How do I calculate depreciation?

It’s widely understood that the moment a new car rolls off the dealership floor, its value has probably dropped up to 15%, before dropping a further 15% value by the end of year one.  

1. The ATO estimates most cars depreciate by 25% per annum.

While cars are not considered a wise investment, they are a necessity here in Australia - which means we’re all making bad investments. 

However, with some research under your belt, there are opportunities to minimise the impact of depreciation on your back pocket. 

How to Calculate Vehicle Depreciation

To calculate car vehicle depreciation, we first take the sticker price of that vehicle when it was brand new and subtract its current market value.

New Car Price - Current Value = Price Difference

Divide the difference by the New Car Price and Multiply by 100 = Depreciation Percentage 

• Example: $30,000 (new car price) - $22,000 (current value) = $8,000 

• $8,000 / $30,000 x 100 = 26.6% deprecation 

It’s best to use data from a reputable valuation platform like Redbook, and stick to identical model variants to get a clear idea of depreciation, specific to that individual model. 

1. Savings.com.au’s two cents 

While there’s a lot of moving parts when it comes to vehicle depreciation, it’s unavoidable and shouldn’t necessarily get in the way of purchasing a vehicle you love. After all, you can’t be too disappointed if you know from the outset that you’re purchasing a depreciating asset.

For the more logical buyers with a shorter time frame that involves selling in a few years, current market trends are indicating that fuel-efficient vehicles and SUVs are the most in-demand segments of the market, likely to experience slightly less aggressive rates of depreciation. 

Your safest hedge against depreciation will always come down to a handful of automotive fundamentals: take care of the vehicle, keep up with the service intervals, and maybe think twice about a bright pink paint finish.

Top 10 Best Selling Vehicles and their Depreciation Rates

To help put everything in context and use the all-important formula above, let’s take a look at depreciation rates across 10 of Australia’s best-selling vehicles so far in 2025.

With the help of the latest VFacts report from the Federal Chamber of Automotive Industries (FCAI), we’ve listed out the top ten highest volume sellers so far in Australia, and we’ll be breaking down their depreciation rates to see which models weather the storm best.

For reference, we’re going to look at depreciation after a three-year ownership period, which tends to be the most significant for a vehicle. 

Typically, the depreciation curve tends to flatten out a little bit at the three-to-five-year mark, with another notable drop when the factory warranty expires. 

We will also be using an average of Redbook’s resale value estimates and have listed the most popular model variants which, down the line, often prove to be the most desirable. 

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Ford Ranger Depreciation

Ford’s Ranger lineup is tough-as-bricks as it remains Australia’s best-selling vehicle so far in 2025. 

Toyota RAV4 Depreciation

Toyota’s midsize SUV has become a go-to option for families, particularly in hybrid form. 

Toyota HiLux Depreciation

The almighty HiLux is a go-to option for working Aussies, consistently topping sales charts.

Isuzu D-MAX  

The D-MAX is famed for its work-ready platform, matched by immense off-road abilities. 

Ford Everest Depreciation

The Ford Everest remains an all-rounder Aussies have come to love for school runs and outback adventures alike. 

Toyota LandCruiser Prado

Toyota LandCruiser Prado is long known as an off-road SUVs with proven body-on-frame engineering and rugged heritage.

Hyundai Kona

Hyundai Kona has evolved from a practical, stylish subcompact SUV into a tech advanced EV-forward model (following its 2024 redesign).

Mazda CX-5 Depreciation

Mazda’s midsize SUV hero looks great, drives smooth and offers a tonne of variety within the jam-packed range. 

Mitsubishi Outlander

The Outlander sits as one of the few midsize SUVs with a seven-seat cabin, and fuel-efficient plug-in hybrid (PHEV) engine option. 

Tesla Model Y Depreciation

Tesla’s battery-electric midsize SUV is spearheading EV adoption in the family segment. 

Car Models with Lowest Depreciation Rates 

With our small dataset, we can see that the following models have experienced the lowest rates of depreciation over the past three years. 

This is namely due to limited availability for popular vehicles that caused wait lists to explode and, as a result, solidified prices on the second-hand market. 

