By the dollars: Fastest Depreciating Vehicles

[Gecko]

Right now automakers may be wooing prospective car shoppers with enticing ads for new cars, but a recent study by iSeeCars.com found that buying a used 1-year-old model over a new one can translate into substantial consumer savings — from $6.8K up to $37.6K.



“Everybody knows that new cars depreciate the most in the first year and that different cars have different depreciation rates, but we wanted to see which used cars experienced the largest price drops compared to their new models,” said Phong Ly, iSeeCars.com CEO.

When comparing the price of new cars with the price of 1-year-old cars with average miles, iSeeCars.com’s data analysts found that the average first-year price difference was 16.9 percent. By comparison, the top 10 cars with the largest price differences ranged from 29.2 percent (Jaguar XK) to 38.2 percent (Hyundai Genesis) in loss of value after just one year of ownership.

For consumers shopping for a Hyundai Genesis, the car with the biggest percentage loss in value, choosing a 1-year-old used Genesis over a brand new one can lead to potential savings of $16.6K. Buyers looking for a Chevrolet Impala, the most popular car on the top 10 list, can potentially save $10.8K by making a similar choice.

“There are numerous reasons for the wide range of differences, but the most prominent factors that increase the price difference between a car’s new and lightly used models are lower popularity compared to its competitors, a brand with reported dependability issues or expensive repairs, or having just undergone a redesign,” said Ly.

Consumers may be surprised at the number of luxury cars on the list, but luxury models often have higher initial depreciation rates than non-luxury cars. Many luxury cars are leased for the first few years by individuals or companies for fleet or management use, which increases the number of used cars in the marketplace, causing a further decline in first-year depreciation.

“While some luxury models tend to lose a lot of their value early on, they still don’t drop enough in price to be affordable to many consumers to buy used, so they aren’t even on the consideration list for those shoppers,” said Ly. “Shoppers who can afford to own or lease those cars would generally prefer to buy the new model or rollover their luxury leased car for a lease on the latest and greatest model, making the used model less desirable to those shoppers.”

Of course, price isn’t the only factor in buying a car, so consumers would be wise to consider all the reasons that are important to them before making a final decision. New cars typically come with a better warranty than used cars and even certified pre-owned cars, which may bring some car shoppers peace of mind.

Additionally, even with a substantial cost savings, some consumers may still opt for the new model based on where the car is in its design lifecycle. “If you buy a 1-year-old car of a model that has been fully redesigned for the current model year, such as the 2015 Hyundai Genesis, then you’re buying the previous generation of the car and it will already look dated compared to the new model,” Ly said. Car shoppers would also face a similar situation when buying the 2013 models of either the Chevrolet Impala or the Mercedes-Benz S-Class, because both were redesigned for the 2014 model year.

“Understanding the difference in price between a new car and a slightly used model is a powerful tool for consumers in their decision-making process. It’s often possible to buy a car that is one model year old with low miles and get all the features available in the brand new model, so it makes good sense to seriously consider this option,” said Ly.

*Methodology of the Study

iSeeCars.com analyzed approximately 15.7 million cars for sale from January 1, 2014 to December 5, 2014. Used cars were defined as vehicles from the 2013-2014 model years with mileage within 20 percent of 13,476, the average annual miles traveled in the U.S., according to the Department of Transportation. The average asking prices of these 1-year-old cars and of the new 2014 model (and 2015 model, when available) were compared. The difference in price for each car was expressed as a percentage of the new model average price and used to identify the 10 cars with the largest price differences across the first year.

 

[mmcartalk]

I would suspect that almost any American-market Mitsubishi product would also have high depreciation, given the company's shaky future here. Management says they are not going anywhere, but we heard the same thing from Daihatsu, Isuzu, and Suzuki.

 

[Och]

I would suspect that almost any American-market Mitsubishi product would also have high depreciation, given the company's shaky future here. Management says they are not going anywhere, but we heard the same thing from Daihatsu, Isuzu, and Suzuki.

True on the Suzuki. My daughter's Grand Vitara was totalled last year, and we've got back less than 50% of what we paid for it from the insurance company, after exactly two years of ownership - and we got it with a big discount to begin with.

