You buy a $25,000 Honda Accord, drive it off the lot, and within twelve months it’s worth $20,000. That $5,000 vanished faster than your first tank of gas. The question isn’t whether cars depreciate—it’s how much you’ll lose per year, which model years bleed value fastest, and whether that loss actually matters for your timeline.
The short answer
Most cars lose around 20% of their value in the first year, then 10–15% annually through year five. Model year matters because newer years within the same generation hold a premium, but that premium evaporates fast once a redesign launches. Brands like Toyota and Honda depreciate slower; luxury cars and EVs depreciate steeper.
How much cars depreciate per year
The depreciation curve isn’t a straight line—it’s a cliff followed by a slope.
Year one takes the biggest bite. Edmunds residual value studies document a consistent 20% loss for mass-market brands (Honda, Toyota, Chevrolet), with luxury sedans and EVs often losing 25% or more. A $30,000 car becomes a $24,000 car before you’ve made the third payment. This first-year loss is the most consistent pattern in the used-car market.
Year two compounds on what’s left—typically another 15% of the original price, which translates to roughly 18% of the remaining value. Your $24,000 car drops to around $19,500.
Years three through five slow to 10–12% annually. The curve flattens because the worst uncertainty is priced in—accident history is known, maintenance needs are predictable, and the car isn’t “new” anymore. Post-pandemic market chaos (2021–2023) temporarily warped these numbers, with used prices spiking above new in some cases. By mid-2026, patterns returned to historical norms.
The decision frame changes depending on how long you keep the car. If you’re holding it for seven years, that $5,000 first-year loss averages out to about $60 per month—annoying but absorbed. If you sell after three years, you’re eating the steepest part of the curve, which is why buying two years used dodges the worst damage.
Which cars hold resale value
Not all depreciation curves are equal. Some models hold substantially more of their value at five years than others.
Top resale holders:
- Toyota 4Runner, Tacoma: Body-on-frame durability and strong secondary market for adventure vehicles. Consistently hold value well, typically 50%+ at five years.
- Honda Civic, CR-V: Reputation for reliability means buyers trust a 100,000-mile Civic more than they trust a 60,000-mile luxury sedan. Both hold value solidly into the 50%+ range.
- Subaru Outback, Crosstrek: All-wheel drive and utilitarian design create steady regional demand, especially in snow states. Regional variation is significant.
- Porsche 911: Limited production, collector interest, and design longevity. Holds value better than most mass-market cars, though specifics vary by model year and condition.
- Pickup trucks (Ford F-150, Chevy Silverado): Work-vehicle demand is less sensitive to cosmetic wear, and fleet buyers keep the used market liquid. Strong regional performance.
Why these models hold value? Four factors stack up:
- Reliability reputation. Toyota and Honda earned trust over decades; buyers assume the 2019 model will behave like the 2015 model.
- Supply scarcity. Porsche makes fewer cars; used supply stays tight. Pickup trucks in rural markets have similar dynamics—everyone needs one, few are selling.
- Styling longevity. Conservative designs (Accord, Camry) age gracefully. Polarizing designs (certain Lexus grilles, old Prius shapes) date themselves.
- New-car incentives. Brands that discount heavily on new inventory (Nissan, Stellantis) undercut their own used values. Toyota rarely discounts; used Toyotas hold a firmer floor.
EVs and hybrids: Hybrids like the Prius and CR-V Hybrid have shifted from depreciation laggards to strong performers as fuel costs and emissions regulations tighten. Pure EVs are still working through their depreciation patterns, with uncertainty around battery longevity and rapid tech iteration keeping used prices softer than comparable gas vehicles.
The model-year refresh trap
Here’s the wrinkle most depreciation guides skip: model year matters within a generation, and it matters catastrophically across generations.
Same generation, different year: A 2023 Honda Accord (same platform as 2018–2022) holds about 5–10% more value than a 2021, even with similar mileage. Buyers see “newer” and rationalize paying the premium, whether or not the hardware meaningfully changed. That premium is soft—it compresses fast under market pressure—but it’s real in the first two years.
Generation refresh, old model collapse: When Honda launched the redesigned 2023 Accord, the prior-generation (2018–2022) models dropped noticeably faster than their normal curve. Dealers flooded the used market with trade-ins from buyers upgrading, and suddenly a 2019 Accord worth $18,000 in early 2023 was struggling to fetch $15,500 by year-end. The car didn’t get worse—the supply glut made it cheaper.
