Depreciation accounts for nearly 40% of the average annual cost of operating a vehicle, according to a report last month from AAA. After five years, the vehicles that depreciate least are sport utility vehicles and pickups, while electric vehicles and luxury sedans depreciate most.
The average new vehicle loses just over half its value (50.2%) after five years, according to a new study by auto research firm and car search engine iSeeCars.com. Researchers combed through 4.3 million new and used car transactions to identify the vehicles that lost or held the most value after five years.
Phong Ly, CEO of iSeeCars, remarked:
For consumers who buy new vehicles and sell them around the five-year mark, choosing a model that retains the most value is a smart economic decision.
For the study, researchers analyzed sales of 3.6 million new model year 2013 vehicles sold in 2013 and more than 750,000 used model year 2013 vehicles sold between January and September of this year.
Here are the 10 vehicles that depreciate the least in five years.
- Jeep Wrangler Unlimited: average five-year depreciation of 27.3%
- Jeep Wrangler: average of 27.3%
- Toyota Tacoma: average of 29.5%
- Toyota Tundra: average of 37.1%
- Nissan Frontier: average of 37.8%
- Toyota 4Runner: average of 38.1%
- Chevrolet Silverado 1500: average of 39.7%
- GMC Sierra 1500: average of 39.9%
- Subaru Impreza: average of 42.3%
- Ram Pickup 1500: average of 42.7%
Note that the only passenger car on the list is the Subaru Impreza. Ly points out that the all-wheel-drive Impreza is among the most affordable vehicles available with that feature and that Subaru vehicles are known for their durability.
The 10 vehicles that depreciated most over the five-year period were:
- Nissan Leaf: average of 71.1%
- Chevrolet Volt: average of 71.2%
- BMW 7-Series: average of 71.1%
- Mercedes-Benz S-Class: average of 69.9%
- Ford Fusion Energi: average of 69.4%
- BMW 6-Series: average of 68.3%
- BMW 5-Series: average of 67.3%
- Mercedes-Benz E-Class: average of 67.2%
- Jaguar XJL: average of 66.4%
- Chevrolet Impala: average of 66.2%
Electric vehicles take three of the top five places in this ranking. Ly explains:
Government incentives play a role in the steep depreciation of electric and plug-in hybrid vehicles as their resale value is based off their lower effective post-incentive sticker price.
Six of the vehicles that depreciate fastest are luxury models. These high-priced vehicles face two big issues, according to Ly:
Luxury vehicles depreciate at a higher rate because they are often leased, which leads to a surplus of three-year-old off-lease versions of these vehicles that lowers the demand for the older models. While these luxury models quickly lose a lot of their value, they still don’t drop in price enough to attract used car shoppers who may be reluctant to pay the premium for high-end trims and technological features.
For example, a 2013 BMW 7-Series carried a manufacturer’s suggested retail price (MSRP) ranging from $73,600 to $140,700. Even depreciated by 71%, the used price ranges from $21,344 to $40,803. A new 2018 Subaru Impreza carries a starting MSRP of $18,595. Not exactly equivalent rides, but you get the idea.
The full iSeeCars study includes data on the highest and lowest depreciating SUVs, pickups and alternative fuel vehicles, as well as a look at depreciation rates for several states.