At least with cars like Mitsubishi that depreciation is well deserved, as most of their products are pretty much junk. With Suzuki it's rather unfortunate, because they did make very decent vehicles but just coun't gain any traction in the US market. They are pretty popular on the other side of the pond though - I've spent a lot of time in Russia, Belarus and Ukraine between November and March and Suzuki is doing very well there.

 

[mikeavelli]

Not sure how the Acura rlx missed this or the Hyundai equus.

 

[mmcartalk]

Not sure how the Acura rlx missed this or the Hyundai equus.

The most likely reason is that demand is higher for these cars used than new....and, of course, not selling many of them new also limits their supply as used cars. I've seen a number posts over the years, for example, from those interested in a used RL that wouldn't buy one new. I myself (as you know), for several reasons, was a fan of the 2Gen RL, but probably wouldn't have bought one new, simply because it's more than I typically care to spend on a new car. So, of course, is the new RLX.

 

[CIF]

Lol at the Top 5 specifically. Overall this paints an interesting picture at how some models have are highly overpriced in terms of MSRP.

 

[mmcartalk]

Here are the fastest-depreciating vehicles of all LOL

 

[Bulldog 1]

Predictable results. Not one Toyota or Lexus on the list.
Bloated MSRP on American and German cars (wow, new Impala ?) is no surprise.

 

[mmcartalk]

Predictable results. Not one Toyota or Lexus on the list.
Bloated MSRP on American and German cars (wow, new Impala ?) is no surprise.

The new Impala's road manners are stunning. Gone is the old rental-car appliance feel. In fact, on the road test, Consumer Reports gave it a 95 out of 100.....the same range they give to vehicles like the LS460 and Tesla Model S.

 

[IS-SV]

I avoid all these cars on list like the plague. Depreciation is the biggest single auto cost element, and many cars (and some domestic brands) have what I consider to be unacceptable rates of depreciation. I'm frequently surprised how casual car buyers don't take this into account.

 

[mikeavelli]

#1. Hyundai Genesis.. Which is already sold at huge discounts. The CL car of the decade lol

S class gets a pass IMO since it costs so much.

 

[mmcartalk]

#1. Hyundai Genesis.. Which is already sold at huge discounts. The CL car of the decade lol

S class gets a pass IMO since it costs so much.

The new Genesis is stunning in many ways....especially the 5.0L version (too bad we don't get the 5.0 AWD in the U.S.). As I see it, though, if it indeed depreciates that quickly, that is gong to make used ones a bargain as well.

I'm not saying I disagree on the S-Class, but I'm just not sure kind of a pass you are talking about, just based on initial price. Are you saying that because one usually has to spend 100K or more on this car when new, that depreciation is not an issue? Or is it because that, because of the higher initial price, used ones would probably save potential buyers even more money than with a used Genesis?

Having done full-reviews on both the 5.0L RWD Genesis and the new V6 Impala, I found them both excellent (and I'm the type of person that can find a lot to complain about in a car if it's there), and I honestly think the reason they (so far) rank high on the depreciation scale is that, with both being only year old, word hasn't really gotten out yet among the public that both are vastly better then the vehicles they replace.....especially the Impala, which replaced a clear rental-grade sedan with a virtual world-class one. Consumer Reports also thinks very highly of both the new Genesis and Impala....it got 95 out of 100 on CR's road test, unheard of for any previous Chevy sedan. So, in other words, what I think is happening is that both are still riding on the images of previous models, which, yes, IMO deserve that kind of depreciation....I wouldn't have bought either of the old versions.

 

[Och]

I'm not saying I disagree on the S-Class, but I'm just not sure kind of a pass you are talking about, just based on initial price. Are you saying that because one usually has to spend 100K or more on this car when new, that depreciation is not an issue? Or is it because that, because of the higher initial price, used ones would probably save potential buyers even more money than with a used Genesis?

One of the reasons the S class depreciates so fast is because its repair costs are obscene. Once that trick air suspension goes, you'll need to take a second mortgage.

