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📉 Car Depreciation

Model how a car's value declines over time: a steep year-1 drop followed by a slower ongoing rate, with a mileage penalty. See value retained, average annual loss and when the car hits 50% of its original price.

Transport & Urbanism3DEasy60 FPS

The model

The curve is two-phase: V(1) = V0·(1 − d1), where d1 is the steep year-1 depreciation rate, then V(t) = V(t−1)·(1 − dn) for every year after, where dn is the slower ongoing rate. A small mileage penalty (+0.5% depreciation per 1,000 miles driven over 10,000/yr) is added to both rates, reflecting how above-average mileage accelerates value loss.

Why the curve isn't a straight line

New cars typically lose 20–30% of their value in the first year alone — driven by "new car smell" wearing off, the moment a car becomes legally "used", and rapid model-year turnover. From years 4–7 the rate slows to roughly 10–15% a year, and after about eight years depreciation flattens further, with mileage and condition becoming the dominant factors rather than age itself.

What changes the curve

Segment matters enormously: luxury and sports cars often depreciate 20–30% in year one and keep falling fast, while compact and economy cars, and larger SUVs and trucks, tend to hold value better thanks to steadier demand. Mileage is widely considered the single biggest factor a buyer can control — a well-maintained, low-mileage car with full service history commands a noticeably higher resale price than an identical model with high mileage or a patchy history.

About this simulation

This simulation models the classic two-phase depreciation curve every car follows: a steep drop in the first year, then a much gentler decline afterward. Value is tracked year by year against a 50%-of-original reference line, with a marker showing exactly when the car crosses the halfway point.

🔬 What it shows

A single declining value curve (blue) from the purchase price down to its projected value at the end of the period, plus a dashed red reference line at 50% of the original price. A pulsing marker lands on the curve at the year it first drops to or below that halfway point.

🎮 How to use

Set the purchase price, the steep year-1 depreciation rate, the slower ongoing annual rate, how many years to project, and annual mileage. Mileage above 10,000/yr adds a small extra depreciation penalty to both rates — drag it up to see how a high-mileage car ages faster than the same model driven gently.

💡 Did you know?

New cars typically lose 20–30% of their value in the very first year, more than double the roughly 10–15% annual rate that follows in years four through seven — which is exactly why buying a one- or two-year-old used car, rather than new, is one of the simplest ways to avoid the steepest part of the curve.

Frequently asked questions

Why do new cars lose so much value in the first year?

A combination of factors: the car becomes legally "used" the moment it's driven away, buyers pay a premium for the newest model year which resets annually, and the badge of a brand-new car (and any manufacturer incentives on it) disappears the moment it's sold on. Typical first-year depreciation runs 20–30%, roughly double the ongoing annual rate.

Why does the depreciation rate slow down after a few years?

Once a car is a few years old, most of the "newness premium" has already been lost, so the remaining value declines more gradually — usually 10–15% a year in years four through seven, and often just a few percentage points a year after around eight years, when mileage and condition become the dominant factors rather than age itself.

How much does mileage really matter?

It's widely considered the single biggest factor a buyer can control. Two identical cars of the same age can have significantly different resale values if one has covered twice the miles of the other — which is why this simulation adds a mileage penalty of roughly 0.5% extra depreciation for every 1,000 miles driven per year above a 10,000-mile baseline.

Do all cars depreciate at the same rate?

No. Luxury and sports cars often depreciate fastest (sometimes 20–30% in year one alone) due to rapid technology turnover and status-driven demand, while compact cars, economy cars and larger SUVs or trucks tend to hold value better thanks to steadier, broader demand.

How can I minimise a car's depreciation loss?

Buying a slightly used car (letting the first owner absorb the steepest year-1 drop), keeping mileage moderate, maintaining a full service history, keeping the car in good condition, and not overpaying at purchase are the most effective, well-established ways to reduce total depreciation loss over an ownership period.

⚙ Under the hood

Model realistic car depreciation: a steep year-1 drop followed by a slower annual rate, with a mileage penalty, tracked against a 50%-of-original-value line.

Three.jsTransportDepreciationFinance

3D · Three.js / WebGL renderer · 60 FPS target · runs fully client-side, no install