May 18, 2014

Car Depreciation Based on Edmunds TCO

Edmunds.com has a measure of depreciation in their True Cost to Own data.   I figured their depreciation values must be based on some real data and should be pretty good figures.   So why not use their numbers to take a look at typical car depreciation?

I looked up the TCO information for several representative midsize sedans from nine different car brands to find the depreciation rates.  For the record I looked at a Toyota Camry, Buick Regal, Chevy Impala, Dodge Charger, Ford Fusion, Mazda Mazda6, Honda Accord, Hyundai Sonata and Nissan Altima.    Here is what I found :



Retained value over 5 year periods:


year 1 year 2 year 3 year 4 year 5
Toyota 82% 71% 62% 55% 47%
Buick 79% 69% 59% 51% 44%
Chevy 80% 70% 60% 52% 44%
Dodge 75% 67% 60% 54% 48%
Ford 89% 77% 67% 58% 50%
Mazda 68% 59% 52% 45% 40%
Honda 82% 71% 62% 54% 47%
Hyundai 77% 67% 58% 51% 44%
Nissan 84% 74% 65% 57% 50%
average 79% 69% 61% 53% 46%
median 80% 70% 60% 54% 47%

The depreciation in the first year in these new models is lower than what people seem to perceive.  The commonly held belief is that a new car "loses half its value' when you drive it off the lot.   But the reality seems to be closer to losing 20% in that first year.   And it takes about 5 years for new cars to lose half their value.


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