As the owner of a high-end foreign car, or any vehicle really, you’ve likely heard the term depreciation thrown about. This is a term to define what happens at that moment when you drive a new car off the lot: it instantly loses 20% of its value. However, some cars hold their value better than others. The motor vehicles that depreciate the most usually are European cars like Jaguar and Porsche, or, at the other end of the spectrum, cheap sub-compact cars, points out Investopedia.
Factors for Depreciation
When factoring in the true cost of your car, don’t forget depreciation. There are several other factors that come into play here, aside from just driving it off the lot. The #1 factor is high mileage, followed closely behind by poor quality and design, the cost of repairs and even public opinion. Sometimes, a car is hyped so much by the manufacturers, only to fall flat with consumer interest once it hits the market. Also, high levels of competition in the auto industry can play a role as well. With so many redesigns of the same make and model coming out every few years, some cars just can’t hold their value because those many iterations are just not selling as they should.
Another big reason for high depreciation is market over-saturation. If you buy a car designed for fleet service, your hopes of a high resale value are dashed. If the aftermarket is littered with your make and model, you won’t get the money you want for it. It’s just a simple case of supply and demand.
Luxury Models with High Depreciation Rates
If you’re the owner of a high-end luxury car, you’ll want to take notice if yours comes with a high rate of depreciation.
- Jaguar S-Type: The Jaguar S is a great car, there’s no disputing that. However, some feel the design is dated. This is manifesting itself in the resale value, which is lower than other models of its kind.
- Mercedes-Benz S-Class: Who would think this make and model would suffer the most in depreciation? After all, it’s a beautiful and most of all respected car. However, it’s losing more than 80% of its value over five years and none of the auto industry experts can quite figure out why.
- Range Rover: This timeless SUV is plagued by poor electronics, bringing the value of a new model at $60,000 down to under $6,000.
- Cadillac Escalade: This large luxury SUV has the gas tank to match, so when gas prices go up, no one wants to invest in a gas guzzler. Many consumers have realized they don’t need to shell out $80,000 for a new Escalade; they can get a low-mileage version for under $30,000.
Looking to trade in your vehicle every five years? Stick to neutral colors like black, white, silver or dark blue. Because the biggest plunge in value happens within the first five years, if you intend to hold onto your vehicle for longer than that, you don’t really have to worry about depreciation.
You can’t predict how depreciation will play out with any given vehicle. You’re rolling the dice whenever you buy a car. It’s more important to make your purchasing decision based on your budget, driving needs, and style.
Contact Hance’s European in Dallas
Your European car has unique needs for maintenance and repairs. Instead of taking your car to the dealership and paying top dollar, come to Hance’s European in Dallas for exceptional service. Contact us at 214-761-659 to schedule your appointment.