According to Carfax, a car’s value drops 10% the moment you drive it off the lot. The value dips another 10% during the first year of ownership. And over five years, the average car value plummets 50%-60%. Depreciation doesn’t only affect economy cars. It also hits luxury cars, which lose 40% of their value after five years. On a $75,000 vehicle, that’s a $30,000 decline.
Fortunately, some models depreciate less than others. Here are 10 worth considering.
Acura – the luxury division of Honda – received top billing for retained value from Edmunds, a well-known car appraiser. Edmunds likes the entire 11-car line-up, from the entry-level ILX to the RDX sport utility vehicles, applauding the brand's mix of performance, technology and value.
Kelley Blue Book salutes the sporty Audi A5 and the Audi Q7 midsize SUV, ranking them among the top echelon of competitors in the “Best Luxury Car” category. Their sentiment is echoed Autotrader, which determined that the Audi Q7 is particularly worthy of high marks for luxe features like heated front seats and dual-zone climate control. But despite Audi’s generally high resale value, it remains to be seen how the diesel engine scandal of its Volkswagen subsidiary will affect the brand going forward.
A twist on the traditional definition of “luxury car,” American muscle cars have found a place among the leaders, as multiple reviewers give solid resale ratings to cars like the Chevy Corvette. Autotrader concluded: “For shoppers trying to combine performance and financial sensibility, the Corvette is the best choice on the market.” The reference data from both Kelley Blue Book and ALG claim that the Corvette’s resale value rivals Audi and Porsche sports cars.
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Kelley Blue Book gushes over Lexus, for its consistently high resale values, year after year. The sedans, coupes, hybrids and sport utility vehicles all receive noteworthy mentions, with the top-of-the-line Lexus LS 460 marked as the go-to choice for wealthy buyers. Edmunds also gives a nod to the Lexus brand for its “utterly refined luxury vehicles that retain their resale value.”
Kelley Blue Book lavishes love on the Mercedes-Benz S Class, noting that German automaker’s “flagship sedan” offers unmatched power, grace and technological sophistication. But with the base model starting at $100,000, and fully loaded models costing more than double, this legendary label demands a fat wallet.
If you are in the market for a fast, pretty four-door car, you may well agree with Porsche’s slogan: "There is no substitute.” The sleek and stylish Porsche Panamera takes top honors from Edmunds in the Premium Luxury Car category and garners strong accolades from Kelley Blue Book.
The Bottom Line
When buying a luxury car, it's next to impossible to leave the lot without experiencing significant depreciation. But with the right purchase, you can keep the loss to a minimum over the years, and enjoy driving a fine automobile in the meantime. And when it comes to making that purchase, you can never be too well prepared. Start with Investopedia University’s detailed insights in The Complete Guide to Buying a New Car. From there, take a look at 10 Steps to Buying a Car (Without Getting Taken for a Ride). And last but not least, it wouldn’t hurt to read 10 Tips for Buying a Car Online.