Luxury cars have a heavy depreciation because owners are likely to change them when they become obsolete and used car buyers don't want to pay a high premium for an outdated model. In addition, its maintenance is costly and the high cost of ownership affects the resale value. Another reason why luxury cars depreciate much faster than regular cars is due to reliability and maintenance issues. We rank the fastest depreciating luxury cars based on the amount of value they lose in the first five years of ownership.
Yes, luxury cars depreciate faster and there are several reasons behind this as well. These cars are generally owned by wealthy people who can afford a new car and will not buy an old and obsolete model. After that, most cars continue to depreciate 15-25% per year, but some cars lose value much faster than others. This is another factor that contributes greatly to the sharp depreciation of luxury vehicles: used buyers must be able to purchase these cars at a price where they can maintain and repair them economically.
The sharp depreciation of luxury vehicles is due to a combination of factors. Firstly, wealthy people who can afford these cars are more likely to upgrade their vehicles when they become obsolete, meaning there is an excess of used luxury cars around three years old, which puts downward pressure on values. Secondly, luxury cars are rented frequently, which means that the duration of ownership is lower than average and a higher turnover in the used market. Thirdly, buyers must be able to purchase these cars at a price where they can maintain and repair them economically.
Finally, you're paying an exaggerated price for prestige and luxury (especially when you consider how good basic new cars are in terms of current features). Understanding vehicle depreciation is an important factor in helping buyers of new and used cars make an informed decision to purchase cars from the dealership. Here are 10 luxury cars with steeper depreciation curves than any of their counterparts, measured by the amount of value they lose over the course of the first five years of ownership. iSeeCars ranked the depreciation of mid-size luxury cars relative to the segment average, which is 53.6 percent.
iSeeCars also ranked the depreciation of small compact and subcompact cars relative to the segment average, which is 36.3 percent. Overall, luxury cars depreciate faster than regular cars due to their high cost of ownership, maintenance issues, and frequent turnover in the used market. Knowing this information can help buyers make an informed decision when purchasing a car from a dealership.