What part of owning a vehicle do you suppose costs the most? Fuel? Taxes and fees? Maintenance? Actually, what costs the most is selling your car, when you take the depreciation hit. Time marches on, miles pile up, and value slips away. On average, vehicles lose almost half their original value within the first three years. The two ways of looking at this figure are depreciation and retained value, i.e., glass half-empty or glass half-full. A vehicle that depreciates 35 percent retains 65 percent of its original value.
Industry-wide average retained value after three years
Of course, not all vehicles depreciate equally. The National Automobile Dealers Association (NADA) tracks trade-in values to gauge which vehicles hold their value best—and worst. The data here depicts the retained values of three-year-old models. It may be just as critical to your buying decision as zero-to-60 times.
Niche models may not be cash cows for the automakers, but they’re excellent opportunities for consumers, particularly if scooped up just before the model gets canceled. Toyota introduced the FJ Cruiser for the 2007 model year, and from 2008 until it was discontinued after 2014, the FJ never broke 15,000 annual sales. Now, the average three-year-old example is worth an astounding 98 percent of its original sale price.
Vehicles that enjoy large sales volumes tend to reward their owners with lower depreciation rates. Unfortunately for buyers of low-volume yet mainstream small cars, especially from discontinued brands, the opposite is also true.