Cars with highest three-year depreciation create bargains for used car shoppers
As the number of off-lease vehicles continues to rise, a new study by car search engine iSeeCars.com reveals which late-model used cars are the best deals for consumers looking to purchase an almost-new vehicle. While the average vehicle depreciates 35 percent after three years, these highest-depreciating vehicles lose between 46 percent and 52 percent of their value, resulting in significant savings for consumers opting to buy a three-year-old vehicle in favor of a new one.
“The rising popularity of auto leases in recent years has led to an influx of cars coming off lease, creating the opportunity for consumers to find bargains on late-model vehicles,” said iSeeCars CEO Phong Ly. “Consumers who take advantage of these best bargains can purchase a three-year-old car for half the price of what it would cost to buy the same car new.”
iSeeCars.com analyzed more than 4.1 million car sales to identify models with the greatest loss in value after three years, when most leased cars enter the used car market. The automotive research firm identified the top 10 vehicles that had higher depreciation than the 35 percent average for all vehicles.
iSeeCars 10 Best Bargains on Almost-New Vehicles
|Rank||Car||Avg. 3-Year-Old Used Price||% Depreciation||Depreciation Compared to Average|
|1||BMW 5 Series||$ 30,846||52.6%||1.5 x|
|2||Volkswagen Passat||$14,906||50.7%||1.4 x|
|3||Mercedes-Benz E-Class||$34,010||49.9%||1.4 x|
|4||BMW 3 Series||$24,024||49.8%||1.4 x|
|5||Ford Taurus||$18,098||49.7%||1.4 x|
|6||Chrysler 200||$14,011||48.4%||1.4 x|
|7||Volkswagen Jetta||$13,157||48.1%||1.4 x|
|8||Audi A3||$21,120||47.9%||1.4 x|
|9||Cadillac SRX||$ 26,291||47.2%||1.3 x|
|10||Buick Enclave||$26,620||46.8%||1.3 x|
|Average for All Vehicles||35.0%||1.0 x|
Luxury models account for the majority of the list of vehicles that depreciate the most, outnumbering non-Luxury models six to four. Similarly, imports narrowly edge out domestics by the same margin.
“Luxury brands are known for depreciating at a higher rate because they are often leased to keep monthly payments down, which lowers the demand for these vehicles in the used car market,” said Ly. “While some luxury models tend to quickly lose a lot of their value, they still don’t drop in price enough to attract used car buyers who may be reluctant to pay the premium for high-end trims and technological features.”
Earning the top spot on the list is the BMW 5 Series luxury vehicle, which depreciated 52.6 percent and 1.5 times more than average.
“Two luxury crossover SUVs, the Cadillac SRX and the Buick Enclave, make the otherwise car-dominated list in the ninth and tenth spots making them attractive options for people interested in this booming vehicle segment,” noted Ly. “Trucks and truck-based SUVs are known for having the highest value retention, which explains why these vehicle types are absent from the top 10 list. Trucks as a vehicle category depreciate 23.3 percent in three years, which is two-thirds of the 35 percent average across all vehicle segments.”
The list features vehicles across a wide range of price points, from the Volkswagen Jetta at an average price of $13,157 to the Mercedes-Benz E-Class at $34,010. The Passat, another Volkswagen model, proves to be among the more affordable cars on the list having the second highest depreciation at 1.4 times the average and an average price of $14,906.
“The Passat underwent a significant redesign in 2016, its first overhaul since it was introduced to the American market in 2011, to include upgrades in its safety features and infotainment technology,” said Ly. “This redesign likely lowered the demand for Passats from the previous year leading to high depreciation.”
The six imports on the list are exclusively German. The BMW 3 Series is the second model from the manufacturer on the list, earning the fourth spot with a 49.8 percent depreciation rate. The Audi A3 subcompact sedan depreciated at 47.9 percent, making it the most affordable luxury vehicle on the list with an average price of $21,120. “One reason for the high depreciation of German vehicles is because of their high repair costs,” said Ly.
The soon-to-be-discontinued Ford Taurus makes the list in the fifth position, while the discontinued Chrysler 200 earns the sixth position. “Discontinued cars typically have lower resale values than cars still in production.” explained Ly.
All of the vehicles on the list have a National Highway Traffic Safety Administration (NHTSA) rating of five out of five, with the exception of the Mercedes-Benz E-Class, which earned four stars.
