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Car depreciation: how age, class and powertrain affect a car's value

How quickly a car loses value by age, class and powertrain, what speeds up the fall in price and what it means for anyone buying a used car.

November 9, 2026

Car depreciation: how age, class and powertrain affect a car's value

Key takeaways

A car loses value fastest in its first years. According to a Carvago analysis of advertised prices on the Czech market (2025), the price typically falls by 15–30% in the first year. After that, the decline slows.
By powertrain, electric cars lose the most. According to DAT, three-year-old electric cars with 60,000 km retained 49.5% of their original list price in Germany in October 2026, compared with 57.9% for petrol cars and 56.7% for diesels.
By class, what matters is mainly money, not percentages. With a similar percentage drop, a premium or luxury car loses far more in cash terms than a small car or a compact.
Used car buyers benefit from depreciation. With a car around 2–4 years old, the first owner has paid for the steepest fall in price.

Car depreciation is the difference between the price you pay for a car and the amount you later get for it. You don't pay it like a service bill, yet according to ADAC it is the biggest cost item of a new car (the other items are covered in the article Car running costs). How quickly the value falls depends mainly on the car's age, class and powertrain, and on how many similar cars are on the market at the time. Used car buyers have an advantage: the previous owner has already written off part of the original value for them. They just need to tell whether a low price reflects normal ageing or poorer condition.

How is car depreciation calculated?

For your own budget, the starting point is the price you actually pay for the car and the price you plan to sell it for:

Depreciation in % = (purchase price − resale price) / purchase price × 100

Market statistics, by contrast, are based on the original list price of the new car. If the first owner bought at a discount, they lost less than the difference from the list price suggests. So what the car once cost new matters little to you. You'll calculate any further depreciation from today's purchase price.

Percentages and money are often confused. An expensive car can retain a higher percentage of its original price and still cost its owner more money than a cheaper model, because the percentage is calculated from a higher amount.

How quickly does a car lose value with age?

The first years bring the biggest drop

As soon as a car enters the used market, it also competes with new examples that dealers offer at a discount. The next buyer can no longer choose the specification and takes on the car's history along with it. That's why the price falls even for an almost unused car.

According to an analysis by Carvago of advertised prices on the Czech market (2025), the price typically falls by 15–30% in the first year. Differences between models are significant. A sought-after version holds its price better than an expensive or harder-to-sell specification.

Later on, the decline slows down

As the years go by, the price of a typical car falls more gradually, not least because the percentage is calculated from a lower amount. It isn't a smooth curve, though. A new model generation, big discounts on new cars or a sudden influx of similar used cars can shift the price abruptly. Many cars return to the market from company fleets and leasing, so similar three-year-old examples are readily available. That puts pressure on their prices.

With an older car, technical condition carries more weight. A slower decline in value therefore doesn't necessarily mean cheaper ownership, as one bigger repair can wipe out the saving.

How do petrol, diesel, hybrid and electric affect the price?

Data from Germany, Europe's largest used car market, make it possible to compare powertrains. According to DAT, three-year-old cars with 60,000 km had the following value relative to their original list price in October 2026:

Powertrain	Residual value	Drop from list price
Petrol	57.9%	42.1%
Diesel	56.7%	43.3%
Electric	49.5%	50.5%

Petrol and diesel cars are in a similar position. Electric cars lose around half of their list price in three years.

Petrol and diesel: the match with the car matters

A petrol car suits both town and motorway driving, which gives it a broad pool of potential buyers. But how well the engine suits the car also affects how easily it sells. A weak base engine in a small hatchback doesn't put buyers off; in a large family estate, it does.

Diesel still has its following among drivers who often cover long distances. A large touring estate with a diesel engine is therefore easier to sell than a small city car with a diesel. Company fleets still buy diesels in large numbers, so there are plenty of three-year-old ex-lease diesels on the market.

Hybrid: it depends on the type

A conventional hybrid that isn't charged from a socket, such as the Toyota RAV4 Hybrid, appeals thanks to its economical running in town and because the owner doesn't have to change their habits. A plug-in hybrid only makes sense for someone who charges it regularly, which narrows the pool of buyers. The “hybrid” label alone therefore says little about future value.

Electric car: under pressure from technological progress

An older electric car loses value even without any change in its condition when new models offer longer range, faster charging or a lower price. The Tesla Model 3, for example, was facelifted in autumn 2023, and older examples have been competing with the newer version ever since. For used car buyers, this is an opportunity to get a big discount. A used electric car is a good buy when its range is enough for your journeys and the traction battery is in good condition.

Which classes of car lose the most value?

The class determines the original price, the pool of potential buyers and how much the car will cost to run. The percentage drop by class can't be predicted precisely. In cash terms, though, there is a clear rule: the more expensive the car, the more money it loses.

