You’ve probably heard it said that a new car loses thousands of dollars in value the minute you buy it. It’s true, but some new cars lose their value faster than others.
It’s not something most car-buyers probably think about because they’re usually more concerned with what the vehicle costs, what the monthly payments will be, and what options come with the car.
Those are all important factors, but Kelley Blue Book (KBB) says how well a new car holds its value should also be part of the buying decision. It has analyzed the resale values of dozens of models and generally found that saving money by purchasing a base model will usually cost you when it's time to sell or trade it in.
When it comes to brands, KBB says Subaru and Porsche hold their values the best -- Subaru among mainstream brands and Porsche among luxury nameplates. Both provide the most bang for their buck in the long term.
"Once again, this year's Top 10 models are dominated by trucks, except for the all-new and much-hyped 2020 Chevrolet Corvette appearing on this year's list,” said Eric Ibara, director of residual values for KBB. “Without the imminent prospect of significantly higher gas prices, the used-car demand for trucks continues to be an ongoing, multi-year trend, directly impacting new cars."
Top 10 models
The 10 2020 models that retain their value best are:
While Subaru did not place a model on that top 10 list, it shows up prominently in the breakdown of vehicle class. The Impreza claimed the title among compacts, the Legacy was best among midsize cars, the Crosstrek took top honors among subcompact SUVs, the Forester was tops among compact SUVs, and the Outback held its value best among two-row midsize SUVs.
Depreciation is the biggest cost
According to KBB, depreciation is often the biggest expense that vehicle owners face in the first five years of ownership. An average 2020 model-year car or truck will only retain about 37 percent of its original value after a five-year ownership period, meaning that a $35,000 new car today will only be worth somewhere close to $12,950 after five years.
KBB says all the vehicles in its Top 10 are expected to retain more than 50 percent of their MSRP during that period.
Because of steep depreciation, a growing number of savvy consumers are buying three-year-old used cars instead of a new vehicle. When buying a used car, selecting a vehicle not on the KBB list -- one that has already lost a lot of its value -- might provide the best bargain.