Cars for Grads and New Drivers
iSeeCars.com also examined the list to determine cars under $20,000 achieving a 5-star NHTSA safety rating to determine the most affordable bargains ideal for new drivers and graduates. Twelve models meeting this criteria have at least 1.3 times more depreciation than average.
iSeeCars Best Bargains Under $20,000 - Cars for Grads and New Drivers
|Rank||Car||Avg. 3-Year-Old Used Price||% Depreciation||Depreciation Compared to Average||NHTSA Safety Rating
(Out of 5)
|1||Volkswagen Passat||$14,906||50.7%||1.4 x||5|
|2||Ford Taurus||$18,098||49.7%||1.4 x||5|
|3||Chrysler 200||$14,011||48.4%||1.4 x||5|
|4||Volkswagen Jetta||$13,157||48.1%||1.4 x||5|
|5||Mazda 6||$15,732||45.9%||1.3 x||5|
|6||Ford Focus||$12,061||45.7%||1.3 x||5|
|7||Kia Forte||$11,545||45.4%||1.3 x||5|
|8||Chevrolet Impala||$19,280||44.9%||1.3 x||5|
|9||Dodge Dart||$12,420||44.6%||1.3 x||5|
|10||Chevrolet Malibu||$14,370||44.5%||1.3 x||5|
|11||Ford Fusion||$14,920||44.4%||1.3 x||5|
|12||Nissan Altima||$14,292||44.3%||1.3 x||5|
|Average for All Vehicles||35.0%||1.0 x|
The list of 12 vehicles is exclusively cars and includes seven domestic models and five imports. Five of the twelve models have been discontinued or will soon be discontinued: the second-ranked Ford Taurus, the third-ranked Chrysler 200, the sixth-ranked Ford Focus, the ninth-ranked Dodge Dart, and the 11th ranked Ford Fusion.
“The Ford models on the list will be discontinued in the coming years, so we can expect these models along with the previously retired Chrysler 300 and Dodge Dart to maintain their low resale value,” said Ly. “However, those interested in these models only have a finite time to purchase them almost new.”
Of the five imports on the list, German Volkswagen accounts for two of the models with the top-ranked Passat and the fourth-ranked Jetta. Two Japanese manufacturers make the list: the fifth-ranked Mazda 6 and the 12th-ranked Nissan Altima, while the seventh-ranked Kia Forte is the sole Korean import on the list.
“These cars are all under $20,000, and can be purchased for at least 44 percent less than what they would cost new,” said Ly. “The affordability of these vehicles coupled with their safety ratings makes them attractive options for drivers on a budget such as new drivers and graduates.”
Bargains on Almost New SUVs
iSeeCars.com also identified the top 10 SUVs, which had at least 1.2 times greater depreciation than the average SUV depreciation of 35 percent – representing a 41.7 percent to a 47.2 percent loss in value. Interestingly, the average three-year depreciation among the SUV segment is the same as the average across all vehicle segments.
iSeeCars Best Bargains Almost-New SUVs
|Rank||Car||Avg. 3-Year-Old Used Price||% Depreciation||Depreciation Compared to SUV Average|
|1||Cadillac SRX||$26,291||47.2%||1.3 x|
|2||Buick Enclave||$26,620||46.8%||1.3 x|
|3||Mercedes-Benz M-Class||$34,628||46.2%||1.3 x|
|4||Lincoln MKC||$24,544||44.3%||1.3 x|
|5||BMW X5||$39,268||44.1%||1.3 x|
|6||GMC Acadia||$26,164||43.1%||1.2 x|
|7||Kia Sorento||$17,939||42.9%||1.2 x|
|8||Buick Encore||$17,003||42.8%||1.2 x|
|9||Acura MDX||$30,500||42.2%||1.2 x|
|10||Chevrolet Traverse||$22,507||41.7%||1.2 x|
|Average for All SUVs||35.0%||1.0 x|
|Average for All Vehicles||35.0%||1.0 x|
Luxury vehicles dominate the list of SUVs that depreciate the most, outnumbering non-Luxury models seven to three and comprise the top five models on the list. The majority of the SUVs are also from domestic automakers, which account for six of the ten models.
Of the six domestic models on the list, five are manufactured by General Motors (GM) including the SUV with the highest depreciation, the Cadillac SRX. The lone non-GM domestic vehicle is the Lincoln MKC, which ranks fourth with a depreciation amount of 44.3 percent.
“The top depreciating SUVs are exclusively crossovers, with six midsize, three compact, and one full-size” said Ly. “The lone full-size crossover model, the GMC Acadia, underwent a redesign in 2017 to become a midsize crossover, and this change likely contributed to the price drop on its older models."
The list includes SUVs across a wide span of price points, ranging from the Buick Encore at an average price of $17,003 to the BMW X5 at $39,268.
Bargains on Almost-New Pickup Trucks
The average three-year depreciation for pickup trucks is 23.3 percent, which is two-thirds of the average for all vehicles. To determine the pickup trucks with the highest depreciation, iSeeCars identified the average depreciation for the segment and found three models that fare higher than average.
|iSeeCars Best Bargains on Almost-New Pickup Trucks|
|Rank||Car||Avg. 3-Year-Old Used Price||% Depreciation||Depreciation Compared to Pickup Average|
|1||Ram Ram Pickup 1500||$41,803||33.2%||1.4 x|
|2||Ford F-150||$48,685||32.4%||1.3 x|
|3||GMC Sierra 1500||$44,284||26.7.%||1.1 x|
|Average for Pickup Trucks||23.3%||1.0 x|
|Average for All Vehicles||35.0%|
“Below-average depreciation isn't surprising when you consider the increased demand for trucks,” said Ly. “People tend to use their pickup trucks for work and hold onto them, which limits the supply in the secondary marketplace.”