The smart-money move: buy two to three years used, post-refresh. You miss the first-year cliff, the supply is healthy (not flooded), and you’re not buying into the tail end of a generation that’s about to get obsoleted. If a model is rumored to redesign next year, wait—or buy the new one if you’re keeping it long enough to ride out the initial collapse.
Regional and category gaps
A Ford F-150 you buy in Dallas holds value differently than the same truck in Seattle. Regional gaps of 5–15% are common depending on vehicle category and local demand patterns.
Pickup trucks and AWD SUVs depreciate slower in rural and snow-belt states (Montana, Colorado, Minnesota) because utility demand is constant—buyers need the capability, not just the badge. Compact sedans and EVs hold value better in urban and coastal markets (Bay Area, Seattle, Denver) where parking, fuel costs, and charging infrastructure favor smaller, efficient vehicles.
This isn’t exotic—it’s supply and demand at the zip-code level. If you’re buying a car you plan to resell locally, check regional listings, not national averages. A Subaru Outback is a commodity in Vermont; it’s a niche choice in Arizona.
The EV depreciation problem (and why it’s temporary)
Electric vehicles depreciate faster than gas cars right now, but the cause isn’t the powertrain—it’s the cost of the powertrain.
Battery replacement is a significant out-of-warranty expense, and buyer uncertainty around pack longevity gets priced into used EV values. Meanwhile, over-the-air updates and hardware refreshes (cameras, sensors, new battery chemistry) make two-year-old EVs feel obsolete in a way that a two-year-old Camry never does. Gas-car tech improves incrementally; EV tech leaps.
But the underlying economics are shifting. Battery costs have dropped substantially in recent years, and manufacturers are extending warranty coverage. If replacement costs decline and longevity data strengthens, EV depreciation curves will flatten to match hybrids. The steeper depreciation today is a buyer’s risk premium, not an inherent flaw in the vehicles. If you’re buying a used EV, you benefit from that premium. If you’re buying new, you’re paying it.
What it means for your next purchase
Depreciation is a cost, not a catastrophe. The question is whether it’s your cost.
If you’re keeping the car seven-plus years, first-year depreciation averages to roughly $50–$80 per month on a $25,000–$35,000 car. Annoying, but you’re also getting the warranty, the known history, and the spec you want. Buying new makes sense.
If you’re selling in three years—upgrading for a family, testing out EV ownership, or just rotating vehicles—you’re absorbing the steepest part of the curve. Buying certified pre-owned at two years old cuts your depreciation hit nearly in half. The first owner paid for the privilege; you get the value.
And if you’re deciding between models: a Toyota that holds value longer costs you less over five years than a Nissan that holds value faster, even if the Nissan’s sticker was $2,000 cheaper. Run the math on total cost of ownership, not just the monthly payment.
FAQ
How much does a car depreciate in the first year?
Around 20% for mainstream brands like Honda, Toyota, and Chevrolet, according to Edmunds residual value data. Luxury vehicles (BMW, Mercedes) and EVs often lose 25% or more due to higher initial prices and faster tech obsolescence. That’s $5,000–$7,000 on a $25,000 car, gone in twelve months.
What cars depreciate the least?
Toyota’s truck and SUV lineup (4Runner, Tacoma, Tundra), Honda’s Civic and CR-V, Subaru’s Outback and Crosstrek, and Porsche’s 911 consistently rank among the strongest resale performers. Pickup trucks also hold strong due to work-vehicle demand and regional utility needs. These models typically retain significantly more value than most sedans and luxury cars over a five-year span.
Does model year affect resale value?
Yes. Within the same generation, a newer model year holds a measurable premium over an older one, even with similar mileage. But when a new generation launches, prior-generation models depreciate faster as trade-ins flood the market. Timing your purchase around redesign cycles can meaningfully reduce what you lose.
Can you reduce depreciation loss when buying?
Buy certified pre-owned at two to three years old—you skip the first-year cliff but still get warranty coverage. Target models with strong resale history (Toyota, Honda, Subaru) and avoid model years just before a redesign. Clean title, documented maintenance, and lower mileage all help protect resale value.
Does mileage or model year matter more for depreciation?
Model year sets the baseline; mileage adjusts it. A 2020 with 30,000 miles will usually hold more value than a 2022 with 60,000 miles, but model-year premiums compress fast under market pressure. On identical mileage, newer always wins—but the gap narrows the older both cars get.
The first-year loss stings, but it’s predictable. Buy the brands that hold value, dodge the model-year refresh trap, and match your timeline to the curve. If you’re keeping it long enough, depreciation is just math. If you’re not, let someone else pay for the privilege of driving it off the lot.
General information, not professional mechanical or financial advice. Resale values vary by region, condition, and market timing.