Different vehicles tend to depreciate at significantly different rates. Sports cars, for example, tend to depreciate rather rapidly, in part because they are presumed to have been driven aggressively & often require expensive maintenance sooner. Many work trucks do a much better job retaining value as the vehicles are required to do work as part of the job. Some luxury cars are highly coveted even when used, which in turn gives them a lower rate of depreciation & makes them relaatively affordable to lease rather than buy.
Between losses from driving off the lot & other depreciation in the first year many cars lose about a quarter of their value in the first year. The cost of depreciation tends to slow significantly in subsequent years, so if you can find a reliable car that is 1 or 2 years old it may offer a great value relative to eating the initial "drive off the lot" depreciation.
If you have taken care of your car then make sure you keep maintanence records to prove you've taken good care of the vehicle. If you are consider buying a vehicle and the price seems too good to be true make sure you use Carfax or AutoCheck. If you believe the car may have been involved in flooding, have it professionally inspected before buying.
The used car market itself also has cycles to it. Used car values plummeted in 2008 & 2009.
After the Great Recession the United States Federal Government unveiled the Car Allowance Rebate System (CARS), which was colloquially known as the "cash for clunkers" program. The $3 billion incentive program caused many people to trade-in cars to buy or lease more fuel efficient new cars. The trade-in program retired a portion of the used car stock, which in turn lifted used car prices. Used car prices have been quite stable from the middle of 2011 through most of 2016. The demand pulled forward from the CARS program now has a glut of people trading in cars, which has pushed down trade-in values as dealers have expanded their margins on used cars.
Used car prices impact every aspect of the auto market, as the residual value of used cars determines the rate at which carmakers can lease new cars for & how much they can charge for new cars. In the first quarter of 2017 leases made up 31.06% of consumer sales. As residual car values drop, the cost of leasing must increase to account for the lower residual value. That, in turn, makes leasing a relatively less compelling option.
Here is a table which highlights the hypothetical depreciation of a typical $30,000 car, though actual rates of depreciation vary by make & model. For a more precise guide, you can look up what various used cars are listed for in the Kelley Blue Book or what they have recently sold for on a marketplace listing service which displays recent prices like TrueCar.
|Condition||Depreciation this Time Period||Total Depreciation||% Depreciation from Prior Value||% Depreciation from Purchase Price||Total Depreciation %||Ending Value|
|Driven Off Lot||$3,339||$3,339||11.13%||11.13%||11.13%||$26,661|
|First Year (after lot)||$4,080||$7,419||15.30%||13.60%||24.73%||$22,581|
Here are the IRS passenger automobile depreciation deduction limits from Publication 946.
|Date Placed in Service||1st Year||2nd Year||3rd Year||4th & Later Years|