Mon. Dec 11th, 2023
    The Used Car Market is Experiencing Changes due to the Preference for Hybrids

    The used car market has undergone a significant shift in recent times, with five-year-old vehicles maintaining their value remarkably. This phenomenon can be attributed to the scarcity of used cars, SUVs, and trucks in the market. Surprisingly, while electric vehicles (EVs) used to be considered a reliable investment, buyers now prefer hybrid vehicles over their fully electric counterparts.

    Historically, the depreciation rate for vehicles within the first five years was around 50 percent. However, due to a variety of factors, the average retention of a vehicle’s original value is now approximately 38.8 percent within the same time period. This change in depreciation trends can be attributed to the persistent effects of the pandemic and production challenges faced a few years ago.

    A recent study conducted by iSeeCars revealed that hybrids and trucks depreciate even less than the industry average. Hybrid vehicles retain around 37.4 percent of their initial price after five years, while trucks retain 34.8 percent. The resilience of these types of vehicles against depreciation highlights their ongoing popularity and desirability among consumers.

    In contrast, SUVs have a depreciation rate of 41.2 percent, slightly higher than the overall industry average. While this may seem surprising, it is important to note that SUVs remain highly in demand due to their spaciousness, versatility, and practicality. The higher depreciation rate can be attributed to a greater supply of used SUVs in the market.

    Frequently Asked Questions:

    Q: Why are five-year-old vehicles retaining their value?
    A: The scarcity of used cars, SUVs, and trucks in the market contributes to the value retention of older vehicles.

    Q: Why do buyers prefer hybrid vehicles over EVs?
    A: Buyers have shown a preference for hybrid vehicles due to factors such as range anxiety, affordability, and the availability of charging infrastructure.

    Q: What is the average depreciation rate for vehicles in the first five years?
    A: Historically, vehicles used to depreciate by about 50 percent in the first five years. However, the current average suggests that a vehicle retains around 38.8 percent of its value within the same time period.

    Q: What types of vehicles depreciate less?
    A: According to research, hybrid vehicles and trucks depreciate less than the industry average, retaining approximately 37.4 percent and 34.8 percent of their original value, respectively.