When buying a new car, most of us always take care of it and look after it (doing maintenance) in order to retain most of the vehicle’s value for as long as possible. Despite all the work, eventually, all cars lose their value. However, some cars tend to maintain value better than others. We can look at the pre-used car market to see which vehicles are losing their value faster and which are retaining the best value over the years.
Let’s start with a new mainstream in the automotive industry – EVs. Electric vehicles are a bit like shooting stars – they start off bright but don’t hold onto their sparkle, losing about half their value in the first 5 years. If you are looking for a less depreciating vehicle, choosing hybrids, sports cars, or the “good old” trucks would be better. If you prefer to buy an EV – make sure to check its history by using a VIN decoder tool. This way you will be sure that you are not buying a “lemon”.
In the last few pandemic/post-pandemic years, cars have surprisingly held their value (compared to what they did back in 2019 or earlier). The pandemic and, as a result, issues with the logistic channels put brakes on new car production. As a result, most buyers were forced to look at a pre-used vehicle marker. Before the pandemic, a typical car would lose about half its value in 5 years. During the pandemic, some crazy market maneuvers led to used (5 years) cars sometimes costing more than new ones. Now, the market is returning to the normal phase, and after 5 years, most vehicles are down to around 38.8%.
The folks at carVertical did some serious analysis of the pre-used vehicle market. They sifted through sales of over 1.1 million cars from November 2022 to October 2023 to figure out 5-year depreciation rates. And what they found is pretty interesting – cars just aren’t depreciating like they used to.
It’s actually great news for car owners these days. Every used car is holding its value better than 5 years ago. But it’s a different story across the board. While trucks and hybrids are on the winning side, electric vehicles are not so much. Hybrids are about 12 percentage points ahead in holding their value, which means you’re looking at a few extra thousand dollars in your pocket after five years. As mentioned before, it’s crucial to tools like a VIN decoder before purchasing a pre-used vehicle.
Electric vehicles are facing the biggest hit in terms of value. They depreciate over 10 percentage points more than the average (for all vehicles, it’s 38.8 %), sitting at 49.1 %. Even SUVs are losing less value than most EVs, reaching 41.2 %.
We can see a noteworthy trend between electric vehicles and hybrids in the pre-used car market. Hybrids still get hit in price depreciation despite their fuel efficiency, but most buyers are worried about the state of the batteries after 5 years and 100K+ miles on the odometer. At the same time, electric vehicles are even in the worst group of depreciating. The main reason is the same as with hybrids – buyers are afraid that batteries won’t last long, and vehicles might need costly battery replacement in the near future. Despite these numbers, it’s interesting to see that most car manufacturers move away from gasoline-driven and hybrid cars to electric vehicles.
First, let’s have a look at the TOP 10 cars that hold their value tight for 5 years.
The iconic Porsche 911 coupe is like a superstar shining above all others – this legendary sports car dropped just 9.3 % in value over the last 5 years, showing its strong demand in the used car market. Other notable names that are good at holding their value include Porsches, Toyotas, Subarus, and Chevrolets. We can see a clear trend here – sports cars, small SUVs, and fuel-efficient economy vehicles hold value the best.
Sports cars really hold their own in terms of value. We saw a huge demand for these ‘fun’ cars during the pandemic, and that trend hasn’t slowed down. On the other hand, luxury cars are like high fashion, losing their value quickly by 48.1 % in 5 years. That’s a lot more than the average car when compared to non-luxury cars. Don’t worry too much if you’re planning to keep your car for a long time. But if you like to change luxury cars quite often, prepare for a hit in your wallet. Let’s look at the top 10 most depreciated cars in 5 years:
Electric vehicles are a bit of a puzzle. They’re relatively new on the scene, so tracking their long-term value is tough. But as we can see, the older models are depreciating more than the average used car. Electric cars tend to lose their value more because of the initial incentives that lower their price, and buyers are concerned about battery replacement costs down the line. It will probably continue higher depreciation until they don’t need big discounts to sell and people are more confident about their long-term costs. Here is the ranking of the TOP 5 EVs in depreciation in 5 years:
When it comes to a hybrid car market, there is a positive impact on maintaining the values. They’ve improved by nearly 20 percentage points in the past 4 years, thanks to higher fuel prices and people getting more comfortable with the technology. This has expanded the market for hybrids and made it more available for more people – Toyota’s long history with hybrids has given them a solid customer base. Japanese Honda and South Korean Hyundai are also working hard to make a name for them selves in the hybrid market. Let’s look at the top 10 most hybrid models that kept most of their value after 5 years.
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