Global Report: Vehicle Depreciation Statistics 2026

What Is Vehicle Depreciation?

Vehicle depreciation is the reduction in a car's market value over time. It is the single largest cost of car ownership — exceeding fuel, insurance, and maintenance combined for most drivers in the first five years. Unlike a house, which can appreciate, a car is a depreciating asset from the moment it leaves the dealership.

Depreciation is calculated as the difference between a vehicle's purchase price and its resale value at a given point in time. It is expressed either as a dollar amount or a percentage of the original price. The Kelley Blue Book, Black Book, CAP HPI (UK), and Schwacke (Germany) are the primary data sources used by dealers, insurers, and lenders to track residual values globally.

In 2026, with the global average new car price reaching $35,800 (up from $28,400 in 2019), the absolute dollar value of depreciation has never been higher. A typical buyer purchasing a $35,800 vehicle today will lose approximately $17,200 in value by year five — more than the total cost of a budget car in many emerging markets.

Understanding depreciation is critical for buyers, sellers, fleet managers, insurers, and policymakers. This report synthesises data from the International Organisation of Motor Vehicle Manufacturers (OICA), Cox Automotive, J.D. Power, Kelley Blue Book, CAP HPI, and national vehicle registration databases across 62 countries to provide the most comprehensive global depreciation analysis available in 2026.

Global Depreciation Overview 2026

The global average 5-year depreciation rate reached 48% in 2026, up from 40% in 2021 when the used-car market was inflated by pandemic-era supply shortages. As new vehicle supply normalised through 2023–2025, used car values softened and depreciation rates returned to — and slightly exceeded — pre-pandemic norms.

Three macro forces are driving the 2026 depreciation environment:

• EV proliferation: Rapid model cycles and improving battery technology are accelerating obsolescence of older EVs, pushing their depreciation above the market average.
• Interest rate normalisation: Higher financing costs have reduced new car affordability, softening demand for used vehicles and increasing depreciation pressure.
• Supply chain recovery: After the 2021–2022 chip shortage inflated used car prices, normalised supply has returned depreciation to structural levels.

Sources: Cox Automotive, CAP HPI, JATO Dynamics, national vehicle registration data ²

Depreciation Curve: Year-by-Year Breakdown

Depreciation is not linear. The steepest losses occur in the first three years, after which the rate of decline slows significantly. This "depreciation cliff" is the primary reason financial advisors consistently recommend buying a 2–3 year old used vehicle rather than new.

The "depreciation cliff" between years 1 and 3 is driven by several compounding factors: the loss of new-car warranty coverage, the accumulation of mileage beyond manufacturer thresholds, and the psychological premium buyers place on a truly new vehicle. By year 5, a car has typically crossed the 60,000-mile mark — a key psychological threshold for used-car buyers.

For context, see our analysis of true cost of car ownership and how depreciation compares to other ownership costs over a 5-year period.

Depreciation by Vehicle Segment

Depreciation rates vary dramatically by vehicle segment. Pickup trucks and budget hatchbacks consistently outperform luxury sedans and EVs in value retention, driven by sustained demand, lower initial price premiums, and more stable technology cycles.

The pickup truck segment's strong value retention is driven by sustained commercial and recreational demand, particularly in North America and Australia. The Toyota Hilux and Ford F-150 are perennial leaders in residual value rankings globally. For a deeper dive into truck ownership economics, see our true cost of car ownership guide.

Depreciation by Country

Country-level depreciation rates reflect local market dynamics: used car demand, import regulations, fuel price sensitivity, climate conditions, and the age of the vehicle fleet. Markets with strong used-car demand (Japan, India) consistently show lower depreciation than markets with high luxury penetration or extreme climates (UAE, China).

Japan's low depreciation rate is partly structural: the shaken vehicle inspection system makes maintaining older cars expensive, reducing supply of used vehicles and supporting residual values. Brazil's low depreciation reflects a different dynamic — high import tariffs (up to 35%) and limited new car affordability create sustained demand for used vehicles at all price points.

For country-specific ownership cost data, explore our global car costs comparison tool covering 62 countries with fuel, insurance, and total ownership data.

Best & Worst Depreciating Models 2026

Model-level depreciation data reveals stark differences even within the same segment. The Toyota Land Cruiser retains 72% of its value after 5 years — while the Maserati Ghibli loses 65%. Brand reputation, reliability perception, and global demand are the dominant drivers of model-level residual values.

The Porsche 911 is a notable exception in the sports car segment — its iconic status, limited production, and strong enthusiast demand have made it one of the best-performing vehicles for residual value globally. In some configurations, the 911 has actually appreciatedin value, particularly limited editions and GT variants. For investment-grade vehicles, see our guide on most expensive cars ever sold.

EV vs ICE Depreciation: The 2026 Picture

Electric vehicle depreciation has been one of the most debated topics in automotive finance since 2020. Early EVs depreciated catastrophically — the first-generation Nissan Leaf lost over 70% of its value in 5 years. By 2026, the picture is more nuanced: mainstream EVs from established brands now depreciate at rates closer to (but still above) their ICE equivalents, while early-generation models continue to suffer.

The convergence of EV and ICE depreciation rates reflects several structural improvements: battery warranties now commonly cover 8 years/100,000 miles, reducing buyer anxiety about battery replacement costs; charging infrastructure has expanded dramatically; and used EV inventory has grown sufficiently to establish reliable market pricing.

However, significant model-level variation persists. Tesla Model 3 and Model Y retain value significantly better than legacy OEM EVs, reflecting Tesla's brand strength and software update capability. Early Nissan Leafs, Chevrolet Bolts, and Renault Zoes continue to depreciate at 60–70% over 5 years.

For a comprehensive analysis of EV ownership economics, see our EV total cost of ownership guide and our EV vs gas comparison tool.

Key Factors That Drive Depreciation

Depreciation is determined by a complex interplay of factors. Understanding these allows buyers to make smarter purchasing decisions and sellers to maximise resale value.

Financial Impact on Consumers

Depreciation is the invisible cost of car ownership — it doesn't appear on a monthly statement, but it is the largest single expense for most vehicle owners. Understanding its financial impact is essential for making rational car-buying decisions.

For fleet operators, depreciation management is a core financial discipline. A fleet of 1,000 vehicles with an average value of $35,000 faces annual depreciation costs of approximately $3.4 million — more than the combined fuel and maintenance budget for most fleets. Optimal fleet replacement cycles (typically 3–5 years) are calculated to minimise the total cost of depreciation plus maintenance, which follows a U-shaped curve.

For personal finance planning, use our car cost calculator to model total ownership costs including depreciation, or our car budget by salary guide to determine how much vehicle you can truly afford.

2027–2030 Depreciation Forecast

The depreciation landscape is set for significant structural change through 2030, driven by the accelerating EV transition, autonomous vehicle development, and shifting consumer preferences.

For buyers making long-term ownership decisions, these trends have clear implications: EVs from established brands with strong software ecosystems will increasingly be the better value-retention choice. For more on the EV transition economics, see our global EV statistics 2026 report.

Frequently Asked Questions