Car Depreciation Explained: How Much Value a Car Loses Each Year

How much does a car depreciate each year?

Published estimates are broadly consistent. This table combines the year-by-year ranges from carVertical (June 2026) and Motorway (2026 update), both based on UK market data:

The cash loss shrinks faster than the percentage. carwow notes that depreciation in years four and five continues at a similar rate in percentage terms, but because the car is worth less, each year costs fewer euros. carVertical also points out that a new car can lose up to 10% of its value the moment it is driven off the forecourt.

Worked example: a €30,000 car after three years

We calculated what a car bought new for €30,000 in a 2026 example would be worth after three years. The calculation uses Motorcheck's three-year ranges for the Irish market and its assumption of 15,000–16,000 km a year.

Put another way, the mainstream car in this 2026 example costs about €458 a month in lost value alone, before fuel, insurance or servicing. Compared with the small car, it loses €5,250 more over three years in this 2026 example. Our cost of ownership calculator lets you set your own price, depreciation rate and years, and adds fuel, insurance, tax and maintenance on top.

How to estimate your own car's depreciation

A simple model applies a fixed rate to the remaining value each year:

value after n years = purchase price × (1 − rate)ⁿ

At 12% a year, a car keeps 0.88 to the power of five, or about 53% of its price after five years. At 18% a year, it keeps about 37%. Real cars do not follow a smooth curve, because the first year is steeper. For a car bought new, use a higher rate for the first year and a lower one afterwards.

For a car you already own, the most reliable figure is the market. Look up asking prices for the same model, age, engine and mileage, and allow for some negotiation.

What makes a car lose value faster

• Mileage. Higher mileage means a lower price. carwow notes that round figures such as 50,000 and 100,000 miles (about 80,000 and 160,000 km) can push values down.
• Accident history. carVertical says a car recorded as a Category S or N write-off in the UK can be worth up to 50% less than a clean-history equivalent.
• Missing service history. carwow: a car serviced on time, every time, is worth more, especially with paperwork to prove it. Motorcheck puts the effect at up to €1,500 on an Irish used car, citing its earlier research, in a 2025 article.
• Many previous owners. Both carwow and Motorway say cars with fewer owners are worth more.
• Unpopular colours and specifications. Motorcheck says a bright yellow or orange car will be harder to sell later and grey or silver is the safer choice; Motorway recommends white, black or silver.
• Brand and segment. Prestige brands generally hold value better than mainstream ones, says carwow, but Motorcheck finds large premium saloons and SUVs among the steepest losers in the first three years. Both can be true: the percentage depends on the model, not only the badge.
• Running costs and rules. carwow lists fuel economy, body style, warranty, car tax and compliance with clean-air zones such as London's ULEZ among the factors.

Do electric cars depreciate faster?

Sources disagree, so here are both views:

• Faster: carwow (January 2025) says many of the fastest-depreciating cars are electric, because used buyers have given them a lukewarm reception so far. Motorcheck (February 2025) expects electric models to keep suffering sharper depreciation in the next couple of years. carVertical (June 2026) calls EV depreciation "very volatile" and says first-generation models from before 2022 lost value quickly.
• Slower: Motorway (2026 update) says electric cars generally hold their value better than petrol and diesel cars, with battery condition, newer longer-range models and charging infrastructure as the key factors.

What both sides agree on: battery health and the gap to newer models drive an EV's resale value. For a buyer, steep EV depreciation is not only a risk. Motorcheck describes well-kept, low-mileage used EVs as something of a bargain. If you are buying one, check the battery's state of health and the remaining battery warranty. Our electric cars section lists electric models with their key specifications.

How to choose a car that holds its value

1. Let someone else take the first hit. A car of two to three years old has already lost the steepest part of its value. Our guide to choosing between new, nearly new and used cars works through the numbers.
2. Buy below list price. carwow notes that depreciation percentages are calculated from the list price, so every euro of discount reduces your real loss.
3. Choose a model in demand. Popular, well-reviewed models in common colours and mainstream engines sell faster and for more. Our car finder helps you shortlist by size, budget and powertrain, and small cars are a good place to start: see the best small city cars.
4. Keep every record. Service book, invoices and roadworthiness certificates all support the price when you sell.
5. Keep the mileage reasonable for the car's age, and fix small cosmetic damage such as scuffed alloys before selling.
6. Keep the car longer. The yearly loss falls as the car ages, so the cost per year of ownership drops the longer you keep it.

Who should worry most about depreciation: anyone who changes cars every two or three years, buys new with a small deposit, or chooses a large premium model. For them, depreciation will likely be the biggest cost of ownership, and a gap between the car's value and the finance owed is possible in the early years.