Car depreciation is something that none of us is excited about. Seeing your life’s investment tumbling down in terms of value isn’t a good sight at all. Car depreciation is the net loss in an automobile’s market value, over the time. On an average and depending upon the model type, once you drive your new car off the lot, it instantly loses about 15-20 per cent of its value.
This is why those who usually keep their cars for 5 years or less, are advised to must consider depreciation as an important factor while purchasing a new model. Similarly, buyers who purchase models for the long haul are spared from thinking about its plunging market value, since resale value doesn’t matter much to them by that time. However, depreciation remains an important variable in car buying/reselling at the moment, and through this article we will cover the 5 car models that depreciate the most.
#1- Luxury models – less popular premium sedans
These cars are the ones whose market value depreciates quickly, despite being top-notch in both quality and price tag. Examples include Volvo S60, Jaguar XFK and Volkswagen Phaeton, amongst others. Within a couple of years, these cars can see their market valuation dropping by up to 30 per cent of their original price.
#2- Luxury models – popular models
This class of premium cars includes those that are seen quite often on the road, such as Audi A6, Mercedes-Benz E-Class and BMW 5 Series, etc. The top reason for this is the change in their owner’s taste, since they aren’t as expensive as the above-mentioned “less popular premium sedan” and are replaced with a new model in the market. These cars sell in good numbers and cater to high-heeled clientèle, who have a propensity towards refreshing their garages frequently.
#3- Outdated models
Cars like Hyundai Accent, Ford Ikon and Maruti Suzuki Esteem were the best sellers of their time, but lost steam when new players like Hyundai Verna and Volkswagen Vento entered the market. It is advisable to not invest in dated technologies, since the resale value of these cars tanks down when a new and more advanced model enters the market.
#3- Manufacturer type
Home-grown players are more likely to stand the competition heat than those who are new in the market. This would be best understood by the example of Maruti Suzuki Swift and Skoda Fabia. Technically, both firms are great and the Czech company might be even better, considering it being under the able leadership of auto giant Volkswagen. However, Maruti Suzuki’s cars have the best resale value in the market, whereas Skoda models have the worst. Reason- the former is home-grown, a well established name and makes the car for masses, whereas Skoda is relatively new and doesn’t enjoy a solid fan base in India like Maruti Suzuki.
#5- Utility Vehicles
Most utility vehicles have low resale value, since they aren’t usually kept well. Also, their maintenance and fuel consumption patterns get worse with every year down the line.
