Car Depreciation Calculator

Cars lose value from the moment they leave the showroom. UK data shows new cars typically lose 15 to 25% of their value in the first year and 50 to 60% over three years. The rate slows sharply with age, so an 8-year-old car loses far less in absolute terms each year than a brand new one, which is why the second owner of a car takes a much smaller hit than the first.

The maths here uses the declining balance method, where the car keeps a fixed percentage of its previous value each year rather than losing a flat sum. Take a £30,000 petrol car depreciating at 20% a year. Year one ends at £24,000, a loss of £6,000. Year two ends at £19,200, a loss of £4,800. Year three ends at £15,360, a loss of £3,840. After three years it retains 51% of its original value and has cost £14,640 in depreciation alone, with each successive year costing less than the one before.

Retention rates vary by fuel type and model, and the spread between segments is wide. Cap HPI data puts the average new car at 60 to 70% down after five years. Premium luxury saloons such as the BMW 7 Series and Mercedes S-Class fare worst, losing 65 to 75% across the same period, while mainstream family cars land in the middle. The strongest performers are a small group with unusually durable demand, including the Toyota Hilux, Land Rover Defender and Porsche 911, which shed only 30 to 40% over five years. Electric cars have depreciated faster than petrol equivalents through 2024 to 2026 because battery technology keeps moving and supply has outrun demand.

Beyond the badge, a handful of factors decide where your particular car lands. Mileage well above the 12,000-mile industry benchmark, say 15,000 or more a year, adds 5 to 15% of extra depreciation, while a full main-dealer service history adds 5 to 10% back on resale. Colour matters more than people expect: black, white and silver hold value, and bright orange or yellow costs 10 to 15%. Aftermarket and cosmetic modifications knock off 5 to 20%, and a Cat S or Cat N insurance marker takes 20 to 40% even after a proper repair. ULEZ compliance is now part of the picture too, dragging on older petrol and diesel values in urban areas.

Among electric cars the differences are stark. A two or three-year-old Tesla Model 3 is down 40 to 50% on its list price, a Polestar 2 sits at 50 to 60%, and premium models take the hardest hit, with the Audi e-tron losing 60 to 70%. Cheaper EVs such as the MG4 track ordinary petrol depreciation closely, simply because there is less value to lose. For comparison, a three-year-old petrol Ford Focus is 45 to 55% down. Diesel has depreciated faster since 2020 as ULEZ and zero-emission policy have narrowed its future, while the Tesla Model 3 and Hyundai Ioniq 5 hold value best among EVs thanks to brand demand, range and long warranties.

You can do a fair amount to slow the curve. Buying at one or two years old skips the steepest phase and saves £5,000 to £10,000 on a car that listed at £30,000. Pick a mainstream colour, service at a main dealer or a marque specialist and keep every record. Avoid modifications, drive carefully enough to stay clear of a Cat S or Cat N history, keep mileage under 12,000 a year where you can, and favour brands with proven retention such as Toyota, Honda, Land Rover and Porsche. When you come to sell, a private sale typically nets 10 to 20% more than a trade-in.

Depreciation is also the hidden engine of car finance. Personal Contract Hire simply charges you for it: a £30,000 car expected to lose £15k over three years leases for roughly £420 a month, which covers the depreciation plus interest, and the risk of a soft used market stays with the lessor. Buy instead and you absorb that loss directly, but you also keep the car past the point where the curve flattens. Anyone planning to keep a car seven years or more is usually better off buying, while a driver who changes every three years pays for convenience and predictable costs by leasing.