Depreciation is the major equity killer in vehicle ownership. Philip Reed, senior consumer advice editor at Edmunds.com, says, "Within its first year, a vehicle loses about 30 percent of its value. After three years of a car's life, depending on the car, it may have depreciated 50 percent."
What steps can a consumer take to minimize the effects of depreciation and maximize car resale value?
Reed says that historically some brands and models simply hold their value better than others. Consumers can spot cars with higher resale value because carmakers brag about the ones with good depreciation records, he says.
What affects car resale value?
According to Scott, beyond choosing a vehicle with a solid history of lower rates of depreciation, there are a number of other decisions a consumer makes, either when buying the car new or when selling it in the future, that can increase the car resale value.
Geography. Body styles tend to be geographic. Demand for a particular car varies in different parts of the country. You should think about the popularity of certain vehicles in your area when buying new if you are going to later sell it locally. For example, there will be less demand for a used pickup in Miami than in Detroit. "A pickup won't hold value in Miami like a convertible will," Scott says. "But that two-seater convertible isn't very practical and won't retain its value in Michigan."