Buying a brand-new car may seem like an attractive prospect. After, all the vehicle will be spotless and you’ll be able to enjoy the latest on-board technology, comforts and safety features. What’s more, as the car is new, it is unlikely to require expensive repairs or maintenance work anytime soon.
Despite the numerous benefits, there is one major caveat that comes with purchasing new: depreciation. No matter which make or model you opt for, your new car will begin to lose value from the point of purchase onwards.
Of course, this will also apply to used cars, although the rate of depreciation will be less severe, as second-hand prices are lower than brand-new.
Whether you are planning to buy a new or second-hand car – or thinking about the best time to sell your car, estimating the rate of deprecation can help you make an informed decision.
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How do you calculate car depreciation?
Our Car Depreciation Calculator is simple to use and can help you estimate your vehicle’s depreciation over the first five years of its life. Simply enter your vehicle’s brand-new value below.
Please note: The figure calculated should be viewed as a guideline only and may not accurately reflect your vehicle’s actual rate of depreciation. Our used car value calculator is based on an average value deprecation of 19% at Year 1, 31% at Year 2, 42% at Year 3, 51% at Year 4 – and 60% at Year 5.
Find out how much your car category depreciates
| Sector | 1 Year | 2 Year | 3 Year | 4 Year | 5 Year | 6 Year | 7 Year | 8 Year | 9 Year | 10 Year | +10 Year | Average Price |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 4x4 | £30,281 | £26,307 | £19,713 | £16,617 | £14,111 | £12,756 | £10,731 | £8,857 | £6,578 | £5,450 | £2,680 | £10,635 |
| City Car | £5,290 | £4,966 | £4,126 | £3,372 | £2,972 | £2,546 | £2,060 | £1,659 | £1,413 | £1,033 | £554 | £1,868 |
| Convertible | £24,550 | £20,084 | £17,711 | £15,714 | £12,938 | £11,515 | £9,500 | £8,206 | £6,259 | £5,427 | £3,046 | £6,559 |
| Executive | £23,802 | £21,780 | £18,386 | £15,524 | £12,811 | £11,063 | £9,314 | £7,484 | £5,573 | £4,536 | £2,008 | £8,225 |
| Lower Medium | £16,331 | £13,346 | £10,955 | £8,444 | £6,677 | £5,454 | £4,413 | £3,358 | £2,555 | £1,919 | £773 | £3,532 |
| Mini MPV | £7,586 | £6,848 | £6,655 | £8,367 | £6,681 | £4,416 | £3,489 | £2,352 | £1,771 | £1,197 | £445 | £2,415 |
| MPV | £10,455 | £9,595 | £9,774 | £8,105 | £7,007 | £6,374 | £5,040 | £3,242 | £2,465 | £1,676 | £734 | £3,424 |
| Small Executive | £20,223 | £16,723 | £13,649 | £11,649 | £10,332 | £8,391 | £6,709 | £5,598 | £4,675 | £3,539 | £1,306 | £5,167 |
| Sports | £30,893 | £28,761 | £26,086 | £19,894 | £15,233 | £13,856 | £13,156 | £12,453 | £9,588 | £9,957 | £5,944 | £11,050 |
| Supercar | £132,490 | £112,840 | £108,873 | £96,717 | £80,629 | £75,635 | £64,281 | £54,586 | £49,297 | £43,633 | £41,386 | £61,493 |
| Supermini | £9,346 | £8,004 | £6,398 | £5,491 | £4,560 | £3,913 | £3,255 | £2,467 | £1,933 | £1,334 | £517 | £2,643 |
| Upper Medium | £14,507 | £13,443 | £11,384 | £9,084 | £6,805 | £4,894 | £3,819 | £2,879 | £2,064 | £1,386 | £559 | £3,507 |
| Average Price | £20,495 | £16,750 | £12,487 | £10,222 | £8,242 | £6,939 | £5,739 | £4,498 | £3,495 | £2,822 | £1,388 | £4,952 |
How much is my car worth after 3 years?
Different classifications of vehicle depreciate at different rates, some of which depreciate as much as 50% after three years of ownership, while others can lose value at a rate closer to 10% of their original sale price each year.
While these rates of depreciation are based on age alone, there are a number of additional factors that could also affect a car’s value during the first three years of ownership. Here are a few additional things to bear in mind if you’re looking to retain as much value as possible:
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Mileage
It stands to reason that the more miles a car has travelled, the more likely it is to incur general wear and tear, and therefore be worth less at resale. According to a 2017 study by the Department for Transport, the average annual mileage travelled per person in the UK is 7,800. Cars that have travelled over the average per year will likely be worth a bit less at resale, while vehicles that have travelled under the average will likely be worth a bit more.
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Service history
It’s fair to say that when purchasing a used car, it’s reassuring to know as much about the vehicle’s history as possible; it gives you more confidence that the car won’t have any undetected or underlying issues and shows that the car has been serviced regularly and on time.
