When it comes to buying a new car, the first question you’ll likely ask yourself is whether to actually buy new or go second hand.
For most people, the answer will be second hand, sheerly for cost-based reasons and value for money.
The bang for your buck between new and old cars is significant – £10,000 can get you a used Nissan Juke, Toyota GT86 or Citroen C3 that’s only a handful of years old. Take that £10,000 in the new car market, and you’ll barely be able to afford even the cheapest models.
The primary driver behind all of this is depreciation, but how significant is it and which cars suffer the most?
What’s the Deal with Depreciation?
Simply put, depreciation is the difference between a car’s value when it’s bought and when it’s sold. Cars typically lose most of their value in their first three years, hence why used cars represent much better value. For new cars, depreciation is significant and will typically sit at 15-35% in the first year, moving to 50-60% by year three.
Of course, not every car will depreciate at the same rate. The more in-demand or desirable the model, the less depreciation it will face – the Range Rover Evoque, Porsche Cayenne and Audi e-tron are just a few examples, all retaining 65% or more of their value after three years.
On the flip side, the less popular, wackier designs will often face the harshest depreciation figures. Earlier in the year, This Is Money produced a top ten list on both the best and worst depreciators – and the following make up the top three heaviest depreciating models.
The Top Three
1. Fiat Doblo XL Combi
Those of us who remember the curiously shaped Multipla will know that Fiat isn’t afraid to create some “interesting” looking vehicles across the product line. Of course, “interesting” isn’t to everyone’s tastes, meaning unusual looking vehicles can be hit the hardest.
The Doblo Combi is part of Fiat’s professional range, designed to be ideal for both carrying goods and people. Its rather boxy appearance and relatively unknown reputation in the market has meant its original price tag of just over £26,000 has shrunk to just under £7,000 in only three years. That’s a drop of nearly 74% in just 36 months.
2. Fiat Tipo
One wonders what Fiat’s thoughts must be to see two of its models be the biggest depreciators in the market. Its range of Tipo hatchbacks and station wagons aren’t actually too bad to look at and offer a very solid family solution, however, the “Easy Plus” edition of the hatchback has dropped 72.5% from its £20,500 initial sale value.
Now available at only £5,650 only three years on, you’ll actually find the Tipo on a number of “Best Used Cars for Under £10,000” lists. Unfortunately for Fiat, the Doblo Combi is nowhere to be seen.
3. Maserati Quattroporte
Moving up the chain, many luxury models like those mentioned above tend to hold their value well, however, Maserati’s four-door luxury saloon – the Quattroporte, has not shared the same fate. Despite its obvious Maserati styling and charisma, not to mention a very good engine and great performance, the Quattroporte manages to lose a staggering amount of value over the first 36-month period of ownership.
New: a very lofty £74,000. Three years down the line: a rather more manageable £20,500. A £53,500 saving, with the Quattroporte retaining only around 28% of its value.
Depreciation, to some extent, is unavoidable – every new car will lose a chunk of its value, but there are some ways to manage the pain.
This Is Money’s top ten list of lowest depreciating vehicles features ten options all of which retain 60-70% of their value in the three-year period. If you’re buying relatively new, it makes sense to bear something like this in mind.
If you’re buying very new, you can also get guaranteed asset protection (GAP) insurance to help protect yourself against potential losses. Companies like Direct Gap provide a form of cover that essentially freezes the value of your car from when you bought it, making up the difference between its current value and the sum you paid in the case of theft or an accident. You can find more on GAP here to decide whether it’s worth it for you.
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