Your Guide to Car Depreciation

Depreciation is the difference in a vehicle’s value when you buy it compared to when you sell it.

There are a number of factors that contribute to depreciation, but typically a car will lose the most value in the first year – anywhere up to around 40%. The minute your new car is driven off the forecourt it immediately loses value. However, the rate of depreciation slows with age.

Things to be aware of:

Mileage

The more miles your vehicle has done, the less it will be worth. Typically, the higher the mileage on a vehicle, the more often repairs will need to be done, and the more expensive the maintenance costs will be. Cars will lower mileage are much more desirable and therefore worth the most.

Servicing

Servicing your car regularly according to the manufacturer’s recommendations will ensure your vehicle is kept in good condition and will prevent unnecessary issues. Keep a comprehensive service record; buyer’s like to have peace of mind that their new vehicle has been well looked after.

Running costs

The more fuel efficient a vehicle is, the higher in demand it will be. Running costs are the biggest expense on a car, so the higher the miles per gallon, the higher the retained value will be. It’s also worth noting the payable road tax amount. The lower this is, the more desirable your vehicle will be.

Modifications

Avoid adding less sought after modifications to your car, such as spoilers, lowered body, wide wheels or flared wheel arches. While having your car sprayed with an extreme shade of pink may appeal to you, the popular car colours are the ones that will reduce the depreciation rate.

General condition

We’re talking about the interior and exterior here. Any damage or general dirtiness will contribution to a reduced vehicle value. Make sure you keep it fresh and tidy on the outside, and clean and sparkling on the outside! Book your car in for regular valets to ensure the build-up of day to day dirt and germs doesn’t become unmanageable (or expensive!). Look after your car, and repair any damage as soon as possible.

Brand reputation

One of the main reasons people look for certain cars when buying a new vehicle is due to the brand. Some brand names hold a reputation that ensures desirability. It’s always doing your research before buying a vehicle to check depreciation rates on similar makes and models.

Sell at the right time of year

Bear in mind the time of year when selling your vehicle. For example, no one will be looking to buy a convertible in the middle of winter, and 4x4s aren’t overly popular in the hot summer months.