If you were to guess which car retains its value best, what would you think? A BMW? A Mercedes? How about which cars depreciate the most? A Ford? GM?
As it turns out there is quite a discrepancy when it comes to which vehicles hold their value. The Toyota FJ Cruiser tops the list of vehicles that retain their value best, depreciating just 26% in 60 months. While the Nissan Leaf tops the list of vehicles that have depreciated the most, depreciating 77% in 60 months.
Visible Equity estimates the current market value of millions of vehicles for financial institutions across the United States. These indices are constructed using in-house data on over 6 million vehicle appraisals. Given the breadth and depth of Visible Equity’s data, we are able to provide a unique, depreciation index for each vehicle model sold in the U.S.
Once a sample of appraisal values is taken for each vehicle model, a scatter plot is created to visualize the trend. A “best fit line” is then derived to represent the curve of the data set as a whole. Perhaps you recall your high school algebra days when you asked, “when will I ever use this?” Well, your teacher is probably smiling as you read this because the curve looks a lot like a parabola you might have solved in 10th grade. In all cases, auto indices either take a linear or quadratic form. See the following plots for a visual example:
Once the best fit line is established we can then calculate depreciation rates for all vehicle makes and models. By nature of auto loans typically living 4 to 6 years, we used 5-year depreciation rates within our analysis. Consequently, here are the top ten best and worst cars over a 5-year (60 month) horizon…
VISIBLE EQUITY’S TOP TEN BEST VEHICLES
(Least amount of depreciation)
#10 NISSAN FRONTIER
Depreciates 36% in 60 months
The mid-size Nissan Frontier pickup combines versatility with practicality and is suitable for both work and the trail. It’s dynamic usage aids it retail valuation.
#9 HONDA ELEMENT
Depreciates 35% in 60 months
Manufactured from 2003 to 2011, the Element features a unique design and progressive style. This, along with off-road versatility, makes it one of the most value-packed cars on the market.
#8 JEEP WRANGLER
Depreciates 34.8% in 60 months
Wrangler’s origins date back to WWII, and while it retains the basic premise of a simple utility vehicle, it has been modernized in a way that is almost incomparable. The Wrangler has little direct competition, which may explain why it depreciates at one of the slowest rates.
#7 LEXUS GX 460
Depreciates 34.6% in 60 months
The Lexus GX 460 has one of the best resale values in the world of luxury cars. One reason is it’s legendary reliability, which is a notorious benefit of Lexus SUV’s and trucks. The GX also boasts a lot of standard features, tremendous capability, muscular horsepower, and reasonable pricing.
#6 HONDA FIT
Depreciates 34% in 60 months
With its good looks, fine handling and strong brand recognition, it’s no wonder the Honda Fit holds its value extremely well. These attributes, combined with the value it delivers in both its sticker price and fuel economy, compare favorably against the competition.
#5 SUBARU IMPREZA
Depreciates 34% in 60 months
With fresh styling and sport-infused flair, the Subaru Impreza offers all-weather capability and premium-brand engineering while maintaining its inexpensive operation. Subaru has long established itself as a builder of rugged small cars and according to the company, approximately 95% of Subarus sold in the last 10 years are still on the road.
#4 SCION xA
Depreciates 33% in 60 months
Scion’s initial introduction to the market featured this subcompact hatchback. The xA quickly gained a reputation as a dependable commuter car for its fuel efficiency, safety, and reliability.
#3 LEXUS IS-F
Depreciates 31% in 60 months
When it comes to depreciation, the Lexus IS-F is near the top of the premium midsize sedan segment.
#2 TOYOTA TACOMA
Depreciates 29% in 60 months
Tacoma has been the most popular pickup in its class for a decade, and has won many awards over that time. Tacoma dominates the segment with over 100,000 sold each year.
#1 TOYOTA FJ CRUISER
Depreciates 26% in 60 months
Designed in homage to the 1970’s Land Cruiser, The Toyota FJ is the crown jewel off off-road vehicles. Retired in 2014, its limited edition nature helps this vehicle retain value better than any other.
So there you have it. The top 10 best depreciating vehicles, just in time for the new year and the hundreds of other top 10 lists you will see!
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