Top 10 Fastest Depreciating Cars

4th April 2024

Following the covid epidemic, when for a couple of years used cars were increasing in value, depreciation is back, with most cars once again losing money every month. Improving new car supply with sales supported by generous discounts and finance terms is one reason with others including the turbulence created by the move away from petrol and diesel cars and increases in running costs and insurance.
For car buyers, depreciation is not such a bad thing since it makes cars more affordable. However, for car owners it's the invisible curse that easily exceeds the cost of road tax, insurance and fuel. As their car loses value, the difference between it and the price of its replacement widens. Those few who buy their car outright with cash suffer most obviously but even those who finance it on personal contract purchase are funding depreciation with their monthly payments: the worse their car's depreciation, the higher are their payments.
Below we look in more detail at the causes of depreciation, reveal the current worst depreciating cars and tell you how you can protect yourself from its worst ravages.

What causes car depreciation?

New cars do. The fact that new ones are produced in their thousands, with the latest features and most enticing sales offers, means used cars must be cheaper if they are to sell – and the older and less desirable they are, the cheaper they must be. That's the biggest cause of car depreciation but at an individual level there are other reasons including a weak model image, a poor or inappropriate specification, an unattractive colour and a lapsed service history, as well as a few more besides…

A few more?

As the market moves from being dominated by cars with an internal combustion engine to one where pure-electric vehicles are becoming the new must-have, by choice and soon by law, so some cars are falling out of favour and losing money. They include some diesels, especially those that don't meet the current Euro 6 emissions standard, and thirsty petrol cars, especially those with a weak image and high running costs. The benefit-in-kind tax that company car drivers must pay punishes most cars bar electric and those hybrids with a decent electric-only range. As a result, there are fewer takers for new petrol and diesel fleet cars that attract more tax, in turn fuelling their depreciation. Mention of hybrids reminds us that while as expensive new cars they appeal to company drivers looking to save tax, as used cars bought by private buyers, this benefit is no longer available, causing them to depreciate, in some cases at an alarming rate.

Are electric cars safe from depreciation?

In fact, EVs have been by far the worst depreciators in recent months. Buyers are still wary of EVs with many worrying about charging provision, the advertised range not matching the reality and the fear that better models are only just around the corner. Add EVs' high new prices and you have the perfect scenario for heavy depreciation – on some models as much as 40 per cent in their first year. Only a few months ago, Tesla wiped thousands of pounds off the prices of some of its new models, forcing down the prices both of used ones and rival models. The cheap, Chinese-built EVs arriving in ever increasing numbers will have the same effect. As the number of EVs grows and if consumers remain wary of them, depreciation will be the inevitable consequence.

Is it all bad news?

In fact, for many cars, depreciation is not as bad as it once was. Recent steep rises in new car prices have helped put the brakes on it. Because fewer new cars were sold during covid, there are now fewer three and four-year-old used cars on the market (the most popular price range). This has boosted not only their value but also the value of cars above and below them. The pressure on car makers to produce increasing numbers of electric vehicles should, in the long term, create a shortage of cheaper petrol and diesel models, with the best ones likely to lose less money as they become sought after by buyers reluctant to change to electric. At the same time, EVs' heavy depreciation means that many models are now the same price, if not cheaper, than their petrol equivalents, making them more attractive.

How can I protect myself against car depreciation?

The key is to choose a car with an eye on its resale appeal. That means buying a car with a strong image or which is popular, in a conservative colour and with a sensible but not extreme specification, although models such as some luxury and sports cars require certain essential extras. If it's a used car, a full service history and few previous owners are also important.

Especially if the vehicle is less than three years old, consider taking out Gap insurance. In the unfortunate event that it is written off after an accident (even a mild impact may result in it being scrapped), you're likely to find your insurer will only pay you the car's market value rather than what you originally paid. Since cars can depreciate by up to 60% in their first three years, that could mean a significant shortfall in finance settlement charges or a loss in vehicle value. GAP Insurance bridges this gap between your insurance payout and your vehicle’s purchase price or outstanding finance.