 

[mmcartalk]

One of the reasons the S class depreciates so fast is because its repair costs are obscene. Once that trick air suspension goes, you'll need to take a second mortgage.

That suspension, on the latest version, is made even more complex by the fact that a camera in front of the car scans the road surface in front of it for bumps, heaves, potholes, etc.....and sends a signal to a computer to quickly adjust the suspension/shock firmness as needed. That's one more reason, among many, why it rides so smoothly.

 

[mikeavelli]

Well Mike I know the new Genesis is well done but IMO its not stunning. Unfortunately Hyundai still fights a negative image even as they have vastly improved product and have luxury vehicles like the Genesis and Equus. Their stock is also I think at a 5 year low. The image hurts resale.

The S-Class are all over 100k, so if they depreciate 10%, thats 10k vs say a car that sells at 30k and depreciates at 10% which is 3k. It will always depreciate faster, not to mention they sell quite a few so there is ample used cars. The AMG S class models depreciate even more!

 

[IS-SV]

Huge discounts and high depreciation go hand and hand, it's also obvious with cars that are sold heavily to rental and fleet buyers, again heavily discounted. I sure as heck am not touching them, (other than to rent them that is).

I too give S class a bit of a "pass", due to its price range. A lot of Porsches fall into high depreciation range for similar reasons but don't show on this simple chart probably due to low volume. It's (S class) still the sales and market leader in this class of large lux sedan, and the most desirable and preferred way to be driven around in many developed nations including China.

 

[mmcartalk]

I too give S class a bit of a "pass", due to its price range. A lot of Porsches fall into high depreciation range for similar reasons but don't show on this simple chart probably due to low volume. It's (S class) still the sales and market leader in this class of large lux sedan, and the most desirable and preferred way to be driven around in many developed nations including China.

Most persons buying Porsches probably realize they are getting a low-volume product and may not be overly-concerned with depreciation. Demand is sometimes there, though, for used Boxster models, particularly among those who can't afford higher-line Porsche models.

 

[IS-SV]

Most persons buying Porsches probably realize they are getting a low-volume product and may not be overly-concerned with depreciation. Demand is sometimes there, though, for used Boxster models, particularly among those who can't afford higher-line Porsche models.

Exactly same as S class, a robust CPO car business is always in play. People buying $ 100k cars often have financial resources.

 

[mmcartalk]

Well Mike I know the new Genesis is well done but IMO its not stunning.

It's not stunning compared to some cars that cost triple-digit prices but, compared to the last-generation Genesis (which wasn't terribly impressed with), it's an enormous improvement. Such is also the case with the Impala. You're correct, though, that both are suffering from an outdated image problem (as Hyundai itself did for some years even after their products vastly improved after 2000).

Unfortunately Hyundai still fights a negative image even as they have vastly improved product and have luxury vehicles like the Genesis and Equus. Their stock is also I think at a 5 year low. The image hurts resale.

Yes, I agree there. No arguments. It also hurts leasing because monthly lease payments have to be high enough to cover projected depreciation. That's why Hyundai doesn't push leasing in the same way that BMW and the Germans do.

And, to be honest, the Equus (I've driven it), though competitive in some ways with the LS460, and nice-looking inside and out, does not quite equal the LS in refinement...the drivetrain is not as silky-smooth, and noise isolation does not seem to be quite as effective. But it also sells for some 10-15K less brand new.

The S-Class are all over 100k, so if they depreciate 10%, thats 10k vs say a car that sells at 30k and depreciates at 10% which is 3k. It will always depreciate faster, not to mention they sell quite a few so there is ample used cars.


The AMG S class models depreciate even more!

I think the earlier postings about the absurdly expensive service/repairs on S-Class models also at least partially explains it. Also, although Mercedes obviously is not responsible for what Lindsay Lohan did with her drug and alcohol stupidity, her wrecking two SL65 AMGs while driving buzzed may not help the image any, even though she was driving SLs, not the regular S-class sedans or coupes.

 

[mikeavelli]

Yeah I think depreciation due to low desirability is in the case of the Genesis and some of the others and there is depreciation due to the car having a very high price ala S-class...the two shouldn't be confused but these lists rarely go into true depth....