>Depreciation: The Best and Worst Cars in the UK and How to Beat it
Depreciation: The Best and Worst Cars in the UK and How to Beat it
Cars are generally regarded as a depreciating asset, this means that regardless of how well you service, clean and generally care for your car, it will always be worth less than when you bought it.
The trick, though, is to find and purchase a car that depreciates less than average. Over a lifetime of motoring this could save you thousands, as we’ll explain below. We’ve rounded up the best cars in the UK known for holding their value. We’ve also gone a step further and given you the WORST cars known for depreciating, so you can be sure to steer clear.
What Causes Depreciation in Cars?
Whilst a car is ultimately a tool, allowing convenient transportation from A to B, almost all of us would rather drive a newer, safer car over an older one. This connection between the age (and mileage) of a car and its desirability, means the older a car gets, the less demand there will be for it.
Supply and demand is an economic principle that affects the cost of an item or product. If the demand increases but the level of supply does not, prices will rise. Conversely, if the demand for an item drops, so does the value.
Why do some cars depreciate faster than others?
To answer this question we must understand the reason why people buy vehicles and the fact that this differs between vehicle types. As you’ll see below, one of the best vehicle types for avoiding depreciation is a small economical car.
Cars such as the Honda Jazz and Ford Fiesta are rarely bought for their style, comfort or technological innovations, they’re bought because people need reliable transportation. On the other hand, cars such as the BMW 7 Series and Range Rovers are desired because they are luxury, aspirational items.
Once both of these types of vehicles reach a few years of age, the small utilitarian car will still serve its primary purpose flawlessly, something that cannot be said for luxury, high-end vehicles.
A secondary reason is that expensive luxury vehicles are often more expensive to repair and maintain, meaning once the manufacturer's warranty has expired, they become a much less attractive prospect.
How to Save Money on Depreciation
There are two main ways to save money on depreciation, buy cars that do not depreciate as much, or buy cars that have already seen the majority of their depreciation. The former option is great for someone who doesn’t need or want fancy gadgets and premium features.
Most cars do not depreciate in a linear fashion, meaning that the rate of depreciation slows down as the car gets older. So if you like a few more luxuries, but don't want to take the hit on a fastly depreciating car, you can buy near the bottom of the curve, when the car has lost 70% of its value already.
6 Cars That Hold Their Value
As above, some cars lose their value faster than others, the list below shows some cars to buy if you don't want to face high depreciation during ownership.
1. Honda Jazz
A popular car for people wanting a reliable, practical smaller car, the Jazz’s reliability and simplicity mean even older ones still command a respectable price second hand.
2. Ford Ranger
A favourite with self-employed tradespeople, the Ranger is both practical and tax-efficient, as they are registered as a commercial vehicle. The practicality of the Ranger is what makes it so desirable.
3. Land Rover Defender
If you’re looking for a new car that will hold its value for a few years, the new Defender is the best-performing car by far - mainly due to the incredible demand.
4. Toyota Hilux
The third commercial vehicle to appear on the list, the Hilux is famed for its incredible reliability and durability. With the Nissan Navara being discontinued, the demand for the Hilux will only increase.
5. Toyota Yaris
For a small city car with great practicality and reliability, the Yaris is a top contender, It’s been in production for many years and each generation is as well received as the last.
6. Ford Fiesta
Popular as a small to medium city car since its inception in the 1970s, the Fiesta has always been a popular sight on Britain's roads. However, now Ford has discontinued this staple model, we suspect the newer ones, especially the STs - the sporty ones - will hold their value well.
Most Depreciating Cars - Cars that Don’t Hold Their Value
These are the ones to avoid, the worst cars in the UK for depreciation. The reasons, as discussed above, are often due to the complexity, unreliability or status of the car.
BMW 5 Series
BMW cars have a reputation for luxury, driving feel and performance, but these benefits, when new, can become liabilities as the cars age. After 5 years, expect your 5 series to be worth approximately 45% of its initial cost, and after 20, 80% of the value will be lost.
Mercedes C Class
For similar reasons to the 5 Series, buyers of new Mercedes C-Class luxury cars can expect them to drop in value significantly over the first years of ownership.
Whilst Peugeot’s stylish SUV may be in vogue, the figures for its value show this to be short-lived, for a 3-year-old car can be worth little over a third of its value from the forecourt.
Another SUV, but priced for an entirely different market, the F-Pace is a brilliant bit of cutting-edge engineering and tech, but this may also be to its detriment, as they are worth considerably less after only a few years.
It seems that the confidence in the re-branded MG cars of the last couple of years is relatively low, with poor depreciation figures on the new MG6 and MG3 cars. With 45% value lost by the three-year-old mark.
Can You Buy a Car as an Investment?
You may hear and read about relatively mundane cars being worth incredible value now, a notable example of this is the explosion in prices of old Fords. An ordinary Mark 1 Escort - a run-of-the-mill car in the 70s and 80s, can now fetch more than a brand-new Ford Kuga.
So it’s clear it’s definitely possible to buy a car as an investment, but unfortunately, without a crystal ball, it’s difficult to predict which cars will be the next big thing.
Things are slightly different if you have plenty of cash to spend, for certain cars are almost guaranteed to hold their value, vehicles such as high-end manual Porsches, BMW M cars and other sought-after models.
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