4 September 2023

As the cost-of-living crisis has got us all watching our money, you’ll want to make sure you are spending wisely when it comes to purchasing a car as some cars can depreciate quicker than others. The AA say that depreciation is ‘a driver’s biggest cost after fuel purchase’.

Car Depreciation

Is the difference between the amount you paid when you bought your vehicle and the amount it is now worth. The deprecation can be different dependant on your individual vehicle, however Motorway say that ‘a car has an average depreciation rate of 10-15% a year, although, since that figure is an average, it does not necessarily describe the real-terms changes in value a car might see in any given year.’

Depreciation is affected by different factors including…

• Mileage,
• Brand reputation,
• Warranty and service history,
• Size and cost,
• Fuel economy and emissions - cheaper to runs cars,
• Number of previous owners,
• Reliability of the car model is it known for breaking down,
• Desirability,
• Road tax,
• Safety - widespread faults and manufacturer recalls for the model of car,
• Compliance with ULEZ,
• General condition.

Tips to Minimise Depreciation

• Keep mileage low,
• Keep car in good condition – well looked after,
• Maintain car by keeping up to date with services and repairs, as well as keeping all service records,
• Avoid making modifications to your vehicle,
• Stick to popular colours,
• Sell at the right time,
• Do your research on your car before buying.

As we are looking at ways to minimise depreciation, here are some of the cars that can lose you the most money when buying new:

• BMW 8 series,
• Peugeot e -208,
• Vauxhall Corse Electric,
• Maserati Ghibli,
• DS 9,
• Nissan Leaf,
• Smart ForFour EQ,
• Mini Electric Convertible,
• Maserati Quattroporte,
• Renault Zoe.

There are other cars that are more likely to depreciate when buying used such as Jaguar I-Pace, Volkswagen ID.3, Tesla Model 3, Audi e-tron, Hyundai ix35, Tesla Model S, Vauxhall Mokka, Audi SQ5, Mini Paceman, and Land Rover Discovery 4.

Also, when minimising depreciation, these are some cars that are holding their value in 2023:

• Land Rover Defender,
• Porsche Macan,
• Volkswagen Multivan,
• Volkswagen ID.Buzz
• Range Rover Evoque,
• MG4 EV.

Also, a way to help minimise the impact depreciation has on you financially if your car is written off is to protect it with GAP Insurance. GAP (Guaranteed Asset Protection) offers a financial safety net if your vehicle is written off or stolen. It’s designed to cover the difference* between what you paid for the vehicle and what your insurer will pay out following a claim.

Interested in GAP insurance and want to find out more? Why not take a look at what we offer here.


Written by: Amy Johnson

*Up to a maximum amount.

**Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.

Sources
https://www.theaa.com/car-buying/depreciation
https://motorway.co.uk/sell-my-car/guides/car-depreciation-guide
https://www.moneyhelper.org.uk/en/everyday-money/buying-and-running-a-car/car-depreciation-explained
https://elmodrive.com/electric-cars/depreciation/
https://www.whatcar.com/news/the-10-fastest-depreciating-cars/n17027#2
https://www.thisismoney.co.uk/money/cars/article-11829913/The-used-cars-falling-price-most.html
https://www.autoexpress.co.uk/best-cars/107122/car-depreciation-the-cars-that-hold-their-value-best