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It?s a harsh reality all car owners must face: new or used, all cars lose value starting from the moment you drive off the lot. It?s largely unpreventable ? even putting money back into your car through aftermarket parts only slows down the process. It is estimated that over a five-year span, a car will lose as much as 60 percent of its value.
Some folks prefer to ride their car out to the bitter end, but if you have an itch to upgrade every few years, you need to educate yourself on what depreciation is and how it will affect your car and its potential for resale.
Why Automobiles Depreciate In Value
New cars depreciate for two basic reasons.  First, for the vast majority of cars and trucks, it is a simple matter of supply and demand. A new car is worth ?X? because it has a certain demand with the public. The public values a new car more than an used one, and is willing to pay more for the new item (demand). The supply side allows this to happen by always having a new one available for purchase. The only exceptions are super-exotic cars in high demand with very limited supply, such as a Ferrari or Lamborghini.
While this explains the basic economics behind depreciation, there can be a lack of consistency year over year due to consumer preferences. As with any product, trends can change and what is perceived as the most desirable model one year could be out of style the next. This leads to an increase in depreciation r...