(iSeeCars) — Used cars have never held their residual value better, with 5-year and 3-year depreciation rates hitting unprecedented levels.
- Jeep Wrangler remains the best vehicle for holding its value, while overall five-year depreciation for new cars drops from 40 percent in 2021 to 33 percent in 2022
- Looking at three-year depreciation shows a mere 17 percent decline in value, the smallest drop on record, with some used models, such as the Porsche 911, actually appreciating in value above its original MSRP
- Fuel efficient cars, including hybrid vehicles, small cars, small SUVs, and midsize cars, held their value the best, reflecting ongoing spikes in gas prices
- Large luxury cars lose the most value, including the BMW 7 Series, Maserati Ghibli, and Jaguar XF
Pandemic-related disruptions to automaker supply chains and their impact on new vehicle and used vehicle pricing have dramatically affected retained value rates as well. An analysis of three- and five-year vehicle depreciation reveals that cars retain more value than they have in recent memory, and that a small number of cars have even appreciated in value, according to a new study by automotive firm and car search engine iSeeCars.
iSeeCars analyzed over three million three-year-old and five-year-old used cars sold in 2022 and found the average five-year-old car lost only 33.3 percent of its value from MSRP. Compared to 2021, that represents a 17.0 percent decrease in depreciation. “The relative scarcity of late-model used cars due to pandemic-related new car production disruptions has kept used car values high for more than a year,” said Karl Brauer, Executive Analyst for iSeeCars. Looking at individual models, the Jeep Wrangler tops the best resale value cars, while the BMW 7 Series is the vehicle with the highest rate of depreciation.
Vehicles that depreciated the least in five years
The average five-year depreciation in 2022 is 33.3 percent, with the best cars for retained value over the past five years listed below.
|Top 10 Vehicles with the Lowest Five-Year Depreciation – iSeeCars Study|
|Rank||Model||Average 5-Year Depreciation||Avg $ Difference from MSRP|
|2||Jeep Wrangler Unlimited||8.7%||$3,344|
The Jeep Wrangler and its four-door counterpart, the Wrangler Unlimited, hold the top two spots in the list of Vehicles with the Lowest Five-Year Depreciation, with around four times lower depreciation than the average car. “The Jeep Wrangler continues to embody the ultimate off-road companion, with timeless styling that keeps it popular long after it has left the new-car showroom,” said Brauer, adding, “Based on historical data, it’s no surprise these two Jeeps were the best resale value winners in 2021 as well. The Wrangler is essentially the poster child for ‘Best Resale Value Awards’.”
Sports cars like the Porsche 911, Ford Mustang, Subaru BRZ, and Chevrolet Camaro, saw increased demand during the pandemic as a means for fun and escapism during lockdowns. “We saw prices jump for sports cars after the lockdowns began, and they maintained their strong original value even as restrictions were lifted,“ said Brauer.
The other cars on the list are some of the most popular, best-selling cars: the Toyota Corolla, Nissan Versa, Honda Civic, and the Toyota Tacoma. The first three are compact cars with high gas mileage, while the Tacoma is a smaller midsize truck with a reputation for durability. “High gas prices always shift demand toward more fuel-efficient vehicles, increasing the value retention of these models,” explained Brauer.
Vehicles that depreciated the most in five years
iSeeCars also examined the vehicles that depreciate the most after five years.
|Top 10 Vehicles with the Highest Five-Year Depreciation – iSeeCars Study|
|Rank||Model||Depreciation||Avg $ Difference from MSRP|
|1||BMW 7 Series||56.9%||$61,923|
|5||Cadillac Escalade ESV||52.3%||$55,128|
Luxury brand vehicles and larger vehicles dominate the cars that depreciate the most after five years. “Just as higher gas prices increase demand for fuel-efficient vehicles, they also decrease demand for full-size SUVs like the extra-large Cadillac Escalade ESV and Lincoln Navigator,” said Brauer, adding, “Luxury vehicles like the also tend to depreciate at higher rates because used car shoppers don’t value their premium features as much.”
Vehicles that depreciated the least in three years
Because the analysis revealed lower five-year depreciation compared to 2021, iSeeCars further analyzed three-year depreciation. Overall three-year depreciation is 16.9%, almost a third less than the average of 23.8% in 2021. Unexpectedly, five models actually appreciated over MSRP in this three-year span. “The market is pricing late-model used cars as though they were new. If shoppers can’t buy a new car, the next closest thing is a used car with low miles, thus the appreciation in value for these cars,” suggested Brauer.
|Used Vehicles Worth More than their New MSRP – iSeeCars Study|
|Rank||Model||Appreciation||Avg $ Increase from MSRP|
|2||Toyota RAV4 Hybrid||-+2.5%||+$883|
|3||Jeep Wrangler Unlimited||+2.0%||+$880|
|4||Porsche 718 Cayman||+1.8%||+$1,342|
Three of the models that increased in value over MSRP are the same as the top three models with the lowest five-year depreciation: the Porsche 911, Jeep Wrangler, and Jeep Wrangler Unlimited. The other models include another Porsche model, the Porsche 718 Cayman, as well as the Toyota RAV4 Hybrid trim. “This is unprecedented in used vehicle pricing. Finding multiple 3-year-old used models worth more than their new MSRP is something we’ve not seen before,” remarked Executive Analyst Karl Brauer.
iSeeCars also analyzed the vehicles with the lowest depreciation after three years. The list includes 10 vehicles that all depreciated less than five percent.
|Top 10 Vehicles with the Lowest Three-Year Depreciation – iSeeCars Study|
|Rank||Model||Depreciation||Avg $ Difference from MSRP|
|5||Porsche 718 Boxster||2.5%||$1,907|
|7||Toyota Corolla Hatchback||3.4%||$846|
|10||Tesla Model 3||4.1%||$2,012|
“To put some context to these numbers, consumers could have bought these cars new, driven them for three years, and then sold them for anywhere from just a few hundred dollars to around two thousand dollars below MSRP, which is unusual to say the least,” said Brauer.
Demand for both new and used cars remains high, keeping their prices high and depreciation low. While that shiny new Chevrolet Corvette, GMC Yukon, Land Rover Range Rover Velar or Lexus IS may look great on the showroom floor, consumers looking to buy a car should consider how long they plan to own it and how much depreciation they want to experience when it’s time to sell or trade in their vehicle. Models with the lowest depreciation tend to cost more upfront, but the higher purchase price can be more than made up in reduced loss of value over time.
More from iSeeCars.com:
iSeeCars analyzed over 3 million used cars from model years 2017 and 2019 sold from January to October 2022. Heavy-duty trucks and vans, models no longer in production as of the 2022 model year, and low-volume models were removed from further analysis. MSRPs from 2017 and 2019 were inflation-adjusted to 2022 dollars based on data from the US Bureau of Labor Statistics. The difference in average asking price for each vehicle between its MSRP and its used car pricing was mathematically modeled to obtain the vehicle’s depreciation.
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iSeeCars.com is a car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars VIN check report and Best Cars rankings. iSeeCars.com has saved users over $358 million so far by applying big data analytics powered by over 25 billion (and growing) data points and using proprietary algorithms to objectively analyze, score and rank millions of new cars and used cars.