Class	Examples	What affects the used price	What it means for the buyer
Small cars	Hyundai i10, Toyota Aygo	Low original price, steady demand for cheap city cars	They lose the least in cash terms, but the saving on a used one is small too
Compacts	Škoda Octavia, Volkswagen Golf	Wide range of uses, large supply of comparable examples	Prices are easy to compare, and the large supply keeps them down
SUVs	Hyundai Tucson, Toyota RAV4 Hybrid	Popular body style, but prices vary widely by engine and drivetrain	A sought-after version holds its price better than a weak base engine
Premium cars	BMW 5 Series, Volvo XC60	High original price, expensive optional extras	On a mainstream car's budget you get more comfort, but also higher servicing costs
Luxury cars	Mercedes-Benz S-Class	Small pool of buyers, complex technology	A big discount on the new price doesn't mean cheap ownership
Electric cars	Volkswagen ID.3, Tesla Model 3	Rapid technological progress, price changes on new models	The biggest discount on the list price, but also the risk of a further fall

When, after some years, the purchase price of a luxury saloon approaches that of a family compact, the costs of its tyres, servicing and repairs stay at luxury-class levels.

What slows the fall in price and what speeds it up?

Sought-after equipment and colour

A sensible engine, practical equipment and a common colour appeal to more buyers than an unusual specification. Neutral shades sell more easily than bold colours that only some buyers like. You won't get the full cost of optional extras back when you sell. Expensive personalisation is worth little to the next owner and can even shrink the pool of buyers.

Mileage, condition and service history

The more the mileage departs from what is normal for the car's age, the more it reduces the price (covered in detail in the article Used car mileage). A continuous service history, a well-kept interior and a clear past reduce the buyer's uncertainty and help hold the price. Unexplained repairs or a neglected condition, on the other hand, are grounds for a discount.

Supply and demand

When there are many similar cars on the market, sellers compete on price. That's good news for anyone buying a mainstream model. A small number of listings doesn't necessarily mean a rare car. Often it's a specification nobody wants.

What this means for used car buyers

You save the most by leaving the steepest drop in price to the first owner. A used car around 2–4 years old is usually past the steepest part of the curve, yet technically still young. The article How old a used car to buy covers this in detail. You'll also lose value more slowly yourself if you choose a sought-after combination of engine, equipment and colour on a mainstream model. Conversely, anyone who wants as much car as possible for as little money as possible will find the biggest discounts on electric cars and premium classes. But they have to reckon with a further fall in price or more expensive servicing.

What to watch out for

A discount on the list price isn't your saving. Calculate further depreciation from the price you pay.
A low price doesn't change the car's class. Premium and luxury technology remains expensive to maintain, even after a big drop in price.
An unusually cheap offer often has a reason other than age. A technical inspection, such as CarAudit™, reveals the difference between a market-wide decline and a problem with the individual car.
You pay for high mileage and gaps in the history twice. Once when buying, through the risk of repairs, and again through a lower price when you sell.
The future resale price is not certain. Budget for the car continuing to lose value.

Carvago has the widest selection of used cars, around a million cars from dealers in several European countries. With mainstream models, there's no need to take the first example available. Among young used cars, you can also pick a sought-after combination of engine, equipment and colour.

A low price only makes sense for a car in good condition. That's why, before sale, a technician checks every car as part of the CarAudit™ inspection, which has up to 270 checkpoints. The inspection covers a check of available information on the car's history and legal status, an inspection of the exterior, interior and technical components, diagnostics and a test drive. The customer knows the result before deciding to buy, and Carvago guarantees the condition stated in the certificate.

Before sale, Carvago buys the car from the original seller, becomes its owner and takes on its risks. The customer therefore buys directly from Carvago. Using a power of attorney, Carvago also arranges the registration of the car in the customer's country and its delivery, so the customer can drive off straight after handover.

FAQ

Can a used car also go up in value?

Yes, when new cars are in short supply or a sought-after model is scarce on the market. But that's the exception. With a typical car, expect a gradual decline in value, not a profit when you sell.

Is market depreciation the same as depreciation in the accounts?

No. In everyday speech, depreciation means the gradual fall in a car's value with age and mileage. Accounting and tax depreciation in businesses is a different matter and follows its own rules. It doesn't determine a car's market price.

Is the trade-in price the same as the price in the advert?

No. A dealer has to factor the preparation of the car, their own costs, risk and margin into the advertised price, so the price they pay to buy a car in is lower. The advertised price is also an asking price, so the actual selling price tends to be somewhat lower still.

Do you get the money spent on regular servicing back when you sell?

Not in full. A documented service history prevents a deduction from the price and speeds up the sale, but service bills aren't added to the car's market value.