Buying new means paying a premium for the newest features, the full warranty, and the ability to configure the car exactly how you want it — but it also means absorbing the steepest part of the depreciation curve. Here's what that typically looks like, year by year.
Year 1: the biggest single hit
The first year is usually the worst for value retention, with commonly cited figures around a 20% drop from the original purchase price. Some of this reflects genuine wear, but most of it is the new-to-used transition: the moment a car is registered and driven, it's competing in the used market instead of the new one.
Years 2-5: steady, compounding decline
After the first year, value typically continues to decline at a slower but still meaningful pace — often cited in the neighborhood of 15% of the remaining value per year through year five. By the five-year mark, a car that cost $35,000 new might realistically be worth somewhere in the $14,000-$18,000 range, depending heavily on mileage, condition, and how the specific make and model tends to hold value.
What actually slows the loss
- Below-average mileage for the car's age.
- A complete, documented maintenance history.
- Popular trims and colors — unusual configurations can be harder to resell.
- Models with a reputation for reliability, which tends to support stronger resale demand.
If minimizing depreciation matters to you
Some buyers deliberately let someone else absorb the first year or two of depreciation by buying a lightly used, low-mileage vehicle instead of new — trading the new-car experience for a meaningfully lower total cost of ownership. Whether that trade-off makes sense depends on how much the new-car warranty and configuration options are worth to you personally.