Chip shortages and supply chain issues during the pandemic have also affected car prices, as they have affected many other industries. As a result of all these developments, the supply of cars decreased and their prices skyrocketed. When new car production slowed, drivers chose to use their cars for longer, which reduced the supply in the used car market, resulting in higher prices.
A new study by automotive firm and car search engine iSeeCars analyzed used car prices for three and five years. The study found that some vehicles lost more than 50 percent of their value.
iSeeCars analyzed over three million three-year-old and five-year-old used cars sold in 2022 and found the average five-year-old car lost only 33.3 percent of its value from MSRP.
According to the site, the car with the highest rate of depreciation in the last five years was the BMW 7 Series, It’s price dropped 56.9 percent and averaged $61,923.
Maserati Ghibli (-56.3 percent), Jaguar XF (-54 percent), Infiniti QX80 (-52.6 percent), Cadillac Escalade ESV (-52.3 percent), Mercedes-Benz S-Class (-51.9 percent), Lincoln Navigator (- 51.9 percent) Audi A6 (-51.5 percent), Volvo S90 (-51.4 percent), Ford Expedition (-50.7 percent) are also among the models that lost more than half of their value.
According to the study, the fuel-efficient vehicles, mid-size trucks and sports cars tend to depreciate the lowest in the last five years, while luxury brands tend to depreciate much faster.
While the depreciation of electric vehicles was recorded at an average of 44.2 percent, the Nissan Leaf had the highest depreciation of 49.1 percent, with Tesla Model S and X having the lowest depreciation. These models depreciated by 43.7 percent and 38.8 percent, respectively.
“The relative scarcity of late-model used cars due to pandemic-related new car production disruptions has kept used car values high for more than a year,” said Karl Brauer, Executive Analyst for iSeeCars.
Looking at individual models, the Jeep Wrangler tops the best resale value cars, while the BMW 7 Series is the vehicle with the highest rate of depreciation.
According to experts, the rate at which used car prices will fall is very difficult to predict, but the increased supply of new cars is helping to lower new and used car prices.
PhD Candidate at Marmara University's Department of Political Science and International Relations in Istanbul, Turkey