Released: May 17, 2006

Which cars depreciate fastest?

Source: By Aleksandra Todorova

Everyone loves that new-car smell. But when it comes to getting a deal, going with a set of wheels that have been used for a year or two can be a wise move.

“A lot of people are going that direction,” says Jack Nerad, executive market analyst for Kelley Blue Book, a vehicle pricing and information service. “It’s an astute move: Buy a one- or two- or three-year-old car and have someone else take the first huge depreciation hit.”

It’s no secret that cars start losing value the moment they’re driven off the dealership lot. And if we were to graph out the typical depreciation curve of how much of its value a car loses each year of ownership, it’s typically steeper during the first two or three years and then flattens out, Nerad says. “When you buy a car that’s two or three years old it’s going to depreciate at a much slower rate than it already has, which is a good thing,” he says.

At the same time, anyone who’s considered buying a used car knows that some car models depreciate faster than others. Why? It’s often a matter of perception more than it is a signifier of a car’s actual reliability, explains Brian Moody, road test editor at auto information web site Edmund.com. In other words, if car buyers believe a certain model is reliable — meaning it will run without problems during the time of ownership — it’s likely to retain more of its value than cars believed to break down sooner. And they’re not necessarily worse than the others.

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