The Rapid Decline: Understanding Vehicle Depreciation Trends in Luxury and Electric Cars

It’s a fact of life that vehicles depreciate—some say by almost 50% as soon they’re driven out of the lot. But which cars depreciate the fastest?

We visualize the top 10 vehicles with the highest depreciation rates over five years, based on data from iSeeCars.

They analyzed over 1.1 million used cars from the model year 2018, sold between November 2022 to October 2023. Models no longer in production as of the 2022 model year were excluded.

Luxury Cars Struggle to Hold Their Value

At the top of the list, the Maserati Quattroporte loses nearly two-thirds of its value after five years. First introduced in 1963, the car is Maserati’s flagship and is on its sixth iteration as a four-door luxury sedan, with a high-performance Ferrari-made V6 or V8 engine. The 2018 version of the car retailed anywhere between $109,000–$140,000, depending on the model.

Here’s a look at the full list of fastest depreciating cars in the U.S.:

Rank	Model	Average 5-Year Depreciation	Average Difference from MSRP
1	Maserati Quattroporte	65%	$90,588
2	BMW 7 Series	62%	$72,444
3	Maserati Ghibli	61%	$58,623
4	BMW 5 Series (Hybrid)	59%	$37,975
5	Cadillac Escalade ESV	59%	$63,885
6	BMW X5	58%	$44,828
7	INFINITI QX80	58%	$47,399
8	Maserati Levante	58%	$55,858
9	Jaguar XF	58%	$39,720
10	Audi A7	57%	$48,917

Insights into Depreciation

BMW’s 7-series and 5-series also lose value quickly (nearly 60% of their retail price), ranking second and fourth respectively. Another Maserati car, the Ghibli, comes in third (-61%), and the Cadillac Escalade ESV (-59%) rounds out the top five fastest depreciating vehicles.

From a quick glance through the ranks, the cars that depreciate the fastest are luxury vehicles, specifically luxury sedans. These types of cars are often leased, and supply increases dramatically once the lease period expires. Meanwhile, most owners who can afford a luxury car would prefer to buy a new model, while used-car owners would prefer not to pay a high premium on an already outdated model.

Electric Vehicles and Depreciation

However, there’s another segment of the market that also drops in value quickly—electric vehicles. Analysis found that EVs lose roughly 49% of their value on the resale market, the worst amongst the categories specified.

Rank	Segment	Average 5-Year Depreciation (%)
1	EVs	49%
2	SUVs	41%
3	Hybrids	37%
4	Trucks	35%
N/A	Overall	39%

A lack of larger demand appetite, as well as a plethora of government incentives pushing people to buy new electric vehicles, could explain their faster-than-average depreciation rate. Trucks, on the other hand, are the slowest depreciating segment of all vehicles in the U.S.

Conclusion

While depreciation is inevitable for all vehicles, luxury cars and electric vehicles tend to lose value the fastest. This rapid depreciation is driven by several factors unique to these segments.

For luxury cars, high initial costs, rapid advancements in technology, and the high turnover rate of leased vehicles significantly contribute to their steep depreciation curves. Luxury cars often come equipped with the latest features and technology, which quickly become outdated as new models are released. Additionally, luxury car owners are more likely to lease rather than buy, leading to a high supply of used luxury cars in the market once lease terms end. This oversupply drives down the resale value.

Electric vehicles (EVs) also face steep depreciation rates, albeit for different reasons. One major factor is the rapid pace of advancements in battery technology and electric drivetrains, which can make older models less desirable. Furthermore, government incentives and subsidies for new EV purchases can lower the perceived value of used EVs. The relatively smaller market for used EVs compared to traditional internal combustion engine vehicles also plays a role, as limited demand leads to lower resale prices.

Understanding these trends can help consumers make more informed decisions when purchasing a vehicle, whether new or used. For prospective buyers of luxury cars or EVs, it’s crucial to consider the long-term resale value and the potential for significant depreciation. Here are a few strategies to mitigate the impact of depreciation:

1. Consider Certified Pre-Owned (CPO) Vehicles: CPO vehicles often come with extended warranties and have undergone thorough inspections, providing a balance between new and used car benefits while avoiding the steep initial depreciation.
2. Lease Instead of Buy: If you prefer driving the latest models and technology, leasing can be a smarter financial decision. It allows you to return the car before significant depreciation sets in.
3. Research Depreciation Rates: Before purchasing, look into the historical depreciation rates of the specific model you’re interested in. Some brands and models depreciate more slowly than others.
4. Invest in Popular Models: Cars with a strong reputation and high demand in the used car market tend to retain their value better. Researching consumer reports and resale values can guide you toward more resilient models.
5. Maintain Your Vehicle: Keeping up with regular maintenance and ensuring the car remains in good condition can help preserve its value. A well-maintained car is more attractive to potential buyers and can fetch a higher resale price.

By being aware of the factors that influence depreciation and taking proactive steps, consumers can minimize their financial loss and make more strategic vehicle purchasing decisions. Whether opting for a new or used car, understanding these depreciation dynamics is key to making a smart investment in your vehicle.