Study finds that trucks and SUVs have far lower depreciation rates than EVs and luxury sedans.
It's depressing to know that most new cars instantly lose value as soon as you drive away from the dealership. According to a study conducted by iSeeCars, the average new vehicle loses over 50 percent of its value after five years. There are, however, some exceptions to this rule, as some cars depreciate faster than others.
ISeeCars has compiled a list of cars with the highest and lowest depreciation rates in the US using data gathered from 4.3 million new and used car sales. If you're looking to buy a new or used car, these depreciation rates are definitely worth taking into consideration.
Scanning the list of vehicles with the lowest depreciation rates reveals a noticeable pattern: with the exception of the Subaru Impreza, the top ten are all pickup trucks and SUVs. Topping the list with an average five-year depreciation of 27.3 percent is the Jeep Wrangler and Wrangler Unlimited thanks to their popularity, durability, and performance across all terrains.
Six pickup trucks also make up the top ten list including the Toyota Tacoma (29.5 percent) and Tundra (37.1 percent), followed by the Nissan Frontier (37.8 percent), Chevrolet Silverado 1500 (39.7 percent) and GMC Sierra 1500 (39.9 percent), and Ram 1500 (42.7 percent). ISeeCars' CEO Phong Ly noted that pickup trucks are a growing segment, so their popularity is helping them retain their value.
The Toyota 4Runner body-on-frame SUV was also ranked at number six, which depreciates 38.1 percent after five years, while the Subaru Impreza depreciates 42.3 percent after five years earning it the number nine spot. "The Impreza is the only compact vehicle in its class to offer standard all-wheel drive, making it one of the most affordable vehicles with that option," Ly explained. "Subarus are also known for their safety and durability, which help contribute to the Impreza's lower-than-average depreciation."
Conversely, most of the cars with the highest depreciation rates are electric vehicles and luxury sedans. At the top of the list is the Nissan Leaf, which loses 72.7 percent of its value after five years, followed by the Chevrolet Volt, which loses 71.2 percent of its value. The Ford Fusion Energi plug-in hybrid also earned the fifth spot with a depreciation of 69.4 percent.
"Government incentives play a role in the steep depreciation of electric and plug-in hybrid vehicles as their resale value is based off their lower effective post-incentive sticker price," said Ly. "Since the technology of EVs changes at a rapid pace, outdated technology also contributes to their dramatic depreciation as well as range anxiety and lack of public charging infrastructure."
However, six out of the ten cars with the highest depreciation are luxury sedans including the BMW 7 Series, Mercedes-Benz S-Class, BMW 6 Series, BMW 5 Series, Mercedes-Benz E-Class, and the Jaguar XJL. This is because luxury sedans tend to be leased, "which leads to a surplus of three-year-old off-lease versions of these vehicles that lowers the demand for the older models." The only vehicle that made the list that isn't an EV or luxury sedan was the Chevrolet Impala.