Estimate a car's value after N years of depreciation.
Depreciation is the largest cost of owning a car, and it is front-loaded. A new car typically loses somewhere around 15 to 20 per cent of its value the moment it is registered, and roughly 40 to 50 per cent within three years. After that the curve flattens: the difference between a five-year-old and a six-year-old car is far smaller than between a new car and a one-year-old one. This is why buying a two or three year old car transfers the steepest part of the loss to someone else.
Two other figures use the same underlying curve and are worth not confusing. Insurers calculate Insured Declared Value using a fixed depreciation schedule set by regulation rather than market prices, so your IDV and a dealer's valuation will rarely match. Separately, if the car is a business asset, tax depreciation follows the rates set out in tax law, again independent of what the car would actually fetch. Market value, IDV and book value are three different numbers for the same vehicle.
Commonly 15 to 20 per cent, with part of that lost immediately on registration. The exact figure depends heavily on the model, fuel type and how well the brand holds resale value; some models depreciate far faster than the average.
Insurers use Insured Declared Value, calculated from the manufacturer’s listed price minus a fixed depreciation percentage for the vehicle’s age band. It is a formula, not a market appraisal, so it commonly sits below what a private buyer would pay.
Both matter, but age usually dominates in the early years and mileage becomes more significant later. Very high mileage accelerates the loss at any age, and service history and accident record can move the price as much as either factor.
They have historically depreciated faster, largely because of battery replacement concerns and rapid model improvement making older versions less attractive. This varies considerably by market and model, so treat any general rule with caution.