Are cars a good investment? We look at the top and bottom models and types for depreciation
By Jim Bray
Do you look at your car purchase as a way to get from Point A to Point B? Do you look at it as a way to make money on your automotive investment? Or do you just want a vehicle that won't depreciate ridiculously the moment you drive it home?
However you slice it, it seems the only way you're going to not lose much moolah on a car purchase is to drive it long enough – while keeping it in pristine condition – to have it qualify as a classic suitable for auction. And that's a crap shoot anyway.
That said, some vehicles depreciate worse than others.
According to an iSeeCars study, which they say in a press release analyzed over 1.1 million vehicles sold from November 2022 to October 2023 to determine five-year depreciation rates, depreciation was lower "across all major segments than in 2019, with the average used car holding its value 10.8 percent better than it did pre-pandemic." That may be good news for those who want to sell their used car, but it's bad news for those looking for a bargain in a used vehicle. Depending on the vehicle, of course.
The worst segment for depreciation? Those electric cars governments are trying to push us into. What a surprise!
According to iSeeCars Executive Analyst Karl Brauer, "while all used cars hold their value better than they did pre-pandemic, electric cars still lose about half their value after five years, far more than any other vehicle type." Brauer noted, however, that hybrids are among the best cars at retaining value, which suggests that "consumers appreciate their combination of high fuel efficiency and zero range anxiety."
Indeed, hybrids have come a long way from the days of the original Honda Insight and Toyota Prius, both of which offered good gas mileage as long as you were willing to drive more slowly than you could walk.
Okay, that may be an exaggeration, but I remember driving those old hybrids and they were bloody awful if you cherish the art of driving. But I digress.
One thing I found particularly annoying – in a Murphy's Law kind of way – is that the car that depreciates the least over the five-year period was the Porsche 911. "Oh sure," I thought to myself when I read the press release, because if there's one car in the world that I would want to buy used (assuming the Lotto Gods smiled upon me) it's the 911.
The 911 was followed by the Porsche 718 Cayman (nearly equally annoying to me!), the Toyota Tacoma, Jeep Wrangler/Wrangler Unlimited, Honda Civic (sedan/hatchback), Subaru BRZ and the Chevrolet Camaro. Why the BRZ is high on the list while its Toyota sibling the GT86 isn't even in the top 25 is beyond me, because they're the same car except for the logos. Go figure.
The cars that lose the most value are the Maserati Quattroporte, BMW 7 Series, and Maserati Ghibli, followed by the BMW 5 Series (hybrid), Cadillac Escalade ESV, BMW X5, INFINITI QX80, Maserati Levante, Jaguar XF and the Audi A7.
Analyst/commentator David Blackmon, reporting on the iSeeCars study, noted that "the disparity between EVs and Hybrids in this measure shows that a high percentage of drivers are motivated to buy cars that result in lower emissions. They just aren't willing to live with persistent range anxiety and lack of performance as advertised that has become the hallmark of full battery electric cars." Blackmon admits that he'd buy a hybrid himself, "if their prices ever manage to come into true parity with ICE (internal combustion engine – i.e. normal) cars."
Blackmon lists some of the factors and conditions he thinks are behind electric vehicles' poor performance in the used marketplace: they depreciate more rapidly, cost more to insure, are harder to resell, and "more and more dealers won't take them on trade-in."
Not only that, but as of this writing it appears that unsold EV's are piling up on dealership lots, even as more and more new EV models are being thrust into the marketplace. Blackmon notes that some (EV) models are now being priced well below cost in order to avoid inventory accumulation, while some U.S. States (such as California, I'm sure to no one's surprise) are starting to restrict buyers' ability to charge the vehicles at home, which means you have to drive to a charging station, which may not at this time be close at hand, then perhaps wait in line to access the charger, then wait ad nauseam to actually charge the vehicle.
And of course, then you have to drive it home again, which cuts down on your range for doing the driving you actually want to.
I've written about such issues before as the heavy hand of governments continue to push EV's on a public that obviously does not want them. I guess this is what these governments consider to be "serving the public", while in reality, of course, it's nothing of the sort. It's just heavy handed, ideologically-driven government action to force you to live the way they want you to.
They aren't serving the public; they're coercing it. And it appears people are telling them to pound sand. That makes me happy.
I don't have anything against electric vehicles as such; it's just that, unless you're merely using them to commute and take short trips from your home base, they're totally impractical at this time considering the state of the technology and infrastructure. Now, I haven't driven an EV for a couple of years, but the last one I had – Ford's "Mock" E Mustang SUV – proved the point to me in spades.
The Mach E is a very nice vehicle and if I were commuting to work it would be a pleasant way to do it. Not only that but, depending on how long that commute might be, I could drive it for a week before having to recharge – and then charge it via a regular outside electrical outlet at my house.
But when I tried to take it on a road trip, I discovered that range anxiety is a very real thing. As I noted in my review, not only did the EV SUV not get me where I wanted to go, it cost more to charge than my "gas guzzling" V6 Sportwagon, which burns premium gasoline. It also cost me two hours of time recharging twice on that (approximately two hours each way) trip, whereas my "Gaia-raping" all-wheel-drive wagon fills up in five minutes or so – and I drove it for two weeks after doing the identical road trip before having to refill.
Now that's not completely fair to the Mach E – and as always, I don't mean to slag Ford here because its EV's are representative of the species. I only use it as an example because I have hands on (or, perhaps, butt in?) experience with it and I don't have such experience with the others.
One should also note the fact that EV's aren't environmentally friendly, regardless of the hype: they just take the emissions from the exhaust pipe (which are already miniscule for ICE vehicles, thanks to decades of innovation and regulation) and move them to the power generating plants where they are forced to compete for juice with the powering of other such frivolous fluff as home heating, lighting, etc.
Then there's the issue of how clean or unclean the production of the EV batteries and stuff may be, let alone how long they'll last and how much it'll cost to replace them.
Clearly, EV's aren't the panacea they're being promoted as, even with government incentives that force your friends and neighbours to subsidize your EV purchase whether they want to or not. Fortunately, it appears that consumers aren't buying into the hype anyway, and this is causing carmakers to curtail the production of these vehicles that few seem to want.
Hopefully, it's also waking up consumers to the fact that the government may not have their best interests at heart, something that should have been obvious for years – especially when you take such things as the Scamdemic into account.
Now, if only the 911 would depreciate more quickly! I guess Porsche could make it electric, but then I wouldn't lust after it any more.
I think that would make my wife happy, though.
Copyright 2023 Jim Bray