Three of the most popular trucks from Ram, Ford, and GMC had greater-than-average depreciation, though not as high as the vehicles on the 10 Best Bargains or SUV Bargains lists. The first-ranked Ram Pickup 1500’s three-year depreciation is 1.4 times the average for all trucks, but falls below the average for all vehicles.
Bargains on Almost-New Minivans
In the minivan segment, just one model had a higher-than-average minivan three-year depreciation rate--the Chrysler Town and Country--while the Honda Odyssey and the Toyota Sienna depreciated slightly below average. The average three-year depreciation for minivans is 34.4 percent, showing that this segment maintains its value slightly better than the average vehicle across all segments, which averages 35 percent.
iSeeCars Best Bargains on Almost-New Minivans
|Rank||Car||Avg. 3-Year-Old Used Price||% Depreciation||Depreciation Compared to Minivan Average|
|1||Chrysler Town and Country||$20,215||42.3%||1.2 x|
|Average for All Minivans||34.4%||1.0 x|
|Average for All Vehicles||35.0%|
|2||Honda Odyssey||$25,676||34.2%||1.0 x|
|3||Toyota Sienna||$24,064||33.2%||.9 x|
“Toyotas and Hondas are known for retaining their value, so it’s no surprise that the Odyssey and Sienna depreciate less than the Chrysler Town and Country,” said Ly.
Bargains on Almost-New Luxury Vehicles
When examining luxury vehicles only, iSeeCars.com identified 11 models that fare above the average three-year depreciation for luxury vehicles of 43.4 percent – representing a 44.1 percent to a 52.6 percent loss in value. This luxury average shows that luxury vehicles as a whole depreciate 25 percent more than the average vehicle, which has an average three-year depreciation of 35 percent.
iSeeCars Best Bargains on Almost-New Luxury Vehicles
|Rank||Car||Avg. 3-Year-Old Used Price||% Depreciation||Depreciation Compared to Luxury Average|
|1||BMW 5 Series||$30,846||52.6%||1.2 x|
|2||Mercedes-Benz E-Class||$34,010||49.9%||1.1 x|
|3||BMW 3 Series||$24,024||49.8%||1.1 x|
|4||Audi A3||$21,120||47.9%||1.1 x|
|5||Cadillac SRX||$26,291||47.2%||1.1 x|
|6||Mercedes-Benz C-Class||$27,007||46.4%||1.0 x|
|7||Mercedes-Benz M-Class||$34,628||46.2%||1.0 x|
|8||BMW 4 Series||$31,196||46.2%||1.0 x|
|10||Lincoln MKC||$24,544||44.3%||1.0 x|
|11||BMW X5||$39,268||44.1%||1.0 x|
|Average for Luxury Vehicles||43.4%||1.0 x|
|Average for All Vehicles||35.0%|
The list of the highest depreciating luxury vehicles is dominated by imports, which outnumber domestics nine to two. Of the imports, eight are from German manufacturers while one is Japanese. BMW is the manufacturer that appears most frequently on the luxury list including the top-ranked 5 Series, the third-ranked 3 Series, the eighth-ranked 4 series, and the 11th ranked X5. Mercedes followed with three models: the second-ranked E-Class, the sixth-ranked C-Class, and the seventh-ranked M-Class. Rounding out the German automakers is the fourth-ranked Audi A3. The lone Japanese model on the list is the Acura TLX, which ranks ninth.
Echoing the trend of cars depreciating more than SUVs, cars outnumber SUVs seven to four.
“Consumers may be surprised to learn how much the value of luxury vehicles drops after just three years,” said Ly. “Those who have an affinity for luxury cars but consider them to be out of their price range should consider one of these three-year-old models.”
For those looking to purchase a vehicle, it is important to understand the types of cars that are available within your budget and to have a plan for length of ownership. “If you want to save money, purchasing a car that has already lost most of its depreciation is a smart economic decision,” said Ly. “Conversely, if you are purchasing a new vehicle and plan on turning it in after a few years, you may want to avoid the vehicles on this list.”
iSeeCars.com analyzed more than 2.8 million new cars from model year 2015 sold between January and May 2015, and more than 1.3 million used cars from the same model year sold between January and May 2018. Models with fewer than 4,000 new and 4,000 used sales were excluded from further analysis. Prices from 2015 were inflation-adjusted by 6 percent to 2018 dollars, based on data from the US Bureau of Labor Statistics. The difference in average price for the same model across the two time periods was calculated as a percentage of the average price in 2015. This depreciation was used to rank models, and the depreciation for each model was compared to the overall average depreciation of 35 percent.
iSeeCars.com is an automotive data and research company that helps consumers find the best car deals by providing key insights and guidance. It has saved users over $159 million by applying big data analytics powered by over 25 billion (and growing) data points and using proprietary algorithms to objectively analyze, score and rank millions of cars and thousands of dealers. Based in the Boston area, iSeeCars.com was founded by former TripAdvisor and SAP executives determined to improve the car shopping experience for consumers.