Depreciation: the cars that hold their value

Most cars lose more than half their value in three years. But which motors hold their value best and worst?

Depreciation is the biggest cost of owning a car.

Generally speaking, almost all real assets are affected by depreciation (with the notable exception of homes, classic cars, antiques and other collectables). This is because the passage of time produces wear and tear that makes older items less useful and reliable and, therefore, less valuable.

Depreciation tends to be steepest in the first year of a vehicle's life, with the majority of the total loss of value occurring in the first three years of ownership. The steeper the depreciation rate, the more you lose out financially in the early years.

Different cars depreciate at different rates. At one end of the depreciation scale, cars in the worst categories lose up to 90% of their value just 36 months after sale. At the opposite end of this spectrum, top-end cars lose around half 50% of their value over the same period.

Although depreciation varies widely across makes and models, you can expect a typical car to lose around 40% of its value in the first year and 60% after three years.

Using data kindly supplied by CAP Automotive, we can today reveal the cars that hold their value and those that see it plummet across 14 different car types.

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The cars that depreciate the most

* Depreciation equals resale value after three years, divided by purchase price (including delivery and Road Fund Licence)

What immediately sticks out is the shocking loss of value experienced by owners of electric cars made by French microcar maker Aixam. Aixam's electric hatchback loses just under 90% of its value over 36 months, making it practically worthless when it comes to sell. Aixam also comes bottom in the convertible category, with its model losing almost three-quarters of its value in three years.

What also stands out from this table is how poorly French cars perform, taking bottom spot in five of these 14 different vehicle categories. Even 'solid' brands such as Vauxhall and Volvo don't do well, with three bottom places between them. Japanese brands Lexus (Toyota) and Infiniti (Nissan) take last place in the large executive and SUV (sports utility vehicle) categories.

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The cars that hold their value

The above table shows the best cars for depreciation: those vehicles which hold their value best in each of our 14 categories.

Again, what stands out is how steep depreciation is for electric cars, the best of which (from Vauxhall) loses almost two-thirds of its value in 36 months. At the other end of the scale, Porsches tend to hold their value excellently, with depreciation rates as low as 43.6% over three years.

Indeed, German marques come out very well in this survey overall, with Audi, BMW, Mercedes-Benz and Volkswagen all making vehicles that hold their values well. Vauxhall came top in two categories - MPV (multi-purpose vehicle) and electric - but these categories held only two and eight vehicles respectively, so the competition wasn't exactly tough.

For the record, German-made cars took top honours in 10 of 14 categories, once again cementing their reputation as reliable and sought-after vehicles.

Quality counts

What this survey clearly shows is that, when it comes to buying a car, quality costs, but it also counts in the long run. Cars that hold their values well lose you less money and are easier to sell, making them better buys.

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