Why Does a New Car Lose So Much Value in Its First Year?

As soon as you pass through the dealership doors, you must accept the fact that your brand-new beautiful car has just lost a large part of its value.

It is commonly said that a car loses a quarter of its initial price as soon as it makes its first trips. It’s a cliché but far from false because a car purchased for 20,000 euros may only be worth 15,000 euros after a year, even if it remains quietly parked in a garage, making only short hops.

Why such a drop? First, a new car is automatically considered used as soon as it’s registered, even if it has only traveled a few kilometers. Then, the automotive market is relentless, with new models regularly arriving on the market with small updates or features that make existing models look dated.

So some brands fare better than others. High-end models, like Porsches, or sturdy and affordable cars, like Dacias, resist depreciation better. And we’re not even talking about certain Ferraris, Bugattis, or Lamborghinis which can increase in value due to limited production runs. Conversely, mass-market cars with very high volumes or less popular models can plummet in resale value.

But, as a result, there are some great deals to be found on the second-hand market! Buying a certified used car directly from the manufacturer, which has already experienced this “value crash,” can be an excellent deal. You get a recent car, in like-new condition, often with a small warranty extension that places it exactly at the same level as a new one. All this with a 10 to 15% discount. If you want more, up to 40% off, models aged 2 to 4 years that have recently been restyled offer a perfect balance between attractive prices and up-to-date technology. Keep in mind that buying new is a passion-driven act, while buying used is a rational choice.

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