What is car depreciation, and why does it happen?
Depreciation is simply the value a car loses over time. It starts the moment a new car is first registered — by the time you've driven it home, it's already worth less than you paid — and it keeps happening, more slowly, for as long as you own it.
It happens because a used car is worth whatever a buyer is willing to pay for it, and that number falls as the car gets older, racks up miles, and gets closer to needing expensive work. A newer, lower-mileage version of the same car is always more appealing, so the one you own becomes relatively less desirable every year a newer model exists.
This guide is part of our wider advice on the true cost of running a used car. It covers what actually drives the rate a car loses value, which types of car tend to hold value better, and how to weigh depreciation up against everyday running costs when you're deciding what to buy.
How much do cars actually depreciate?
Search for "car depreciation" and you'll find the same claim everywhere: cars lose 35%, or 40%, or 60% of their value in the first year or three. Almost none of these figures name a source or a date. Chase them back and they mostly turn out to be numbers that have been repeated from site to site for years, sometimes over a decade — not something measured recently by any named organisation.
We looked. There is no single authoritative UK figure for "average first-year depreciation" that's currently backed by a dated, named primary source. Take CAP HPI, one of the trade's main valuation data providers. It publishes its measurement approach openly — a "Year-on-Year % Deflation" calculation comparing a car's value at the same age and mileage across a 12-month period — but keeps the current numbers behind a paid subscription. So rather than repeat an unsourced figure, here's what's verifiable right now.
Auto Trader's Retail Price Index — a monthly, named price-trend index built from its own marketplace data — is the most current, dated figure available. Its June 2026 data put the average used EV at £24,662, up 1.6% on a year earlier. The fastest-moving bracket, 3-5-year-old EVs, was up 8.9% year-on-year to an average of £19,295. The overall used car market averaged £17,194 in June 2026, up 0.8% year-on-year. This is a rolling monthly index, not a fixed "X% in year one" statistic — it will move again next month, which is exactly why any figure quoted here needs a date attached and re-checking before you rely on it.
Separately, the SMMT (Society of Motor Manufacturers and Traders) reported that used battery-electric vehicle (BEV) transactions grew 32.0% year-on-year to 86,943 units in Q1 2026, taking BEVs to 4.3% of used-car sales. That's a market-growth figure rather than a value figure, but it's useful context for how fast the used EV market is moving.
What this tells you: depreciation isn't a fixed curve you can look up. It moves with the market, and it moves differently for different types of car. The rest of this guide covers what actually drives it.
What drives depreciation — the factors that matter
Think in factors rather than percentages — the things that push a specific car's value up or down faster than the market average.
Brand and model reputation
Cars with a strong reputation for reliability and low running costs tend to hold value better, because used buyers actively seek them out and are willing to pay more for the reassurance. Cars with a poor reliability reputation, or ones about to be replaced by a newer model, tend to depreciate faster — buyers can see a better version coming.
Mileage
The more miles on the clock, the less a car is generally worth, because higher mileage points to more wear and a shorter remaining lifespan before major components need replacing. Two otherwise identical cars of the same age can be worth noticeably different amounts if one has covered significantly more miles than the other.
Condition and service history
A full, stamped service history and evidence of regular maintenance both reassure a buyer and support a higher resale price, according to the RAC's consumer guidance on protecting a car's value. A car with a thin history, visible damage, or a poor MOT record loses value faster, because a buyer has to price in the risk and cost of putting things right.
A car that's been written off and repaired (Category S or N) will typically sell for noticeably less than an equivalent car with a clean history. Our guide to insurance write-off categories explains what those markers mean for value and insurability.
Fuel type — EVs as a fast-moving special case
Electric vehicles have depreciated faster than petrol or diesel equivalents for most of the last few years, partly because new EV prices themselves have been falling as more models arrive and government incentives shift, which drags used values down with them. That picture has been changing: Auto Trader's Retail Price Index recorded used EV prices growing year-on-year for the first time since December 2022 (see above), and SMMT's Q1 2026 data shows used BEV demand growing much faster than the wider used market. Treat any current EV depreciation figure as a snapshot, not a rule — this is the fastest-moving part of the used market right now.
