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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteCars do not lose value at a fixed rate simply because they get older. Depreciation is the result of age interacting with demand, supply, mileage, discounts, location, condition and changing technology. Two vehicles bought in the same year can have very different resale prices because buyers want one more, dealers discounted it less, or the used supply is tighter.
The most useful way to judge depreciation is to define the vehicle, market, mileage and date first. A five-year estimate for a projected 2026 model is not directly comparable with an observed sale-price study of used cars sold in a different period.
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What depreciation actually measures
Depreciation is the difference between what a vehicle cost when new and what the market will pay for it later. A simple calculation is:
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Depreciation percentage = (original transaction price − later market value) ÷ original transaction price × 100.
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Published figures may use MSRP, an estimated transaction price, dealer wholesale data or observed retail sales. They may also report either value retained or value lost. Always check the method before comparing two numbers.
Value is set by the next buyer’s willingness to pay, not by the vehicle’s historical cost. That makes depreciation a market outcome rather than a penalty attached permanently to a badge, body style or powertrain.
Age creates the first and usually largest drop
The first years are unusually expensive
New cars typically lose value fastest early in ownership because a buyer can obtain a nearly identical car with a new-car warranty, the latest equipment and no prior use. Once the vehicle becomes a used car, the annual percentage loss often moderates, although the dollar loss can still be substantial on an expensive model.
A 2024 U.S. Bureau of Labor Statistics research article estimated average annual depreciation of 12.1% for new automobiles and 10.3% for used automobiles. The same study estimated that new automobiles lose almost 40% of their original value over the first three years. Those are study-level averages based on U.S. Consumer Expenditure data, not a forecast for a particular make, model or owner.
Ownership horizon changes the answer
Someone selling after two years is exposed to the steep early decline. Someone keeping the same car for ten years spreads that initial loss across more years of use, but may face a smaller buyer pool and more age-related uncertainty at sale. Compare a vehicle’s expected value at the time you plan to sell, not at an arbitrary calendar milestone.
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Supply and demand separate one model from another
High demand supports residual value
Kelley Blue Book explains resale value through supply, demand and current and projected future market conditions. A model that attracts many shoppers while used examples remain scarce can command a stronger price. Consumer interest may come from practicality, reliability reputation, performance, utility, styling, seating capacity or a feature set that competitors do not match.
Excess supply pushes prices down
When many identical vehicles reach the used market at once, sellers compete with one another. Fleet purchases, short leases, rental-fleet returns and a large production run can all increase supply. A vehicle can be perfectly sound yet depreciate quickly if buyers have dozens of similar alternatives nearby.
Competition matters within the segment
Resale value is relative. A compact SUV may lose value when a newer rival offers better fuel economy, more cargo room and a lower lease payment, even if the older SUV remains reliable. Model-level demand is more informative than broad labels such as “SUV,” “truck” or “luxury car.”
New-car discounts change the used-car starting point
Depreciation is often calculated from MSRP, but buyers may have paid less after incentives, dealer discounts or subsidized leases. If a new vehicle is routinely sold well below sticker, a used example must be priced below that real-world transaction level to look attractive. A model with little discounting can appear to retain a larger share of MSRP even when the absolute dollar difference is similar.
Discounts also change over time. A manufacturer clearing inventory, redesigning a model or responding to weak demand can lower new-car prices quickly. Used prices then have to adjust because shoppers compare a used car with the newly discounted replacement. Conversely, a supply shortage can reduce incentives and temporarily support used values.
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Mileage, condition and location alter an individual car’s value
Mileage is relative to age
Kelley Blue Book adjusts values according to mileage compared with typical mileage for the vehicle’s age. A five-year-old car with unusually low mileage may be worth more than an otherwise identical example with heavy use; a high-mileage car faces a smaller buyer pool and greater expected wear. The relevant question is not only the odometer number but whether it is high or low for that vehicle’s years in service.
Geography changes the market
KBB produces U.S. values across 134 geographic regions. Local weather, fuel prices, tax rules, terrain, commuting patterns and seasonal demand can change which vehicles shoppers seek. Four-wheel drive may command more interest in a snow-prone area, while a small, efficient car may be easier to sell where fuel costs and urban parking dominate. A national average can therefore misstate the price of a particular car in a specific region.
Condition is not interchangeable with age
Appraisal services generally distinguish average, good and poor condition, but the sources discussed here do not quantify independent effects for accident history, branded titles or service records. Do not assign a universal percentage to those details. Their effect depends on the severity, documentation and local buyer response.
Design cycles can make a car look old sooner
KBB’s historical design-cycle analysis described a plausible mechanism: frequent styling and technology changes can make an older vehicle appear dated quickly, while a long production cycle can help a four- to six-year-old car look nearly current. The same analysis cautioned that keeping an unattractive design in production for many years can hurt residual value. This is an illustrative historical pattern, not a quantified rule that applies to every current model.
A mid-cycle refresh, major infotainment update, new safety equipment or a full redesign can reset buyer expectations. A used car may still perform well, but shoppers compare its visible features with newer alternatives, which can reduce willingness to pay.
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Do electric cars depreciate faster than gasoline cars?
There is no universal powertrain rule. EV depreciation depends on market, model, battery technology, incentives, charging access and the period measured.
What the recent regional data show
International Energy Agency data found that battery-electric vehicle (BEV) resale retention across five European markets fell from about 50% in 2022 to about 35% in 2025. In China, three-year-old EVs retained about 46% of value in 2024, compared with around 55% for the broader used-car market. The IEA associated the Chinese gap with rapidly advancing technology, concerns about battery health and the possibility of major repair costs.