Oppositely, a car with only partial or no service history will likely be worth less than an identical car with a full service history. This is simply because it adds an element of ‘risk’ to the buyer, and also means that the resale value of the car will drop for them too.
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Number of owners
The number of previous owners a vehicle has had can also affect its resale value, even in as short a time as three years, should the car change hands during that period. This is worth bearing in mind when shopping for a used car with the intention of purchasing. Even if the car is only a few years old, if it has changed hands a number of times during those years, it is likely worth less than an identical car with only one previous owner.
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Condition
Maintaining the condition of your vehicle is vital should you wish to hold on to as much value as possible for when you come to sell the car. This could include everything from having an annual manufacturer service, such as an AUDI specialist car service for owners of Audi vehicles. Also, simply driving the car with due care and attention to avoid any scuffs and scratches to the paintwork, or chips and dents in the alloys.
Furthermore, maintaining the condition of the car’s engine and general functionality is crucial, should you wish to get a good price when you come to resell. Having necessary repairs as issues arise, such as replacing worn brake pads and tyres, keeping the car regularly topped-up with oil, antifreeze and coolant and having any odd sounds or shudders emitting from the vehicle inspected by an expert, are all great examples of how to take good care of your car.
How much does a car depreciate per year?
Cars start to depreciate the moment they are sold and driven away from the forecourt. Although depreciation rates vary depending on the car’s type, make and model, it will typically lose anything from 15-35% of its initial value in the first year – and up to 50% over the first three years.
Why do cars lose more value in the first year?
By purchasing a new car and driving it away, you have agreed to pay the dealer its retail value. Should you decide to return it after driving a short distance, it will only be worth the wholesale value. Depreciation is steepest during the first year but will subsequently slow down.
Car value after 10 years
After experiencing sharp depreciation over the first three years, most cars will then steadily lose value up until around the 10-year mark. Then, the car will be worth just a small fraction of its brand-new value, regardless of condition or mileage - unless it is a rare and desirable model.
Used car supply and demand vs depreciation
The available supply of used cars against demand can also affect used car prices. For instance, demand (and prices) for used cars spiked in 2021 and far exceeded supply, as the UK emerged from Coronavirus restrictions and have remained high since.
What is Total Cost of Ownership (TCO)?
Total Cost of Ownership refers to the original purchase price of a vehicle, subtracted from its future value (depreciation), along with any taxation and running costs. When choosing a used car, you may consider TCO to decide which option is the most economical over your planned ownership period.
Depreciation and negative equity
Due to depreciation, some car owners can find themselves in negative equity. In simple terms, this means owing more money on a vehicle than its present value. This can arise due to the vehicle’s age, mileage, condition – or value depreciation over time.
Frequently Asked Questions
Some of the slowest depreciating cars on the UK market (based on their three-year value retention rate) include Porsche’s 911 GT3 (81%), Macan (74%) and Taycan Cross Turismo (72%) – and the Range Rover and Range Rover Evoque (73%).
You may also be surprised to learn that your choice of car colour can affect second-hand value – and the optimal colour differs depending on the make, model and car type. Electric cars are also often more resistant to depreciation than their petrol or diesel counterparts.
Some of the fastest depreciating cars on the UK market (based on three-year value retention rate) include the Peugeot 508 (38%), Lexus LS (37%), Audi A8 (34%), Fiat Tipo (33%) – and the Maserati Quattroporte (just 32%).
There are numerous ways in which you can mitigate the effects of depreciation, such as keeping on top of maintenance and repairs, having your vehicle serviced at the manufacturer-recommended intervals – and keeping the mileage as low as you can.
Before selling the vehicle, take care of any bumps and scratches, as these can impact your final car valuation. For more detailed insights, check out our extensive guide on how to beat depreciation.
Research from Edmunds – a US-based car buyer and seller revealed that a brand-new car typically loses around 9% of its value the moment it is driven away from the forecourt.
Thankfully, the rate of deprecation stabilises after that! A typical new car will depreciate by around 19% over the first year, although this figure will vary according to factors such as the make, model and mileage.
However, more severe damage that compromises the structure will cause further value loss on top of any previous depreciation, even if the vehicle is subsequently repaired at a reputable garage. In some instances, it is more economically viable to sell your damaged car, rather than put it through expensive repairs that would fail to raise the value to its pre-accident figure.
If you don’t know the brand-new price of your vehicle, you should be able to find this out from the original dealer or online. First, record the VIN (Vehicle Identification Number) – this is usually stamped on the chassis of the vehicle. The original dealership name is also often printed here.
Once you have identified the original dealership, contact them - and enquire about the MSRP (Manufacturer’s Suggested Retail Price). You will need to provide them with the VIN number, in addition to key information about the vehicle, such as its make, model, year of manufacture and transmission type.
If you cannot locate the original dealer, you may still be able to find the vehicle’s brand-new price by searching automotive review sites for information on the relevant make and model.