How Much Do Cars Depreciate Each Year Australia

Advice

Depreciation heroes – almost-new bargains of 2020

Fancy a lightly-used car for minimal outlay? Here are the cars with the worst depreciation – and thus the best bargain potential for used car shoppers

12 Oct 2020

Sure, buying a car brand-new has its perks. Things like the knowledge that nobody else's bum has creased the seat fabric, that you've got the full factory warranty to cover any defects, and the reassurance that your car has never ever been in a crash.

However, those things come at a significant cost: depreciation. It's the biggest financial drain that comes with car ownership, and most cars will see a massive chunk of their purchase value lost in the first three years. Bummer.

It's often said that as soon as a car drives off the dealership lot, it loses 10 percent of its value. Sadly, that statement is actually not too far off. Unless it's a limited edition model or in high demand, new car buyers can kiss goodbye a significant amount of cash as soon as they take delivery.

Yet, if you're the kind of savvy shopper that doesn't mind buying something used, depreciation works in your favour. Don't need to drive the latest and greatest model? Opting for something that's older could save you a bunch of cash.

So which cars cop the most depreciation after three years, and are thus ripe pickings for bargain hunters? We've trawled through resale data supplied by industry monitor Glass' Guide to give you a segment-by-segment breakdown of Australia's depreciation darlings:

Light hatch

Mitsubishi Mirage ES manual

• Three-year resale value: 41 percent
• Original RRP: $14,990
• Three-year estimate: $6146

The Mitsubishi Mirage may not equal the popularity of its main rival, the Kia Picanto, but Mitsubishi's compact hatchback depreciates faster to give it an edge on the used car market. Yes, there's an automatic and it'll cost just a few hundred more, but for outright value it's the base manual that's a supremely wallet-friendly buy. At just $6146 after three years, that's good buying no matter which way you look at it.

Small

Kia Cerato S sedan automatic

• Three-year resale value: 47 percent
• Original RRP: $23,790
• Three-year estimate: $11,181

Small cars tend to hold onto their value pretty well, with only a few exceptions. The Kia Cerato is one of those exceptions. The South Korean-built Cerato sedan is a handy small car with a sizeable second row and accomodating boot, and the fact it cleaves more than half of its retail price in just 36 months means it's great buying as a used car.

Additionally, the manual has the same resale potential as the auto, so you won't be losing out if you decide to shift gears yourself either.

Mind you, the Cerato is beaten out by the fastest-depreciating vehicle in the small car segment, the Alfa Romeo Giulietta. That car only retains 44 percent of its $35,950 retail price after three years, meaning a $15,818 bargain with plenty of Italian panache three years down the track. However that's still several grand more than the Cerato, which we reckon is a better value buy.

Medium sedan

Skoda Octavia 110TSI manual sedan

• Three-year resale value: 43 percent
• Original RRP: $25,890
• Three-year estimate: $11,132

The Octavia is already one of the keenest deals in the midsize market when brand new, and a low retail price coupled with high depreciation means it continues to hold the value crown for years down the line. A satisfying driver's car, it's also efficient and nicely designed both inside and out with plenty of European flair.

For an Asian alternative, the Toyota Camry doesn't fare much better than the Skoda when it comes to resale, with most variants retaining just 44 percent of their purchase cost after three years. That means you can snare a base model Ascent petrol for a little over 12 grand once they're at 36 months of age – which is a great deal, as the current Camry is a well-rounded, well-built and dependable sedan.

Large sedan

Holden Commodore LT 2.0L

• Three-year resale value: 36 percent
• Original RRP: $33,690
• Three-year estimate: $12,128

The import Holden Commodore gets absolutely savaged by depreciation, with Glass' giving the entry-level LT 2.0-litre turbo petrol just a 36 percent resale value at the three-year mark. That sees a car that once cost north of $33K drop to just over $12K as a used car, and given the sheer roominess of the Commodore's cabin (not to mention its smooth, powerful and efficient turbo four-pot) that means you get a hell of a lot of metal for your money.

Look at the Commodore on its merits, and it's actually a decent buy. You'll still be able to service it, parts will be around, and you'll have two years of factory warranty remaining after the three-year depreciation period.

Interestingly the Skoda Superb 162TSI does even worse for resale than the Commodore, hanging on to a mere 33 percent of its $43,990 original retail sticker to sit at $14,516 after three years. It doesn't have the power of the Commodore, but with a used value that's not too far off that of the Holden it's an intriguing alternative if you don't mind paying a touch more.

