Understanding the Realities of Car Value Depreciation
Despite the economic upheavals brought about by the pandemic, one fact remains clear: cars are almost invariably depreciating assets. This holds particularly true for sports cars, which are already a niche category. However, amidst the chaos, some vehicles defy the norm, holding their value or even appreciating significantly over time.
Subaru: A Notable Exception
When it comes to car brands that generally retain their value, Subaru stands out. Despite being a mainstream automaker, Subaru models tend to hold their value better than many of their competitors. This resilience is attributed to factors such as durability, reliability, and the brand's focus on practicality and cost-effectiveness. Subaru vehicles often retain significant equity despite age and mileage, making them a compelling choice for those seeking long-term value.
Corvette: The King of Sports Car Retention
When it comes to sports cars, the Corvette from Chevrolet is a clear standout in terms of maintaining its value. This iconic American sports car not only holds its value well but often appreciates as it ages. The combination of limited production, high demand, and a strong enthusiast base contributes to its ability to maintain or even increase in value over time. This exceptional performance makes the Corvette a rare treasure for car enthusiasts and investors alike.
The Anecdotal Evidence: Exotic Vehicles
Some of the most striking exceptions to the rule of declining car values are exotic sports cars. These high-performance, luxury vehicles that carry price tags in the hundreds of thousands or even millions of dollars are a rare breed. Their limited production, exclusivity, and the sheer desirability among both collectors and enthusiasts contribute to their ability to hold their value or even appreciate. However, their high cost and infrequent use make them less accessible to the average buyer.
The Truth Behind Keeping Your Car’s Value
While the majority of cars inevitably depreciate, it's important to understand that almost no car or truck retains its value over the years. Even models that originally cost hundreds of thousands of dollars will ultimately depreciate; they just do so at a slower pace. The true exception to this rule is found in extremely high-end, extremely rare exotic sports cars. These vehicles are extremely limited in production, highly sought after, and driven infrequently, which contributes to their value holding or even increasing over time.
Buying Tips for Car Value
If you're in the market for a new car, research is your best ally. Look for models that historically retain their value or even increase in value. This can include both mainstream cars and high-end vehicles. Alternatively, consider buying a car that has already undergone significant depreciation due to its recent 3-year lease, as the bulk of the depreciation has likely already been factored in.
Real-Life Example
To illustrate, we recently purchased a 3-year-old Toyota that originally listed for $32,000 for only $19,000. By selecting a model that had already experienced a significant portion of its depreciation, we were able to save a substantial amount of money ($13,000) while securing a car in nearly mint condition with just 14,000 miles on the odometer.
Conclusion
In summary, while most cars will depreciate over time, there are exceptions, particularly in the realm of exotic sports cars. Subaru and Corvette are notable examples of mainstream cars that generally retain their value better than their peers. For the average buyer, focusing on car models that historically retain value, or finding well-maintained used models from 3-year leases, can be a practical approach to retaining equity in your vehicle.