation rate despite its relatively low cost of ownership.

6. Mercedes-Benz E-Class

The Mercedes luxury mid-sized sedan and coupe suffer from a worse depreciation rate than its bigger brother, the S-Class. The E-Class sports a five-year car depreciation rate of 69.0%.

5. Maserati Ghibli

The Italian mid-sized luxury sedan does not fare any better than its German counterparts. The Ghibli takes fifth place with an average five-year depreciation rate of 69.0%.

4. Audi A6

Following the trend of mid-sized luxury European sedans, the Audi A6 also features a five-year car depreciation rate of 69.0%.

3. Nissan Leaf

The lone electric car on the list, the Nissan Leaf, exhibits an average five-year depreciation rate of 70.1%. With EV technology improving rapidly, the low range offered by old Nissan Leafs is overshadowed by every new electric car on the market today.

2. BMW 5 Series

Compared to its direct competitors, the E-Class and A6, the BMW 5 Series suffers from the worst depreciation at a five-year average of 70.1%.

1. BMW 7 Series

BMW’s flagship model, the BMW 7 Series, takes the top spot for the fastest depreciating cars with a five-year average of 72.6%.

Top 5 Car Brands That Depreciate the Most

While some models can be outliers, some brands have a bad track record for depreciation. Below, we’ve detailed the brands that have the highest depreciation.

• Maserati. The Italian luxury automaker holds the title of the most depreciated car brand, with a five-year average depreciation of 69.0%.
• Volvo. While Volvo may be the most affordable brand on this list, it still suffers from a significant five-year depreciation rate of 66.4%.
• BMW. BMW depreciation is the highest among its German peers, with a five-year average of 66.1%.
• Audi. Following closely behind BMW is Audi, with an average of 64.6% lost over five years.
• Lincoln. America’s luxury brand is not immune to the depreciation of all luxury automotive brands, with 63.6% over five years.

10 Cars With the Slowest Depreciation

While luxury sedans dominate the list of fastest depreciating cars, there is no clear indicator in the list of least depreciating cars. Within this list, you can find a mix of sports cars, rugged SUVs, and economy cars.

10. Chevrolet Camaro

Starting off the list is an American muscle classic, the Camaro, achieving a five-year average depreciation of just 20.2%.

9. Nissan Versa

One of the cheapest new cars anyone could buy. There is little room for the Versa to depreciate value with a five-year rate of 19.9%.

8. Toyota Corolla

A compact car staple, the Corolla takes advantage of Toyota’s great reputation for building reliable and affordable cars with a rate of just 19.9%.

7. Ford Mustang

Another American classic, the Mustang’s huge fanbase keeps the car desirable. Allowing the muscle car to have a five-year car depreciation of 19.4%.

6. Subaru BRZ

This pocket rocket BRZ is the Subaru counterpart to the Toyota 86. It's able to share many of the same parts and reliability benefits. The agile sports coupe achieves a depreciation rate of just 18.2%.

5. Honda Civic

Another excellent compact economy car, the Civic, can leverage its strong reputation to achieve a rate of just 16.3%.

4. Toyota Tacoma

Perhaps the most capable vehicle on this list, the Tacoma pickup truck features a five-year depreciation rate of only 14.9%.

3. Porsche 911

Worldwide acclaim and a diehard fan base prevent any 911 from becoming too cheap. As such, the legendary sports car boasts an average depreciation of 14.6%.

2. Jeep Wrangler Unlimited

The timeless quintessential outdoor SUV, the Jeep Wrangler, boasts a meager depreciation rate of just 8.7%.

1. Jeep Wrangler

The regular two-door version of the Wrangler enjoys even greater value retention. It is the least depreciating car available, with a five-year average depreciation of only 7.3%.

Used Cars Reach Their Lowest Value at Different Ages

Car depreciation is most severe in the first five years of a car’s life. At this point, the depreciation will start to be significantly lower each year. It will eventually find a relative bottom to the value.

Some models may continue to depreciate a lot after five years, while others may find their bottom within the first five years.

Why Do Used Cars Have a Different Value?

Cars will depreciate at a different rate for a multitude of reasons. The starting price is one major factor in how much a car will depreciate. If its base price is already low, there is not much value to lose—especially when compared to a luxury sedan that nears six figures.

Another major factor is reliability and maintenance costs. Most cars will be reliable for the first three to five years. However, past the five-year mark, reliability deficiencies will be exacerbated. If a used car constantly breaks down or its maintenance costs too much, depreciation will be more significant.

Finally, overall desirability plays a big role. There are a few sports cars on the list of least depreciating cars. These vehicles tend to have a cult following, always looking to attain a model. With a lot of demand for these vehicles, prices rarely drop significantly, and in turn, depreciation doesn’t hit as hard. In rare circumstances, a high level of desirability may cause a model to appreciate.

Vehicle Depreciation by Segment

Another thing to consider when discussing car depreciation is how rates vary by segment. As the data shows, larger vehicles will have higher depreciation rates. This can, of course, be explained by luxury vehicles being larger than average. Since luxury vehicles suffer from significant depreciation, it impacts the whole segment.

Five-Year Car Depreciation Across All Vehicle Segments

Below is a table showing the average five-year depreciation of each vehicle segment. As a whole, electric cars and mid-sized SUVs suffer from the most significant depreciation. But midsize trucks and sports cars offer the least amount of depreciation.

Is Your Car Worth More Than You Realize?

The used car market is highly fluid in its pricing. If you see a deal that is too good to be true or a vehicle that doesn’t seem to be hitting the depreciation curve correctly, don’t hesitate to use our tools at EpicVin. We offer a comprehensive report on any prospective used car that will include previous odometer readings, hidden damages, technical data, and more!