Premium sedan

BMW 520i

• Three-year resale value: 36 percent
• Original RRP: $90,990
• Three-year estimate: $32,756

Few other cars are as wince-inducing to watch come down in price than luxury cars, and the BMW 520i is a perfect example of that. Starting at a lofty near-$100k price, after a mere three years of ownership you can expect a BMW 520i to only be worth 36 percent of what it was new.

Ergo, they're bargains as used cars. More than the 520i, the whole 5 Series range depreciates quite hard too - so take your pick.

A mid-size premium sedan for less money than a new Toyota Corolla? You read that right!

Small SUV

Haval H2 Premium

• Three-year resale value: 44 percent
• Original RRP: $22,990
• Three-year estimate: $10,115

The Haval H2 doesn't really have a whole lot going for it, being one of the least impressive small SUVs on the market. It is, however, exceedingly cheap to purchase, and even cheaper to buy used. Just over ten grand for a high-riding small SUV really isn't a whole lot of money.

If you want a REALLY small SUV, the Suzuki Ignis is another depreciation gem. The base Ignis GL manual retains only 44 percent of its original value over three years, meaning roughly $7000 should see you land one of the tiny crossovers in your garage. That said, its diminutive size won't be for everyone.

Medium SUV

Mitsubishi Outlander PHEV ES

• Three-year resale value: 42 percent
• Original RRP: $45,990
• Three-year estimate: $19,315

Here's a bargain that more Australians should be taking advantage of. Not only is the Mitsubishi Outlander PHEV one of the only plug-in hybrid SUVs in the mainstream market right now, (which gives families the ability to avoid spending money on petrol) but it also cops huge depreciation that makes a pre-loved example cost less than a much-less-useful Mazda CX-3 does when new.

Large SUV

Kia Sorento GT-Line FWD

• Three-year resale value: 54 percent
• Original RRP: $60,070
• Three-year estimate: $32,437

Good news! Large SUV is a vehicle category that generally does pretty well for retained value. After all, the South Korean Kia Sorento manages to cling onto a decent 54 percent of its value after three years.

After those three years of ownership, you'll have a four-year balance of factory warranty remaining, and the Sorento will still fare quite well as one of Kia's top notch products.

With that in mind, you're getting a pretty decent deal paying just over half of what the thing cost when new just three years ago.

At the end of the day, you can happily go into many large SUV purchases knowing that you're getting a pretty good deal in terms of resale.

Sports Cars

Subaru BRZ manual

• Three-year resale value: 50 percent
• Original RRP: $34,990
• Three-year estimate: $17,495

The Subaru BRZ/Toyota 86 remains one of the sweetest-handling cars on the market today, and a healthy supply of them on the used market and generally low demand for sports cars means that you can bag a three-year-old one for about the same money as a new Kia Rio.

If you'd like something with a heck of a lot more grunt, the the Nissan 370Z N-Sport manual has the same 50 percent resale score as the 86, but a 245kW 3.7-litre V6 that flexes nearly 100kW more than the Toyota 86's 2.0-litre flat four. With a projected three-year resale of $24,245, the Nissan 370Z (below) offers a lot of performance for the money.

It's worth noting that there are several other sports cars that depreciate more than the above two, vehicles like Mercedes-Benz's SL (48 percent) and SLC (46 percent) and the Jaguar F-Type (49 percent), however with many of them having retail prices that are deep into six-digit territory, they still don't end up as 'affordable' at the three-year mark.

Light commercial utility

Great Wall Steed 4x2 2.0L diesel manual

• Three-year resale value: 29 percent
• Original RRP: $18,990
• Three-year estimate: $5507

We've saved the best for last. Well, not the best, but you know what we mean. The Great Wall Steed is a bare-bones workman-grade ute that's already dirt-cheap when parked on the showroom floor, but a brutal 29 percent retained value means it'll cost less than six thousand dollars when it clicks over to three years of age.

And for shoppers just looking for a basic work ute to get the job done, that price projection is no doubt more attractive than any feature list. In case you were interested, the Great Wall Steed has the dubious distinction of having the lowest resale value of any car currently on sale according to Glass' Guide.

How Much Do Cars Depreciate Each Year Australia

Source: https://www.whichcar.com.au/car-advice/which-cars-depreciate-the-most

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