A new car is likely to be one of the biggest purchases you'll make in your lifetime. As most new cars sell for between £19,000 - £35,000, it’s crucial you make sure you're spending your money wisely.
Picking the wrong car can mean a lifetime of stress and repairs which of course is money down the drain. But there’s another factor that comes into play and it happens as soon as you drive your new set of wheels off the forecourt - depreciation (the difference between what you paid for the car when you bought it and the value of the car when you come to sell it).
It’s no secret that taking a brand-new car off the forecourt reduces its value immediately. You’re losing thousands of pounds simply by driving away, but it might not all be bad news. If you make the right choice, you’ll be able to sell your car on the second-hand car market at a higher price than others.
So, instead of looking at the colour of the vehicle, look at resale value instead and you’ll end up much better off in the long run. While the model of the vehicle plays a role, the make of the car also has a lot of power.
What factors stop a car from depreciating?
Besides the usual factors of mileage, condition and number of owners, what else affects the resale price of vehicles? Below, we list the key considerations when purchasing a new car to give you the best chance of getting a good resale price. Of course, buying a car brand new may not be the best option if you’re worried about depreciation, however, the same data trickles down to used cars. So even if you’re buying used, you can still get an idea of value for money.
Just like most things in life, if it’s more popular, then it commands higher prices. Subsequently, the resale value of an in-demand car even after 3 years of use will be higher than its competitor brands. It is worth bearing in mind that factors such as the colour of the car will also affect the demand for it, for example selecting a popular colour may help its resale value later down the line.
If a car has bad reviews from customers or has known reliability issues, that will hurt its resale value. Car review websites such as AutoExpress and WhatCar usually give in-depth reviews for every model, so it’s important to check everything before you buy.
Similar to reliability, the better made the car is (on the inside too), the higher the price it will command. Cars built with higher quality parts and materials in the interior mean the vehicles hold up better over time. Like a good watch or piece of jewellery, the better something wears and maintains its form, the longer it will last - meaning it’ll be worth more even if it’s old.
Cars with the latest technology which enhances the performance and safety of the car can mean they hold their value more.
Optional add-ons have a varied impact on the value of your vehicle however leather seats and premium sound systems generally command higher prices.
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Which car brands hold the most value?
Below we list examples of some car brands that hold the most value when it comes to reselling the vehicle. However while some brands may have slower depreciation than others, it does also depend on the type of vehicle that you buy so it is worth looking at the depreciation value of a particular model as well as the brand of the vehicle.
The popular British brand is well-known for its luxury 4x4 vehicles and has a number of models sought after in the UK. While the cars are expensive to purchase, they could be a good investment choice as they retain their resale value. According to Webuyanycar and AutoExpress, the 2020 Land Rover Defender is listed as number 1 in the top 10 slow-depreciating cars with a retained value of 74.97% after 3 years of use.
Germany’s most recognisable car brand also holds on to some of the highest values. VW has 2.87 million cars on the road in the UK, which bodes well for its resale value and VW cars are also consistently high performers when looking at reliability. The online used car marketplace Motorway had three of Volkswagen's models, the Volkswagen Transporter, the Volkswagen Up! and the Volkswagen Polo on its top 10 list of cars with the slowest depreciation.
This Japanese brand is known for its high-quality vehicles that hold their value. There are currently 1.59 million Toyota cars on the road in the UK and according to a survey by What Car! Toyota is a leading brand for reliability. Motorway had two of Toyota's models; the Toyota Hilux and the Toyota Yaris, on its top 10 list of cars with the slowest depreciation.
Which car brands depreciate the most?
Below we highlight some examples of car brands that may depreciate quicker than others. As with the car brands that depreciate slowly, it is also down to individual models and not just the car brand so be sure to take this into consideration when looking for a new vehicle.
BMW is extremely popular in the UK and the company has a reputation for vehicles built to a high standard that are very reliable. Despite this, BMW has 2 models listed in Motorway's top 10 cars that have lost the most value in the shortest amount of time. These were the BMW 3 and 5 series. One reason for this could be down to the number of cars on the market and according to the DVLA, there are currently over 600,000 BMW 3 series vehicles on UK roads.
The Mercedes brand is associated with luxury with its vehicles being known for their advanced technology but similarly to BMW it has 2 appearances in Motorway's 10 worse vehicles for holding their value. The cars featured were the Mercedes C Class and Mercedes E Class. Similar to the BMW 5 and 3 series this could be down to the number of these vehicle types on UK roads. Additionally, the cost of maintaining prestige cars such as these could be deterring used car buyers in these tricky economic times.
Another brand that may come as a surprise is Audi, again a very popular brand in the UK with a range of models and a reputation for quality. It also has 2 models on Motorway's list, the Audi A4 and the Audi A5, both executive cars with a large supply in the used UK market. Like the other prestige brands, Mercedes and BMW, the models of the cars are frequently redesigned and upgraded which can lead to the value of the older models dropping.
While purchasing the right brand might not be a foolproof method of guaranteeing a high resale value, it’s a good steer and knowing that it is a desirable car can help to allay any fears. It’s absolutely worth doing some research before your next car purchase and there is an abundance of resources online to help with this, it could mean £1,000s extra in your pocket when it’s time to sell. It may not save you money now, but it's likely to save you money down the line.