Why Luxury Cars Depreciate Faster
Why luxury cars depreciate faster in the US—incentives, competition, and buyer expectations—and what it means for total cost.
Luxury cars in the U.S. often depreciate faster than non-luxury cars—sometimes 50–60% or more over 5 years. Here's why and what it means for what you pay over time.
TL;DR Luxury cars depreciate faster because of heavy incentives, strong competition, and buyer expectations (new tech, new design). That means higher depreciation cost over 5 years—so total cost of ownership can be high even when the "deal" on purchase looks good. Use autopremo.com and total cost of ownership to see the full picture.Why Luxury Cars Depreciate Faster
1. Heavy incentives
Luxury brands often use large rebates and special APR to move new cars. That pushes down new prices—which pushes down used values. So a $55,000 luxury sedan that sold for $48,000 after incentives is "worth" less in the used market because comparable new cars are discounted. Incentives accelerate depreciation.
See how depreciation affects total cost at autopremo.com.2. Strong competition
Luxury segment is crowded—many brands and models compete. Buyers have options. So used luxury cars have to be priced competitively—which often means lower resale than segments with less competition (e.g., trucks, some non-luxury brands).
3. Buyer expectations (new tech, new design)
Luxury buyers often want the latest tech, design, and features. A 3-year-old luxury car can feel "dated" compared to the new model year. So demand for used luxury drops faster than for used non-luxury in some segments. That accelerates depreciation.
4. Higher repair and maintenance cost
As luxury cars age, repair and maintenance cost more than non-luxury. Buyers discount that risk—so older luxury cars are worth less relative to their original price. That shows up in steeper depreciation in years 4–7.
5. Lease returns and fleet
Many luxury cars are leased. When leases end, a lot of used inventory hits the market at once—which can soften used prices and accelerate depreciation in those model years.
Model depreciation for any car at autopremo.com.What It Means for You
If you're buying new luxury
Assume you'll lose a large chunk in the first 5 years—often 50–60% or more. Factor that into total cost of ownership. A "good deal" on purchase can still mean high total cost when depreciation is steep. Use autopremo.com total cost of ownership to see the full 5-year cost.
If you're buying used luxury
A 2–3-year-old luxury car has already taken the steepest depreciation hit. You pay less than new—and from there, the curve may flatten. So used luxury can be a way to get into the segment at lower total cost—if you're okay with prior design and less warranty. Use autopremo.com to see fair price for used luxury and depreciation calculator to see how much value is left.
If you're selling luxury
Expect lower resale than a comparable non-luxury car. Sell when the car is still in demand (e.g., before a redesign, when mileage is low). Use autopremo.com price checker to see current market before you list.
See depreciation and total cost at autopremo.com.Your Luxury-Depreciation Checklist
- [ ] Understood: luxury often depreciates faster (incentives, competition, expectations)
- [ ] If buying new: factored steep depreciation into total cost—use autopremo.com
- [ ] If buying used: checked fair price and remaining value—use autopremo.com price checker and depreciation
- [ ] If selling: checked current market—use autopremo.com
Bottom Line
Luxury cars depreciate faster in the U.S. because of incentives, competition, and buyer expectations. That means higher depreciation cost over 5 years—so total cost can be high even when purchase "deal" looks good. Use autopremo.com to see depreciation and total cost so you don't overpay over time.