Car depreciation values

[TripleHelix]

Hi all,

What would be the best way to find out how a certain car will depreciate over the years?

Since NA cars depreciate more than overseas vehicles, there must be some place that details general formulas for the depreciation.

Thanks

[Anonymouse]

When I wanted to find out the optimum car age to buy, I entered all the trader.ca asking prices versus model year into matlab (but you can use a spreadsheet) and graphed it. The "knee" of the curve is the optimum age- for most cars I looked at, it was at 3 years.

[TripleHelix]

When I wanted to find out the optimum car age to buy, I entered all the trader.ca asking prices versus model year into a spreadsheet and graphed it. The "knee" of the curve is the optimum age- for most cars I looked at, it was at 3 years.

Which would make sense since thats when most warranties tend to expire on a vehicle. Chances are I will be buying a 1-2 year old car but I want to compare how the vehicles I am looking at compare down the line...

[TripleHelix]

BUMP before I leave from work

[CaptSmethwick]

Most authoritative source I know: https://www.alg.com/DepreciationRatings

[TripleHelix]

Most authoritative source I know: https://www.alg.com/DepreciationRatings

Thanks!

Not much info but at least they are ranked! Gotta make sure to pick a 4star or 5star car then. Surprising to see the BMW 1 Series as a 5star though!

[stealth]

How did they decide to give the challenger a 5 star rating? How many months has it been on the market? Mazda 3 gets a 5 star rating? I dunno....

[CaptSmethwick]

ALG's forecasts are US-based and are based on MSRP, not selling price, and don't take into account sales taxes or incentives. Keep in mind that ALG is in the business of predicting residual values, not depreciation - to them, it doesn't matter quite so much how much you actually paid for the vehicle - except where that will ultimately impact future residual values. Also keep in mind that, at the end of the day, a 5 star premium car will still incur far greater annual depreciation than a 1 star econo-car.

Obviously, manufacturers should strive to have their cars in the 3-5 star zone. Here, they require fewer incentives and banks are prepared to offer higher residuals, keeping lease costs down.

That being said, priced-right, I wouldn't avoid a 1-star vehicle.

Last fall, we (knowingly) bought a 1-star vehicle and are really okay with that because: (a) the vehicle more than meets our needs; (b) resale values are pegged with probability, not certainty; (c) the price premium we would have had to pay for its 5 star competitor was greater than what the resale value difference will be - today or 5 years from now; (d) price premiums (for higher resale value vehicles) need to be financed (if you're financed) and/or tie up your cash.

But, perhaps more importantly, we actually preferred the 1-star vehicle to its competitors. Don't kid yourself: there are some very good 1-star vehicles but they just don't light any fires in the used market and so their residual values are low. Great used car opportunities and, if you can swing the right deal, great new car opportunities as well. IMO