The answer is nobody can buy a car and expect to sell it for the same amount or more – provided they are not a celebrity or spend money restoring or fixing up the car.
Generally, a car buyer will drive away with a car, use it over a few years and then trade it in or sell it on a little older and with more miles on the clock.
As our guide describes, depreciation can be based on a huge number of things but the age, mileage and condition of the car are some of the key aspects of depreciation.
How to beat depreciation – buying a car
The first step to reducing the amount you car drops in value the second you drive it off the forecourt is to choose the correct car in the first place.
Different cars have different rates of depreciation depending on their badge, perceived reliability and consumer demand.
For example, a car with from a niche car maker known for its unreliable cars, high servicing costs and ageing looks will instantly lose a huge amount of its value and will be more difficult to sell on at a good price.
However, a car from a respected manufacturer with a strong track record of reliability will be snapped up quickly on the used car market, and for a higher price.
When choosing a new car it is important to look at expected residual values courtesy of CAP or a similar organisation. Taking a look at studies into the most reliable cars and the cost of servicing the car will also help a buyer gauge how much value it will lose.
Other things to look out for in a new car include:
Green cars – Rising running costs mean smaller, cheaper-to-run cars are in demand and will lose less of their value over time than more expensive cars.
Badge loyalty – Some marques will offer lower depreciation than others. For example respected brands such as Ford and Jaguar are always popular on the used car market and as such will have better residual values.
Options – A bright pink car will tend to depreciate quicker than more widely-popular colours because the demand will be lower. This also applies to other options such as interior trim, equipment and accessories. The more popular the options, the better a car will keep its value.
Buying a car – other options
Buying a new car is not always the best method of reducing depreciation. Buyers will expect to pay much less for a used car than a new one, meaning the car loses a chunk of its value as soon as it is driven of the forecourt and becomes a used car.
If a buyer is not bothered by losing the ‘new’ tag then a nearly new car is a quick and easy way to avoid that initial depreciation shock.
A nearly new car – one that is one or two years old – will usually be in good condition (as long as its mileage is reasonable) and will have lost that initially-high price tag.
This can often mean a car is much better value on the nearly-new market than in the new car market.
Owning a car and depreciation
Depreciation occurs throughout a car’s lifetime and is an inevitable aspect of owning a car. However, how much value to car loses depends on a variety of factors that the owner of the car can control.
Depreciation is heavily influenced by the mileage car has on its odometer. This means the less it is driven, the less value the car loses over a period of time.
However, we’re aware the best aspect of car ownership is actually driving it – which means this is an often-unavoidable loss of value.
What a driver can do is keep the car in good condition. A clean, dent- and rust-free car in sparkling condition is more likely to attract a higher price tag than a car that has not been looked after.
By following our maintenance guides and keeping the car rust-free, the interior clean and tidy and mechanics in good condition, hundreds (if not thousands) of pounds can be added to the value of the car.
It is also worth noting smoking in a car or carrying pets in it will affect the interior and could reduce the value of the car.
A final thing to note when owning a car is that a car with a full service history is more likely to fetch a higher price when it comes to selling it on.