• Toyota LandCruiser Prado VX 4WD - 19.52%

• Toyota HiLux SR5 Double Cab 4x4 Auto - 21.07%

• Toyota LandCruiser Prado GXL 4WD - 22.98%

• Toyota HiLux Workmate Double Cab 4x4 - 25.92%

• Toyota RAV4 Cruiser Hybrid 2WD - 26.67%

Car Models with Highest Depreciation Rates 

On the flip side of the equation, below you can find five car models that have depreciated the most over the past three years, largely caused by new-generation replacements arriving and questions on perceived reliability. 

• Tesla Model Y Long Range - 55.04%

• Tesla Model Y Performance - 48.60%

• Mazda CX-5 Maxx Sport FWD Auto - 47.24%

• Mitsubishi Outlander PHEV Exceed - 44.36%

• Mazda CX-5 GT AWD - 42.71%

Luxury Car Depreciation

Using data from the FCAI, we can see that the list of best-selling luxury car brands is topped by Tesla, followed by BMW, Mercedes-Benz, Audi, Lexus and Volvo. 

Below you can find depreciation rates for each of those brand’s two best-selling vehicles to compare with more affordable members of the vehicle segment.

Tesla Depreciation

BMW Depreciation

Mercedes-Benz Depreciation

Audi Depreciation

Lexus Depreciation

Volvo Depreciation

Why do premium vehicles depreciate so fast?

It’s a combination of their high initial purchase price and the fact that buyers are wary of inheriting extortionately priced fixes when things go wrong - especially out of warranty.  

Yes, it’s possible that your current vehicle will become a cult-classic one day and the value will skyrocket, but this takes both time and a bit of a knack for predicting a soon-to-be-classic.

Maximising Vehicle Resale Value

You can’t fight the tide of depreciation, but there are a number of things you can try to leverage for the best possible price when selling your vehicle on the second-hand market. 

In the end, what someone is willing to pay is technically what it’s worth, but there are a few things to keep in mind to be best-prepared when it comes time to sell online or to a dealer. 

Trim Level  

Within any model range, there will be a handful of model variants, otherwise known as trim levels. Depending on your budget, stepping into a trim higher than the base model can be a great option to curb depreciation rates, which often impact entry-level vehicles the hardest.

Ironically, it’s often best to avoid the range-topping variants which often have large depreciation rates from their high, initial purchase price. 

Fuel Efficiency 

Not only are fuel-efficient vehicles more affordable to own, they’re becoming even more appealing to buyers on the second hand market. With rising fuel costs and tightening belts, a fuel-efficient vehicle, be it a small-capacity petrol engine, a conventional hybrid, or plug-in hybrid vehicle (PHEV), is becoming one of the best bets to curb the impact of depreciation. 

Warranty Coverage

A warranty gives you the confidence of knowing a major fault from the vehicle’s assembly will be covered by the manufacturer if anything were to go wrong. Vehicles are much more valuable when sold with some existing warranty coverage, especially premium vehicles. 

Body Shapes

The shape of vehicle you buy, whether it’s an SUV, hatchback, or a sedan can have a sizable impact on its resale down the line. For quite some time now, SUVs have dominated sales charts, meaning they’re highly desirable among buyers, while sedans have seen their sales drop in recent years due to dropping consumer demand. 

Mileage 

Mileage is a big one when it comes to depreciation rates, and it’s arguably the single biggest determining factor of resale value, because it's a clear indication of just how used that vehicle is. Country-kilometres are king, with stretches on open roads and highways taking the least toll on a vehicle.

Redbook lists its ‘average odometer’ readings for models alongside indicated prices which gives a pretty clear picture of where your car’s value sits on the scale. 

Condition  

The visual condition of a vehicle is a pretty accurate signifier of just how well it’s been treated, which has a huge impact on its value on the second-hand market. Tell-tale signs like faded paint or a cracked dashboard from UV exposure make vehicles that have been properly garaged for their lifespan even more desirable when it comes time to sell. 

Logbooks 

One of the easiest and most effective ways to confidently check on a vehicle’s reliability should be sitting in the glovebox - the logbooks. A full service history with a licenced mechanic or dealership is worth its weight in gold down the line, with more receipts the merrier. 

Colour 

While it seems a bit unusual, the colour of the vehicle does indeed have an impact on the rate of depreciation you might experience. According to a study from the U.S. Chase Bank, white and black are the best colour options for maximum resale value, followed by grey and silver, while yellow, orange, red, and brown are reportedly the worst. 

Modifications  

Owners that give into the temptation of modifying their vehicle may experience more aggressive levels of depreciation when it comes time to sell, with the second-hand market far preferring stock vehicles due to reliability concerns.