1. Three Things Disrupting the Auto Industry and How It’ll Affect Your Car’s Value
2. Surprising Report: Your New Car Will Likely Hold Its Value Longer
3. New Study Uncovers Shocking Car Value Trends – This is What You Need to Know
4. Strengthen Your Wallet: How to Make Sure Your Car Retains Its Value
5. Forget Everything You Thought You Knew – New Cars Could Actually Increase in Value!
Car Shopping Know-How: What You Need to Understand About Car Depreciation
Are you in the market for a new car but worried about the value it’ll retain over time? If so, you’re not alone. Every car dealer has heard the familiar adage that a new car loses 10% of its value the minute you drive it off the lot. Fortunately, a recent report from CNBC and Black Book, an automotive research firm, should put its buyers’ minds at ease. Their findings suggest that long-held depreciation regulations have been affected by supply disruptions due to the recent pandemic and other factors – meaning that new cars now retain roughly 10% more of their value after three years compared to 2019.
Why Collectively Are Cars Losing Value?
The intersection of several factors are causing fluctuations in both the new and used car markets, according to the report. Covid-19 has caused manufacturing hiccups, resulting in a lack of new cars available for purchase between 2020 and 2022. This has led to shoppers opting for used vehicles, subsequently forcing prices up. In some cases, pre-owned cars are even increasing in value due to high demand and limited supply chain.
Aside from the pandemic, automakers are now producing fewer vehicles than their peak in 2016. They favor constructing expensive models to gain higher margins, reducing available inventory and sending prices higher. To pile on, a given American car is staying in its original owner’s hands for longer due to improved reliability. This is resulting in fewer used vehicles on the market, furthering the dearth of availability and rising prices.
Can You Still Expect Value Out of Your New Car?
It may seem like the outlook is bleak for car buyers, but there is some good news. The disruption to the market is causing cars to depreciate in value at a slower rate. Before the pandemic, new cars were depreciating by over 50% within the first three years. But thanks to the current market, that figure has shifted to 40%, giving shoppers more bang for their buck.
Another common misconception is that new cars automatically lose 10% value once started up. However, this is not entirely true. Part of that 10% is due to accounting for dealer incentives and state and federal incentives. Furthermore, certain types of cars – electric vehicles, rare or exotic cars, and specific brands like Honda and Subaru – may be immune to the usual depreciation rate and even increase in value over time.
The bottom line is that it’s still possible to get value out of a new car despite the challenging market – it just boils down to making the right purchase decision. Researching options, knowing when to shop, and accounting for incentives will all work together to help you save money in the long run.