* Toyota Tacoma: 29 percent
* Nissan Frontier: 37 percent
* GMC Sierra 1500: 40 percent
* Subaru Impreza: 42 percent
The list above merits discussion because resale value is not tied to vehicle reliability or maintenance ratings. One reason you see SUVs and pick-up trucks with lighter depreciation has more to do with market trends; to this effect, it helps to keep in mind that American car buyers have been favoring SUVs in recent years thanks to lower fuel prices, but this trend is in peril because OPEC has been manipulating crude oil production in an effort to increase demand and pricing. When you factor in maintenance and repairs, the Jeep Wrangler and GMC Sierra are known for their more expensive parts and frequent trips to the shop. With reliable cars such as the Honda Civic and Toyota Corolla, your resale value will likely be around 50 percent after five years, but you would have saved considerably in terms of service and maintenance schedules.
As for the cars with the highest depreciation after five years, here are some notable models:
* Nissan Leaf: 71 percent
* Chevy Volt: 71 percent
* Ford Fusion Energi: 69 percent
* Mercedes Benz E-Class: 67 percent
* Chevy Impala: 66 percent
Plug-in electric and hybrid vehicles have not had a good run in term of North American sales; for this reason, it is not surprising to learn of their poor resale value. On the other hand, the used electric car market has been heating up in 2018 thanks to the lower costs of replacement batteries.
Evaluating Depreciation and Maintenance Costs
The true and total cost of car ownership cannot be determined solely by depreciation. As previously mentioned, market trends come and go; the current love affair between American drivers and SUVs could subside as a reaction to economic shifts. When the global financial crisis was at its worst level a decade ago, sales of new SUVs plunged as drivers were impacted by sticker shock at gas stations.
When you look at Jeep and GMC models, their average annual maintenance costs after five years climb above $500. According to a 2017 survey published by Consumer Reports, maintenance costs for Toyota and Honda models start off at less than $100 per year and only reach $400 after 10 years of operation.
In the case of a car such as the Subaru Impreza, annual maintenance costs start at about $180 for the first three years and can be as high as $695 after five years; moreover, this is not an easy model to sell in the used market because it is considered a specialty vehicle.
Cost per mile calculations tend to provide a more realistic view of the true cost of auto ownership because they take depreciation and mileage into consideration. To calculate how much a car costs per each mile driven, the depreciation per year must be divided by the annual mileage and multiplied by 100. Let’s say a 2018 Subaru Impreza sells for $25,000; as long as it is driven at about 1,250 miles per month and kept in good condition, it will depreciate by about $2,100 each year, thus:
* Cost per mile: $2,100 / 15,000 * 100 = 14 cents per mile
The Subaru Impreza may not seem expensive to own at $0.14 per mile, but this does not take maintenance into consideration, which may run as high as $2,000 after five years.
The Bottom Line of Car Value Depreciation
It makes better financial sense to think about the costs of keeping a car on the road than its resale value. Even if you own one of the aforementioned SUV models that does not depreciate too much, you have to also think about fuel expenditures and maintenance. You can’t do anything about trends in the car buying market, but you can always improve the condition of your vehicle by following a maintenance schedule. In the end, a car’s true value will be determined by the steps you take to improve its reliability.