Buying a new car is one of the biggest purchases you will make, so it’s important to also think about how much it’s going to cost to keep it on the road.
The majority of cars these days are bought using dealer finance deals, but a significant amount are still purchased the “traditional” way using cash or a loan to buy the vehicle outright.
However, many car buyers look at the price sticker and not the total cost of ownership.
After buying a car, the biggest expense is depreciation, followed by fuel, insurance, servicing, maintenance and repairs, road tax and registration fee.
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Car depreciation explained
Depreciation is the difference between a car’s value when you buy it and when you come to sell it.
It's a sad fact that many new cars depreciate at an alarming rate and will lose more than half their value over three years.
This drop in value varies between makes and models, but typically it is between 15-35% in the first year and up to 50% or more over three years.
In other words, choosing a car that holds its value well could save you more money than simply focusing on fuel efficiency.
According to research by car price experts CAP Automotive, depreciation will cost the typical motorist three times as much as they spend at the petrol pump.
The good news is that it is now possible to research new cars to find their residual values, or how much they will be worth in one, two or three years' time – plus other running costs.
Also, magazines and newspapers often publish articles highlighting the fastest (and slowest) depreciating cars.
If you want to research a specific make and model, your best bet is to use an online depreciation calculator on sites such as the Money Advice Service, Parker’s and Fleet News websites.
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Slowest depreciating cars by sector
City car – Peugeot 108 – 49%
Supermini – Audi A1 – 52%
Lower medium – Toyota Prius – 55%
Upper medium – Mercedes-Benz C-Class Coupe – 54%
Executive – Jaguar XF – 53%
Large executive – Porsche Panamera – 55%
Luxury Executive – Rolls-Royce Ghost – 53%
MPV – Mercedes-Benz V Class – 52%
SUV – Porsche Macan – 68%
Sports – Audi TT Coupe – 57%
Convertible – Ford Mustang – 57%
Supercar - Ferrari 488 GTB Coupe - 68%
This list of the slowest depreciating cars by sector was published by Auto Express magazine using data from car price experts CAP Automotive.
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Nine tips for avoiding car depreciation
• Do your research before buying a new or used car - chose a low depreciating car
• Buy a used or nearly-new car - that way you avoid the steepest depreciation which is over the first few years
• Look after your car - damage and excess wear and tear will reduce a car's value, and avoid modifications
• Keep your mileage down - the more you do, the less your car is worth. The average mileage is around 10,000 miles per year
• Fuel efficiency - the more miles per gallon a car can manage, the more desirable it is
• Size matters – bigger, more expensive cars tend to depreciate more
• Warranty - consider a new car with a longer warranty period. Some manufacturers have five-year and seven-year terms.
• Sensible colours - stick to neutral colours and avoid outrageous shades which can lower a car's value.
• Service history - the more complete the better, so stick to the service schedule.
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