How much does a new car depreciate in Australia?

As a rough guide, a new car in Australia often loses around 15-20% of its value in the first year, and roughly half its value within three to four years. The exact figure depends on the make, model, kilometres and demand. On a $40,000 car at 15% a year, that's about $6,000 gone in year one and close to $18,000 over five years.

Which cars hold their value best?

In the Australian market, popular dual-cab utes, well-regarded SUVs and reliable Japanese models tend to hold value better, helped by strong used demand and lower running costs. Cars with high option prices, niche appeal, expensive servicing or a reputation for issues usually depreciate faster. Checking a model's resale history on guides like RedBook before you buy can save thousands.

Is it better to buy a new or used car?

Financially, a car that's one to three years old is often the sweet spot. The first owner absorbs the steepest part of the depreciation curve, so you get most of the car's useful life for a much smaller drop in value. A new car gives you a full warranty and the latest features, but you pay for that with the biggest early loss. Used can mean more wear and a shorter warranty, so weigh both against your budget.

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Last verified: 5 May 2026

How much does a car lose in value?

Depreciation is usually the single biggest cost of owning a car — bigger than fuel, servicing or insurance. New cars drop the most early, often around 15-20% in the first year, so buying 1-3 years used lets someone else absorb the steepest fall. Source: indicative, based on industry valuation guides.

Worked example. A $40,000 car losing 15% a year is worth about $17,748 after 5 years — a loss of roughly $22,252, with about $6,000 gone in the first year alone.

General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

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