Depreciation: the ten cars that will hold their value in 2012
Cars can depreciate at a rapid rate. However, these ten are the most likely to hold their value.
Which are the most important factors to take into account when choosing a new or used car?
With the price of fuel hitting all-time highs, you should check a vehicle's fuel economy, as well as deciding whether you want a petrol or diesel engine. Be sure to read Diesels are cheaper than petrol cars...for some of us
Also, when doing your sums, you'll need to add on the cost of car insurance, so check to see which of the 50 insurance groups your new vehicle falls into. Likewise, your Vehicle Excise Duty (VED, or 'road tax') could be anything from zero to over £1,000 a year, depending on the car's CO2 emissions.
And then there's for service, maintenance and MoT costs, plus interest charges and fees if you buy using a personal loan or other finance.
The biggest cost of ownership
However, the above list excludes what is often the biggest cost of owning a car: depreciation.
Depreciation is the tendency for vehicles -- both new and old -- to lose value over time. As cars age, they become less valuable, largely because of wear and tear. Generally, the biggest loss of value comes in the first year of a new car's life, when depreciation is at its steepest.
Obviously, this loss of resale value really does matter, because the steeper a vehicle's depreciation, the less you'll get for it when you come to sell and replace it. Depreciation varies widely between makes and models, but typically ranges between 15% and 35% in the first year. Then again, depreciation can be even higher for cars with high mileages and those that haven't been well looked after.
How low can depreciation go?
On the whole, cars that are well-built, reliable and popular tend to hold their values much better than cars seen to be unpopular, unreliable or at the lower end of the quality scale.
To show you how low depreciation can be, used-car website Motors.co.uk has produced a survey of ten small cars that it predicts will hold their value well in 2012. Here they are:
1. BMW 1-Series
A popular choice for businessmen and families alike, a 2010 model will set you back around £19,197. On average, a new model costs just over £20,329, so the BMW 1-Series loses just 5.6% of its value in the first year, which is incredibly low.
2. Ford Focus
A new Focus bought a year ago would have cost £11,919, but is worth £11,207 today. This 6.4% drop in value in 12 months is a testament to the enduring popularity of the Focus.
3. Fiat 500
A funky, fun and fiercely popular first car, a Fiat 500 bought a year ago was priced at £9,815. Second hand, it now sells for £9,137, which is a drop of just 6.9%. Motors.co.uk reckons the 2010 and 2011 versions are both worth a look.
4. BMW 5-Series
The first of three classy German autos on our list, the BMW 5-Series is a firm favourite. A year ago, one of these cars would have set you back an average of £35,590, but now changes hands for £31,758, for a price fall of 10.8%.
5. Audi A3
The upmarket big brother of the Volkswagen Golf, the Audi A3 is a dream to drive. A new model costing £20,994 would sell for £18,437 with one year on the clock, which is a relatively modest 12.2% drop.
6. Vauxhall Corsa
Among the UK’s most popular and reliable cars, the Corsa cost £9,475 new, but still goes for £8,206 a year later. That's a price fall of 13.4%, making the Corsa "a great option for young drivers wanting a reliable first car with a great resale value," according to Motors.co.uk.
7. Ford Ka
The second of three Fords on our list, a shiny, new Ka came with a price tag of around £8,866 last year. Twelve months on, it sells for £7,659, which is a modest decline of 13.6%.
8. Mazda 6
The Mazda 6 holds its value well. Worth £18,379 new last year, it now fetches £15,876. This depreciation of 13.6% is surprisingly low for a mass-market, Japanese model.
9. Mercedes C Class
A solid favourite of well-heeled motorists, a Mercedes C Class costing £26,468 a year ago would sell on for £22,703 today. This fall of £3,765 works out at a first-year reduction of 14.2%, or £1 in every £7 lost to depreciation.
10. Ford Fiesta
The final Ford on our list is the ever-popular Fiesta, a British classic that definitely stands the test of time. A year ago, a new Fiesta would set you back £11,133, but would go for £9,469 today. That's a price fall of 14.9%, which makes the Fiesta a solid buy.
Choosing a cheaper make or model of car often backfires. This is because higher depreciation can make a low-cost vehicle a false economy, since it loses its value so rapidly.
Therefore, when choosing your next vehicle, be sure to ask your friendly neighbourhood petrol-head about the depreciation rates of different manufacturers. Otherwise, you could get a shock when you come to sell your once-prized motor!
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