These figures describe distinct markets and dates. They should not be generalized to every EV, every country or every future model. A particular EV with strong demand, a competitive range, reliable battery documentation and limited used supply can perform differently from the regional average.
Why technology can accelerate EV value changes
- Rapid product improvement: Longer range, faster charging and better software can make earlier vehicles seem less capable.
- Battery uncertainty: Buyers may discount a used EV when battery health is difficult or expensive to verify.
- Repair exposure: The prospect of a major battery or high-voltage-system repair can affect perceived risk.
- Incentive changes: New-car tax credits or local subsidies can reduce the effective price of a new EV, putting pressure on used prices.
- Charging compatibility: Changes in connector standards or charging-network access can influence demand in a particular region.
Gasoline, hybrid and diesel vehicles face their own technology and regulation shifts, so comparing powertrains requires the same discipline: define the market, vehicle age, mileage and observation period.
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There is no single five-year answer. The following estimates use different methods and therefore should not be treated as interchangeable.
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| Source and date | What it measured | Five-year result | Important qualification |
|---|---|---|---|
| Kelley Blue Book, 2026 | Projection for the average 2026 model-year vehicle | About 45% of original value retained | Residual Value Guide projection; assumes average condition and 75,000 miles at five years |
| Kelley Blue Book, 2026 Top 10 | Projection for the ten models receiving the best-resale award | Around 55% or more of MSRP retained | Projected values, not guarantees; same average-condition and 75,000-mile assumption |
| iSeeCars, 2026 | Observed depreciation for more than 950,000 five-year-old used cars sold from March 2025 through February 2026 | 41.8% average depreciation, or about 58.2% retained | Observed sales sample; different population and method from KBB’s forecast |
| U.S. Bureau of Labor Statistics, 2024 | Average annual depreciation estimates for automobiles | 12.1% annually for new automobiles; 10.3% for used automobiles | Study estimates from U.S. Consumer Expenditure data, not a model-specific five-year prediction |
The apparent differences are expected. KBB projected future residuals for a defined model year, iSeeCars analyzed completed sales in a defined window, and the BLS article estimated broad ownership patterns. A careful comparison labels the method and date instead of selecting the most favorable percentage.
Examples of models projected to retain more value
KBB’s 2026 Best Resale Value awards used projections from its January and February 2026 Residual Value Guide. KBB said the following Top 10 models were expected to retain around 55% or more of MSRP after five years, compared with about 45% for the average 2026 model-year vehicle:
| Model | KBB 2026 projection context |
|---|---|
| Chevrolet Corvette | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated in the supplied figures |
| Ford Maverick | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Ford Ranger | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Mercedes-Benz G-Class | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Porsche 911 | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Toyota 4Runner | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Toyota GR Supra | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Toyota Sienna | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Toyota Tacoma | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
| Toyota Tundra | Included in KBB’s projected Top 10; exact model-specific retention percentage not stated |
The list is a forecast for 2026 model-year cars, not a promise that every trim, option or local example will achieve the group’s threshold. KBB describes its projections as statistical models built from millions of transactions plus analyst review.
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A practical way to estimate depreciation before buying
- Define your selling date. Write down whether you expect to sell in two, five or eight years. The relevant age curve changes with the horizon.
- Use the same vehicle configuration. Match body style, engine or battery, drivetrain, trim and major options. A base model and a high-performance version can have different buyer pools.
- Check local values. Use a valuation source that allows your U.S. region and compare with nearby listings. National averages cannot capture every market.
- Normalize mileage. Compare vehicles with similar mileage or adjust for mileage relative to age. A low-mileage example should not be benchmarked against a heavily used one without an adjustment.
- Record the new-car transaction environment. Note current incentives, lease programs and dealer discounts. Recheck them if the model is redesigned or inventory changes.
- Look for supply and demand signals. Count comparable used listings, observe how long they remain advertised and check whether the model is being replaced or heavily supplied by fleets.
- For an EV, investigate technology risk. Confirm battery-health information, charging capability, warranty coverage and local demand rather than relying on a broad EV average.
- Compare methods before comparing percentages. Label each figure as a forecast or observed transaction result, and keep its date, geography and mileage assumption beside it.
Common mistakes that produce misleading comparisons
- Treating MSRP retention as cash recovery: If the original buyer received a discount, the actual return on money spent differs from a percentage of sticker price.
- Mixing regions: A result from five European markets, China or a U.S. national average cannot automatically describe another location.
- Mixing dates: A 2022 resale environment may differ sharply from 2025 or 2026 because of inventory, interest rates, incentives and technology changes.
- Confusing retained value with depreciation: Retaining 45% means losing about 55% relative to the stated starting value, not losing 45%.
- Assuming a category always wins: Trucks, SUVs, luxury cars, hybrids and EVs contain models with different supply, demand and technology profiles.
- Ignoring the comparison vehicle: Used shoppers may choose a discounted new car, a competing model or a newer redesign instead of the vehicle being sold.
What a resale estimate can—and cannot—tell you
A dated estimate is useful for budgeting, lease residual comparisons and deciding whether a purchase fits your ownership horizon. It is not a guarantee for an individual car. Actual value depends on the exact trim, mileage, region and market conditions when you sell.
The strongest conclusion is conditional: cars depreciate faster when their age-related value loss combines with weak demand, abundant supply, large new-car discounts, high mileage, an unfavorable local market or technology that buyers view as outdated or risky. Cars retain more value when the opposite conditions hold. Evaluate those forces together rather than relying on a badge or a single category rule.
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