How to Minimize Car Depreciation and Maximize Resale Value

Love that new-car smell? Enjoy it while you can: After a few weeks or months, the aroma inevitably fades. Unfortunately, and more significantly, so does the value of your not-so-new vehicle.

In those first weeks after you initially take ownership, your new ride will probably lose more than 10% of its resale value. After its first year, it will have shed 20%. After five years, it will be worth, on average, about half its original price.

Depreciation—the rate at which cars lose value—accounts for about 38% of the cost of ownership, according to AAA. But you might not notice the impact that depreciation can have on resale value until you trade in or sell your car.

Depreciation rates, which typically range from 40% to 60% within the first five years, depend on a variety of factors. Some of them are out of your control, but many are not. Here’s how to minimize your losses.

Depreciation by Vehicle Type

Auto research and buying site iSeeCars conducted a study of more than 800,000 5-year-old cars sold between March 2024 and February 2025.

Electric vehicles (EVs) depreciated the fastest, losing about 59% of value in their first five years. They were followed by SUVs, which lost almost 49% in value. Trucks and hybrids fared the best, losing around 40% each. Sedans were in the middle, with an average depreciation of about 43%.

Within those categories, luxury models generally depreciated faster than others. For example, luxury SUVs lost nearly 56% of value, while mainstream SUVs lost 49%. Among sedans, luxury versions lost almost 55% and regular versions lost 43%.

“Used buyers are much more bottom-line practical,” says Karl Brauer, executive analyst at iSeeCars. “They don’t have the means or mentality to waste that kind of money.”

Trim Level

You might think that top-of-the-line models, loaded with all the options, would depreciate faster than a base models. Not necessarily, says Kelsey Mays, customer success director with JD Power. It depends a lot on the kinds of features an automaker adds at each trim level.

For example, Mays says, “electronics have a lot of depreciation.” But if a trim has power seats, a sunroof, and a seat heater, and it costs only $2,000 or $3,000 more than the standard model, it could retain its resale value well. Used-car buyers are much more price-conscious, says Mays. Many of them just want to be sure they’re maximizing the bang they get for their bucks.

Make and Model

Among individual makes and models, the most important depreciation factors are popularity and reliability, which often (but don’t always) go hand in hand.

“Popular models with long-established reputations for reliability have the best resale value,” says Sean Tucker, managing editor of Cox Automotive.

Many news and auto publications rank manufacturers and models by reliability. Although those rankings are based on different methodologies and don’t necessarily evaluate the same brands, some patterns emerge.

Lexus, Subaru, and Toyota topped Consumer Reports’ 2025 brand reliability rankings, followed by Honda and BMW. The least reliable were Rivian, Ram, Jeep, GMC, and Chrysler, according to data from Consumer Reports members who own vehicles from those brands.

JD Power’s 2025 brand dependability report, based on consumer surveys after three years of ownership, puts Lexus, Porsche, Cadillac, Buick, Mazda, and Toyota at the top of its lists (for luxury, premium, and mass-market brands); Volkswagen, Chrysler, Jeep, Audi, and Land Rover rank at the bottom.

iSeeCars analyzed which makes and models have the greatest chance of still being on the road at 250,000 miles. In the survey, Toyota, Lexus, Honda, and Acura were the most reliable, while Ram, Mazda, Cadillac, and Chevrolet were below average.

Unforeseen Events

Other factors that impact depreciation are almost impossible to predict. For example, depreciation rates slowed during the pandemic, when supply-chain disruptions throttled new-car production and caused used-car prices to soar. Since then, used-car prices have come down, and depreciation rates have gone up again—but not to prepandemic levels.

In 2019, the average 5-year-old vehicle lost about 50% of its value, according to iSeeCars. In 2023, that number dropped to 39%. By January 2026, it had risen to 42%.

Electric vehicles—which typically lose value more quickly than gas-powered cars because the technology changes so rapidly—began to depreciate even faster when the federal government discontinued EV tax credits after September 2025, Mays says.

Used car buyers have taken note. “EVs, despite cooling momentum on the new-car side, are being scooped up faster than any other powertrain in the used market,” Edmunds reported in November.

Who should worry about depreciation?

If you plan to buy a new car and sell it within five years, depreciation should be top of mind, particularly if you need a loan.

“If you’re financing a car, you need to pay attention so you don’t end up owing more than it’s worth,” says Keith Barry, senior autos reporter at Consumer Reports. If the car is stolen or totaled in a crash, you would have to come up with the difference between what you owe and what it’s worth, unless you have purchased gap insurance to cover the shortfall. “If you buy a car with a low predicted resale value, take out a shorter-term loan and put down as much as you can,” he says.

However, he says, “if you plan to hold on to your car for 10 to 20 years, resale value can drop to the point where repair and maintenance costs can outstrip depreciation.”

If you plan to lease, you don’t need to focus on depreciation because it will be factored into, and largely determine, your monthly payment. In general, your payment will cover the car’s expected depreciation and a few minor costs. The residual value—what you could buy it for at the end of the lease—is the expected depreciated value.

How to Minimize Depreciation

“The single best way to protect against depreciation is to buy a relatively recent used car,” Tucker says. It will already have taken the biggest depreciation hit, but should still have lots of life left and perhaps time remaining on a transferable warranty.

If you must buy new, there are ways you can minimize depreciation:

1. Shop for cars that hold their value. If you are deciding between two possibilities, see what their 2020–21 models are selling for now and apply that rate of depreciation to the ones you’re considering.
2. Use online calculators to estimate the total cost of ownership—including depreciation—of cars you’re considering. You can find them at AAA, Edmunds, and Kelley Blue Book.
3. Once you’ve driven your new car off the lot, treat it gently.

“Depreciation is often tied to the market’s perception of a car’s value, desirability, reliability, and cost of ownership. So, a car that holds its value is often a good car” to own, Barry says.