Question about New Car Depreciation

cool_aquariancool_aquarian Member Posts: 15
edited June 2015 in General
I live in South California, and am currently contemplating buying a used or new sedan/compact (something similar to civic/mazda3).

I've read a lot about high depreciation on new cars:
- about 10% as soon as drive out of dealership
- atleast additional 10% in next year
- reaches about 60% of its value in 3 years
And so on till it is about 40% of value after 5 years of owning

But yet, I am unable to see any private party or a dealer whose used car prices are anywhere near to above depreciation figures compared with current new car prices.
  • Private parties are selling 3 year old cars for hardly 2-3K less than current price of new car(I am sure they must have paid much higher money on insurance than this)
  • Dealers are no better. They are selling one or two year old cars with 30-40k mileage at just 2K less than price of new car (same trim)

Where is the high depreciation?? I don't see it anywhere in used car prices all over.

At the end, it just feels like buying a new car is best option. Same thought is shared by many of my friends looking to buy used car after doing months of hunting on craigslist and used car dealer websites.

care to share any thoughts??


  • steverstever Guest Posts: 52,454
    Didn't check the Civic but the first year depreciation hit on a '15 Mazda3 is pretty bad. True Cost to Own. The problem is that the numbers are, I think, based on trade-in values. Sell your used car yourself and you generally don't take as big a hit (tax savings in some states on trade-ins negate some of that advantage).

    Dealers will claim that they incur reconditioning and overhead costs and that justifies marking the resale price up. Lots of dealers seem to CPO used cars and don't even bother to check that the tires match though, so that one is bit iffy. It's just easier to buy cars at dealers - a whole lot to choose from and if you do get a lemon, at least there's someone to yell out. You may never find a craigslist seller again and it's often hard to find what you want.

    This article may be of interest:

    Drive a (Nearly) New Car for (Almost) Free!
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,482
    edited June 2015
    Well they aren't "selling" the cars at those prices. That's what they are asking. An asking price is nothing more than the exercise of your First Amendment rights :smile:
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