Colour, spec and desirability
White, black, silver and grey sell to more people than bold colours do, so they tend to hold value slightly better, per RAC guidance. Popular trim levels and desirable options (a good infotainment system, alloy wheels, a tow bar on a family car) can also make a car easier to sell at a fair price, though the effect is smaller than mileage, condition or brand reputation.
Which types of used car tend to hold their value best?
You'll find league tables of specific models all over the web. We're not running one — every version we found is built on unsourced or proprietary sales data we can't independently verify. Describing the general patterns is more honest:
- Brands with a long-standing reliability reputation, particularly certain Japanese manufacturers, tend to hold value well across their range, because used buyers trust them to keep running cheaply.
- Desirable SUVs and 4x4s have generally held value better than the market average in recent years, helped by sustained demand.
- Sought-after sports and performance models, especially from brands with limited production and strong badge appeal, can hold value unusually well when they're well maintained and low-mileage.
- Heading the other way: cars from brands with a weaker reliability reputation, and cars about to be replaced by a next-generation model, tend to depreciate faster than average.
These are patterns, not guarantees — an individual car's condition, mileage and history will move its value up or down within whatever pattern its brand and model generally follow.
How to factor depreciation into your buying decision
The simplest way to cut what depreciation costs you is to buy a car that has already been through its fastest years of value loss. Once a car is a couple of years old, its first owner has taken the sharpest drop, and you still get a vehicle with plenty of useful life left.
From there, the best protection against overpaying is checking the specific car in front of you, not just its type. Two examples of the same model, same age and similar mileage can still be worth different amounts once you factor in condition, service history and any past insurance write-off. Run a history check before you view a car seriously — it's far cheaper than a wasted trip, and it can flag issues (like a Category S or N write-off, or a mismatched mileage record) that would otherwise hit resale value hard.
It's also worth thinking about how you'll protect the car's condition once you own it — keeping up services, fixing small issues promptly, and weighing up whether a used-car warranty is worth paying for. All of that feeds back into how much the car is worth when you eventually come to sell it.
Depreciation vs running costs — the full cost of ownership
It's easy to focus only on the cost of fuel, tax, insurance and maintenance when budgeting for a car — but that's only half the picture. The other half is the value the car loses while you own it, and for many cars that loss is larger than everything else combined.
Our free car check includes a running-costs estimator that covers fuel, tax, insurance and maintenance, plus emissions-zone charges where they apply — a practical way to compare the ongoing cost of two cars you're considering. It's worth being clear about what it doesn't do: it estimates what a car will cost you to run day to day, not what it will lose in value. There's no tool, ours included, that can reliably forecast a specific car's future resale value — anyone claiming otherwise is guessing.
FAQs
How much does a car depreciate in the first year?
There's no single reliable UK figure for this — every "X% in year one" statistic we found online was unsourced. What's genuinely verifiable is that depreciation is fastest early in a car's life and slows as it ages, and that the rate varies a lot by brand, model, mileage and, for EVs, by the fast-moving state of that specific market.
Which cars hold their value best in the UK?
As a general pattern, cars from brands with a strong reliability reputation, popular SUVs and 4x4s, and desirable performance models tend to hold value better than average. Condition, mileage and service history matter just as much as the model itself — a well-maintained ordinary car can outperform a neglected desirable one.
Do electric cars depreciate faster than petrol or diesel cars?
They have for most of the last few years, but the picture is shifting. Auto Trader's Retail Price Index recorded used EV prices rising year-on-year for the first time since December 2022 in its June 2026 data, and SMMT reports used EV sales volumes growing much faster than the wider used market. Treat any depreciation comparison between fuel types as a snapshot rather than a permanent rule.
Does mileage affect how much a car depreciates?
Yes. Higher mileage generally means lower resale value, because it points to more wear and less remaining life before major work is needed, per RAC guidance. A full service history that backs up a genuinely low mileage helps protect value.
Is it better to buy a used car once the steepest depreciation has already happened?
Often, yes. A car that's a couple of years old has typically already absorbed the fastest part of its value loss, so you can get a lot of the car's useful life for a lower price than buying new.
How can I check how much a specific used car has depreciated, or is likely to?
There's no reliable tool that predicts a specific car's future value. The practical approach is to compare current asking prices for similar cars, and run a history check to confirm the car's mileage, condition and past record are what the seller claims — all of which affect what it's actually worth today.