Why Cars Lose Their Value So Fast

A car loses about 10% of its value as soon as it's driven off the lot. And within the first three years, that number goes up to 50%. Depreciation — the rate at which that happens — is one of those numbers everyone in the automotive world thinks about including consumers, automakers and the massive used car market, which made up somewhere around 35.2 million in 2022 — compared with 13.8 million new cars. But the Covid-19 pandemic turned the used car market upside down — constrained production and supply chain shortages sent prices skyrocketing, and increased for about two consecutive years, unprecedented for the industry. Those odd times have led to lasting changes, and industry insiders say it is likely to stay that way. 01:22 - Intro: - Why cars depreciate so fast 01:31 - Chapter 1: - How depreciation works 05:16 - Chapter 2: - Down from there 07:39 - Chapter 3: - Unprecedented times 09:13 - Chapter 4: - Why cars are worth more today Producer: Robert Ferris Editor: Darren Geeter Animation: Christina Locopo, Jason Reginato Senior Managing Producer: Tala Hadavi Additional footage: Getty Images