Do luxury cars depreciate faster?

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owners are likely to change them when they become obsolete and used car buyers don't want to pay a high premium for an outdated model.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 rich people and the one who can afford a new car will surely not buy the 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.

So now you know why luxury cars depreciate so quickly. There is not one but many reasons behind it and it is difficult to say that a particular reason affects this the most. If you're an expert car buyer, you know that buying an “almost new” car is the best value for money. Just because your used luxury car has lost 50, 60, or 70% of its value since it was new, doesn't mean that running costs have dropped (in fact, running costs could worsen once you get out of the warranty period).

The sharp depreciation is one of the reasons you can often buy used and old luxury cars for pennies on the dollar (compared to the original purchase price) years later. However, having benefited (and suffered) from cheap and heavily depreciated luxury vehicles on several occasions, we felt qualified to analyze the pros and cons of this type of car purchase. Whether or not this inflated premium is worth the extra money depends on your perception of value, considering how many people buy new luxury cars, there are clearly a lot of us out there who see the extra cost being worth it. This means that there is often an excess of used luxury cars around three years old, which puts downward pressure on values.

According to that Cartelligent article, luxury cars are rented frequently, which means that the duration of ownership is lower than average and a higher turnover in the used market. 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. 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). 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 ranked the depreciation of small compact and subcompact cars relative to the segment average, which is 36.3 percent.

Shari Venturelli
Shari Venturelli

Professional beer trailblazer. Total communicator. Freelance web expert. Wannabe coffee practitioner. Hardcore sushi maven. Passionate food guru.