How Vehicle Depreciation Works

Blog Sep 21st, 2025

After you purchase a car, its value doesn’t stay the same. Over time, wear, mileage, and market factors can all affect what a vehicle is worth. This process is called depreciation, and it plays a major role in how much you’ll get back when you trade in or sell your vehicle. Understanding depreciation can help you make smarter buying decisions and maximize the value of your investment, which is why we’ve broken down how depreciation works in the blog below.

What is Vehicle Depreciation?

Depreciation is the rate at which your vehicle loses value after you drive it off the lot. On average, a new car can lose up to 20% of its value in the first year alone, and about 40%–50% after five years. While that may sound steep, depreciation isn’t the same for every make and model. Some vehicles may maintain their value over time better than others, depending on brand reputation, demand, and condition.

What Factors Influence Vehicle Depreciation?

Several factors impact how quickly a vehicle loses value. Mileage is one of the most important, as the more kilometres a vehicle is driven, the higher the likelihood it will have mechanical wear. The vehicle’s condition is another major factor: Vehicles with fewer scratches and dents tend to retain their value better than vehicles with noticeable damage. Market demand can also play a role in depreciation, as high-demand models like SUVs and hybrids tend to depreciate more slowly than less popular models. Finally, brand reputation plays a role. Manufacturers known for reliability, like Honda and Toyota, generally see slower depreciation compared to other brands.

What Can I Do to Minimize My Vehicle’s Depreciation?

While nobody can stop depreciation from happening, you can reduce its impact on your vehicle’s value. Keeping up with regular maintenance helps maintain value, as does avoiding damage to the vehicle. Choosing a vehicle with strong resale history is another smart move. Buying used instead of new can also work in your favour, as the bulk of a vehicle’s depreciation will occur within the first two or three years.

Shop for Your Next Used Vehicle at Car Connect in Ottawa

The Car Connect team has a talent for connecting drivers with pre-owned vehicles that are a perfect fit for their budget, preferences, and needs. Take a look at our online inventory to explore all the cars, trucks, SUVs and more that we currently have on our lot. Have any questions for the Car Connect team? Don’t hesitate to reach out to us using the form below!