Car depreciation is a source of intense consternation when purchasing a new or used vehicle. All cars lose their value, and this process begins sharply. The average new car loses approximately 10 percent of its value as soon as it’s driven off the dealer’s lot. At the end of the first year, the car will lose an additional 10 percent on average – and often much more.
Vehicles from an unappealing brand or with few options will feel the biggest impact, depreciating as much as half their purchase price in the first one or two years. If the manufacturer is retiring a vehicle, then the value can drop like a lead weight. This loss in value is relevant to any used car buyer.
What’s more is that depreciation doesn’t necessarily slow much after the first year. New cars continue to depreciate for another four more years, averaging a value loss of 15-25 percent each year. By the time it is five years old, the average car has lost 60 percent of its retail value.
If you’re looking to purchase a vehicle soon, it pays to know the market. Below is a list of 15 vehicles that are currently losing their value the fastest and why.
1. Hyundai Genesis
The Hyundai Genesis is at the top of the list of vehicles that depreciate the most and quickest. The Genesis competes with other luxury cars, but lacks the brand appeal of an established luxury vehicle. Its price tag is comparable to Mercedes or Lexus models, but it will lose 38 percent of its purchase value within the first 12 months. This is a drawback if buying brand new, but could be considered a benefit if buying used. Car buyers looking for luxury can buy a 1-year-old Genesis for $16k less than a brand new one (which starts at around $52k).
2. Smart ForTwo
The Smart ForTwo is another vehicle whose value free falls in the first year of ownership. This is likely because, although it gets plenty of publicity for being a green car, the benefits of driving it seem to end there. The gas mileage is formidable but the interior is claustrophobic and cramped, the two-speed transmission is obnoxious to most drivers and though it’s touted as safe for its compact size, most car buyers would seem to prefer a more highly safety-rated, mid-sized competitor. The Smart ForTwo is worth 36 percent less than what its owner paid for it (approximately $14k), after only one year.
3. Chevrolet Impala
Chevy’s Impala is a well-known and popular car. So why does it depreciate so much so fast? For one, it’s part of Chevy’s fleet sales lineup. This means thousands of these cars face the destiny of being company cars or rentals. In short: they are oversupplied. There is nothing unique, rare or irresistibly attractive about them and with the amount of Impalas on the market (and the demand for midsize sedans shrinking,) the value of this popular Chevy model has plummeted. Last year’s model (which started at $27k) is worth 33.5 percent less today.
4. GMC Yukon
The rise in gas prices has halted for the most part and the appeal of gas-guzzling SUVs has returned. The new redesigned GMC Yukon may have suffered in its redesign, or else new car buyers are doing the 5-year cost-to-own research as seeing that a brand new Yukon ($47k) will cost them upwards of $70k just to own for the first five years. Whatever the reason, these SUVs are depreciating nearly 33 percent in just the first year.
5. Lincoln MKS
The Lincoln MKS is soon facing obsolescence. It has been a slow-selling model that appealed to those car buyers seeking luxury under $50k. Because it was never a standout top-seller, it’s now worth 30.4 percent less than what its owner paid for it last year. Like the Genesis, this is a thorn in the side of the person buying an MKS brand new, but a used car buyer’s best-case scenario.
6. Mini Cooper
The Mini Cooper is an attractive compact vehicle with a loyal band of followers but it depreciates more than any other model in its class. Last year the typical cost of a brand new Mini Cooper was $20k. For any owners with a 2015 Mini sitting in their garage, it’s now worth 29.3 percent less. When considering a car like this, residual value matters because depreciation is the largest single cost of owning a car.
7. Jaguar XK
The Jaguar XK, like the Lincoln MKS above, is now an obsolete model. Jaguar has replaced it with the newer, flashier F-type model. Last year’s Jaguar XKs were driven off the dealership lot for around $84.5k. They’ve since lost just under 30 percent of that value, depreciating 29.2 percent in the last 12 months. This make and model of Jaguar would be suited on a list of cars that are best purchased used.
8. Nissan Rogue SV
Introduced as a sporty alternative to more square and practical Toyota and Honda models, the Rogue appealed to loyal Nissan owners. However, after a redesign, the value of this vehicle slipped more than 5 percent. Like the Nissan Leaf, the Rogue is just that, a rogue on this list, with an above-average depreciation rate.
9. Mercedes S-Class
The Mercedes S-Class is a vehicle renowned for being more advanced than its competitors are. The typical off-the-lot cost is above $70k, but depreciation is the most remarkable feature a new owner will experience.
Last year’s models are now worth 32.4 percent less. This makes the S-Class one of Mercedes’ used car bargains since they are so technologically equipped when they’re new, to purchase one used at a fraction of the sticker price would not be an unwise buy.
10. BMW 328i
Luxury cars are prone to depreciating more quickly than roadrunners people buy and drive hard and often. The BMW 328i is an example too of a popular luxury vehicle that’s leased in large numbers, over-supplied like Chevy’s Impala, and destined to depreciate even faster.
11. Lexus ES 350
Lexus remains a carmaker with a valued reputation. Lexus owners tend to gravitate toward smooth, sleek design, luxury, speed and handling that excels. The ES 350 is perhaps Lexus’ more ‘boring’ model, and looks average and unremarkable on the outside. This could be why it depreciates $9.1k in its first year of ownership.
12. Nissan Leaf
The Nissan Leaf is Nissan’s great success in the realm of electric vehicles. Yet it suffers one of the worst drops in value of any vehicle on this list. The abundance of leased Leafs hurts its resale value, as does the nearly $7.5k in tax credits, and more in dealer incentives or discounts. All of these mark offs from the total cost filter down when the car is resold.
13. Dodge Charger
Cars.com shows the total 5-year cost to own a 2015 Dodge Charger at just over $41k. The original total cost of this vehicle was $26k, and within the first year, its value will depreciate more than $8k (upwards of 45 percent). Why is this? Most models are unremarkable, with no noteworthy add-on features. The depreciation rate could also be due to the more popular, attractive and upgradable competitors on the market.
14. Chevrolet Camaro
Chevy’s sporty, sharp Camaro is reported as losing 39 percent of its value in the first year. This is one of highest depreciation rates on this list. The average 5-year total cost to own a 2015 is about $40k. It’s $23.7k off the lot and loses a little more than $8k in the first year of ownership. This is an American- made sports car, like the Mustang, SS or Corvette, which has a following of worshippers that lines of luxury cars also have. For this reason, perhaps, the Camaro depreciates like a luxury car.
15. Kia Cadenza
The Kia Cadenza is another top contender in the list of swiftly depreciating vehicles. At a rate of 38 percent, this car is a bargain to buy lightly used, and difficulty to justify buying brand new. Kia’s pseudo-luxury large sedan has yet to win over buyers. It’s also not the only Kia on this list.