It's a brutal fact that the moment the wheels of a new car hit the road it plummets in value. Cars aren't just one of the most expensive purchases people make, they are also a long term depreciating asset. Some cars will eventually become classics and rise in value, but that's rolling the dice. Of course, buying a classic can pay dividends as an investment, but we're talking about cars you buy and drive regularly as part of your daily life. Unfortunately, the average depreciation over a 5-year period is around 50% but some will depreciate faster, while others will hold their value for longer.
As far as cars that depreciate the most, plug-in electric vehicles aren't a smart investment if you don't want to hang onto it for its entire lifecycle. Technology is moving so fast it's like buying a smartphone and expecting to have good resale value.
At the moment, a Nissan Leaf is expected to depreciate by 71.7% over 5 years, which makes it the most heavily depreciating car around despite being inexpensive to run as a city car. Higher end German luxury cars including the BMW 5, 6, and 7 series and Mercedes E-Class and S-Class are expected to drop 67-70% of their value in the same period. Hybrids aren't exempt and the Ford Fusion Energi is expected to lose 69.4%.
So what should you buy if you want the best resale values down the road? These are the vehicles that have averaged out to have the lowest depreciation in price on average after a five year period.
Jeep Wrangler and Wrangler Unlimited: 27.3%
Jeep occupies a segment in the market that tends to ensure a slow depreciation curve. Trucks with reputations for being strong workhorses always score well, whereas Jeeps are mostly recreational vehicles valued for their performance and durability off-road. Jeep's recent update of the Wrangler in both two and four-door configurations brings new engines and even greater off-roading chops that should ensure it stays at the top of the heap for years to come.
Toyota Tacoma: 29.5%
The Toyota Tacoma is a mid-sized workhorse in the tradition of Toyota reliability and strength and plays just as well at weekends. For 2019, the Tacoma picked up the Kelly Blue Book award for best resale value by holding 69.4% of its value over 36 months and then 62.2% over 5 years. It's set for some competition though as the mid-sized truck market warms up, but it looks Toyota is ready for the challenge.
Toyota Tundra: 37.1%
Despite being overshadowed by its rivals in the full-size pick up market the Tundra relentlessly delivers a well equipped and trusty workhorse designed to be as tough as it is reliable. The design may be getting a bit tired despite the refreshes, but it's a formula that works and when people rely on their vehicle for their occupation, it needs to just work when they turn the key.
Nissan Frontier: 37.8%
The Frontier has quietly been going about its business for a long time now providing an affordable truck with plenty of ability, a configurable cargo box, and a nice drive on the road. It's not been properly updated for a while, but a strong rumor of a new generation arriving in 2020 should keep it high on this list if Nissan keeps the formula intact.
Toyota 4Runner: 38.1%
Despite its current modern styling, the 4Runner's last real redesign was all the way back in 2003. Its value is in having the off-road SUV chops people want at a price point where they won't be afraid of actually taking it off-road. Its ladder frame means the floor is higher than unibody equivalents and eats up some interior room, but we know the strength and durability of that setup will never go out of style.
Chevrolet Silverado 1500: 39.7%
The most important thing to note about this entry is that it's not the Ford F-150 despite that still being the biggest selling truck in America for the billionth year in a row. The only reason we can come up with is that Chevy diehards truly are diehards and the Silverado has some serious niche value with its towing ability. On Kelly Blue Book's 2019 resale awards, both the Colorado and Silverado have pushed the F-150 down the list.
GMC Sierra 1500: 39.7%
While Chevy and Ford take public digs at each other over their trucks, GMC has just been quietly going about its business of building up some exclusivity with its features. You'll find adaptive suspension, a split-folding tailgate, and a carbon-fiber cargo bed amongst other things. Add that to the fact GMC evolves rather than goes nuts on redesigns and you probably have the reason why its resale values are so stable.
Subaru Impreza: 42.3%
We're surprised by this one as the Outback is the current die-hard vehicle of choice for the middle-classes where it snows once a year. But, the Impreza is the only small car out there with AWD as standard, has the reputation for reliability, and the fact is they have always been an expensive choice on the used market.
Ram 1500: 42.7%
The Ram 1500 is historically versatile, capable, and comes with great ride quality. When it comes to trucks that you want to work in during the day and then take a partner out for dinner in the evening, the Ram 1500 has that written into its mission statement. The current generation is also packed with technology including a hybrid drivetrain option.
What Have We Learnt Here?
The vehicles that tend to hold value in the long term tend to be in the niches where durability is king and are at a price point that provides value for money in capability and reliability. In the Kelly Blue Book 2019 list of top cars for holding resale value, a Honda actually pops up in the form of the Ridgeline and that fits the formula. The dirt in the oil of that recipe though is that the Porsche Macan slips in at number 10, but that's mainly based on its 36-month resale value of 65% as it's five-year resale is value is average.
Cars that the general public would expect to be there like Honda and Toyota crossovers are just too common, and sports cars just aren't making the cut along with luxury vehicles. Curiously, in an age where fuel economy and technology has become important that isn't reflected here. The real key is functionality.