Most of us have heard that the moment you drive that new vehicle off the dealer lot, it depreciates or drops in value. We rarely think of that in such a moment but it’s true. All cars depreciate. In fact, some vehicles depreciate far more than others. How does car depreciation work? Which cars hold their value the longest?
How cars depreciate over time
Any asset of value gets worn through everyday use and that includes cars. Vehicles lose value each year due to daily use and aging. As Kelley Blue Book explains, they depreciate. Depreciation is used more for accounting purposes though. It’s not a detailed or even accurate assessment of the true condition of the vehicle.
How quickly a vehicle depreciates depends on the make and model along with the year it was produced. The greatest depreciation against a vehicle’s market value happens in the first year with most cars losing as much as 20 percent of their original value. Within the first five years, on average, most vehicles lose around 60 percent of their original value.
Why does that matter? It will matter when you go to sell or trade in that car. By then, you may just find that your vehicle is worth significantly less than it was new.
Cars with better-than-average depreciation
The folks at Kelley Blue Book have several decades of experience in determining the market value of vehicles. For their 2020 Best Resale Value Awards, they selected Subaru as the top overall brand in 2020 that offers the best resale value for their vehicles. That doesn’t include luxury vehicles. In 2020, the brand with the best luxury resale value was Porsche.
In addition to the brands, KBB also named the top vehicles they predict will retain their value better than the other 2020 models out on the markets.
It’s no surprise that there are three Subarus in the best resale value SUV category. KBB projected that the Crosstrek, Forester, and Outback would all retain their resale value better than their peers. They also included two Porsches with the Macan and Cayenne. The Lexus GX and LX, Jeep Wrangler (4-Door), Volvo XC40, GMC Yukon, and the Toyota Highlander.
When it came to the cars category, KBB gave awards to Subaru Impreza and Legacy, Lexus ES and GS, and the Chevrolet Corvette. The Porsche Panamera and Toyota’s Avalon also made the list.
KBB also gave awards in the category of best EVs, minivans, and trucks. There are no Subarus or Porsches on this list but there is the Tesla Model X. There’s also the Honda Odyssey, Toyota Prius Prime, and the Chevy Silverado 1500 HD. The Toyota Tacoma and Tundra also made the list.
Historical vehicles that hold their resale value
When it comes to vehicles that have been around a few years and how they’ve maintained their resale value, the folks at iSeeCars took a look at over seven million vehicles both new and used. They came up with the top 10 vehicles that held their resale value well for over five years.
Subaru, unsurprisingly, made the list at No. 10 with its Impreza. Toyota took the third, fourth, and fifth positions on the list with the Tacoma, Tundra, and 4Runner, respectively. Two Nissans, the GT-R and the Frontier, made the list along with Porsche 911 and the Honda Ridgeline.
The top two spots? Both taken by Jeep. The Jeep Wrangler got the No. 2 spot, according to AutoGuide.com, for its durability, ruggedness, and “iconic design.” Jeep is timeless with removable doors and roof. Jeep Wrangler is usually ready for anything.
In the top spot was the Jeep Wrangler Unlimited. In 2007, Jeep produced its first factory-built four-door Wrangler Unlimited. With four doors and a spacious back seat, it became an instant hit. Its popularity remains today, reflected in its resale value. The Jeep Wrangler Unlimited has only shed 30 percent of its original price after five years.