The depreciation of five-year used cars slowed earlier during the past 15 months as prices continue to soar.
A new study from iSeeCars found, as prices for used cars set records, the average depreciation of a five-year-old vehicle has slowed to 40.1% in 2021, compared to 49.1% in 2020.
“We’ve seen record high used car prices over the past 15 months as a result of the microchip shortage, and that has slowed down the average depreciation rate across all vehicles,” said iSeeCars Executive Analyst Karl Brauer.
“Vehicles that have historically maintained their value well have depreciated even less this past year, but even in today’s market some cars continue to drastically drop in value.”
Jeep is leader off-road and in value
The Jeep Wrangler and Jeep Wrangler Ultimate depreciated less than other vehicles, topping the website’s top 10 list of vehicles with the lowest five-year depreciation rate. Brauer attributed its strong performance to a few things.
“Jeep Wranglers are known for retaining their value due to their enthusiastic fanbase, as well as their durability and performance across all terrains, especially off-road,” he said. “Jeep Wranglers also have maintained their iconic design, so even older models don’t appear dated.”
The coveted Porsche 911 was third on the list with an annual depreciation rate of 12.8 percent.
Toyota Tacoma, Toyota Tundra and Ford Mustang, Chevrolet Corvette and Camaro and Dodge Challenger and Toyota 4Runner round out the list of 10 vehicles with the slowest depreciation.
The list of five-year-old vehicles with the fastest depreciation, meaning they lose their value more quickly that other vehicles, according to iSeeCars, includes the Nissan Leaf and the BMW i3, which have more than 63% of their value.
BMW takes a hit on depreciation
The other cars on the list, which see their value slide, include the flagship of the BMW line, the BMW 7 series, with loses 61.5% of its value or just less than the BMW i3. The Maserati Ghibli, BMW X5, Jaguar XF, BMW 5 series, Audi A6, Lincoln Navigator and Volvo S60, according to the survey by iSeeCars, which said the vehicles lost between 61.3% and 57.3% of their value to depreciation.
To determine the cars that depreciate the most and least, iSeeCars analyzed more than 8.2 million car sales to identify models with the lowest and highest loss in value after five years.
Dealers and carmakers note this slowing depreciation and rising prices of used cars give consumers more liquidity for the purchase of a new vehicle.
Cox Automotive says vehicle prices hit record highs — listing prices in September for both new and used vehicles as well as mid-October used vehicle values in the wholesales market.
The demand for used vehicles is also holding up better than new, according to Cox. But Cox noted rising prices will produce modest slow down through the end of the year.
Cox also noted this week the retail sales of used vehicles this year will exceed the number sold in 2019, the last full years of sales before the COVID-19 pandemic overwhelmed the industry. “Consumers have ample cash to handle the higher prices, so used retail should see record sales before we end the years,” Cox concluded.