Car depreciation explained: future residual values and how they’re calculated

There are lots of services out there that offer depreciation calculators and tables based on ongoing market analysis. The likes of CAP HPI and Glass’s have detailed future valuations for every car sold in recent years, and we use similar services to provide an idea of future residual values in our in-depth car reviews. 

1. Choose the right car

You can set yourself on the path to low depreciation by going for a desirable car from a premium brand with a good reputation for reliability. Small, economical cars are always in demand, but be wary of big, expensive models with high running costs, especially from unfashionable sectors of the market. 

2. Spec it wisely

Don’t over or under spec your new car. The market will expect a certain level of equipment on a particular type of model and cars with the lowest depreciation will exceed those expectations without going overboard. Avoid outlandish paint or interior trim options that might limit the car’s appeal and think carefully before spending extra cash on expensive options or fully-loaded trim levels.

3. Buy when the time is right 

Cars tend to lose most of their value in the first year and have done the biggest part of their depreciating after three years. New-car buyers can avoid crystallising their depreciation losses by holding on to their cars for that bit longer and used buyers have the option of targeting cars at the optimum point in their depreciation curves. Of course, this means buying and running an older car, which comes with its own problems.   

4. Minimise mileage

More mileage means more depreciation so, if at all possible, try to keep the miles on the clock to a minimum.  

5. Maintain it properly

Keep your car properly maintained and serviced as the manufacturer intended, keeping a record of any work done. Avoid racking up needless MoT advisories or failures that will be visible to future buyers by getting the car checked out prior to its tests. 

6. Keep it clean

Keeping the car clean and avoiding minor damage to the bodywork or interior trim will do wonders for its future value. Look after your paintwork and wheels, and think about getting minor cosmetic damage fixed. Avoid smoking or letting pets loose in the car if possible.

7. Avoid modifications

It’s possible that some modifications and aftermarket upgrades can add value to certain types of car, but in the majority of cases changing the vehicle from factory spec will increase deprecation. Many buyers will be more cautious with cars that have had lots of ‘enhancements’ added.

Did you know you can sell your car through Auto Express? We’ll help you get a great price and find a great deal on a new car, too.