Depreciation Deep Dive: How it Works & How to Minimise It

Put simply, depreciation is the reduction in your car’s value over time. The classic analogy? Buy a brand-new car, and it can lose up to 20 per cent of its value as soon as you drive it out of the show room.

From there, the decline continues. The biggest chunk of depreciation occurs in the first three years before it starts to level out. The main factors that drive depreciation are:

• Age – Newer cars lose value quicker, before they start to plateau in price.
• Mileage – The more kilometres travelled, the lower the value.
• Condition – Scratches, dents or poor servicing history drag down resale.
• Demand from the second hand market – A Toyota Hilux will hold its value better than an obscure import simply because more Kiwis want one as a used buy.

1. Buy Smart

The easiest way to win at depreciation is to let someone else take the biggest hit. A one- to three-year-old car has already lost much of its “new car premium” but still has plenty of life left in it. Some might still be covered by a warranty and roadside assistance.

Stick to popular makes and models with strong reputations in New Zealand. The Toyota Hilux, for example, holds its value well. Even in smaller segments, familiar names like the Corolla or Honda CR-V tend to be safer bets than European models.

It’s also worth considering colour and options. Neutral colours like white, silver, and black often appeal to the widest audience, while unusual shades or quirky extras may narrow your pool of buyers later on.

2. Maintain Your Ride

A full service history is gold when it comes time to sell. Buyers want reassurance that your vehicle has been cared for, and a stamped service book or online record provides exactly that.

3. Drive Less

It sounds obvious, but it works: lower mileage equals higher resale value. A 2020 model Corolla with 50,000km on the clock will be worth more than one that has travelled 150,000km come time to sell. 

4. Timing is Everything

Knowing when to sell is just as important as knowing when to buy. You might want to move it on before you start running into major service requirements. Let someone else, who hasn’t done their research, deal with those bills.

Similarly, watch for new model releases. When a fresh version of your car hits the market, the previous generation often takes a dip in value. And make sure your car has a current WOF and Rego when you sell, as it’s the law.