For most owners, depreciation is the single biggest cost of driving — larger even than fuel. Yet it's invisible until the day you sell. Understanding how value evaporates over time lets you time purchases and sales intelligently.
The steep first year
The moment you drive off, the car is worth less — often 20% below what you paid. The steepest drop happens first because a new car becomes a used car instantly. This is why buying new and reselling quickly is usually the worst financial path.
The steady slide
After the initial hit, depreciation settles to a steadier annual percentage. Age, mileage and condition drive it. High supply and low demand accelerate it, which is why unpopular colours and options can hurt resale.
Depreciation in the ownership decision
Samshing it into fuel plus insurance gives the real running cost. Buying 2–3 years old lets someone else absorb the first-year drop, while the ongoing rate from there is gentler — a lever many savvy buyers pull.
Frequently asked questions
Typically about 20% in the first year and roughly 10% per year afterwards. A $30,000 car is worth around $24,000 after a year and about $19,400 after three.
Reliable, high-demand models with strong resale values — often certain pickup trucks, SUVs and Japanese cars. Electrics and luxury cars often depreciate faster.
Before major scheduled maintenance, in a strong used market, and while it's still under warranty. Depreciation also slows with age, so very old cars lose less absolute value.