Why Do Some Luxury Cars Depreciate More Than Others?

March 18, 2013

Any consumer who is looking at luxury cars as an option for their next vehicle purchase should also be mindful of the advantages and disadvantages of purchasing a vehicle in this category. One of the problems with cars in the luxury category is they actually tend to depreciate faster than other vehicles. There are a couple things you should look at as a consumer before purchasing a luxury automobile. Some of the main things that contribute to vehicle depreciation in this category are:

  • Insurance Cost - Luxury vehicles cost more than standard cars to insure for several reasons. One is they tend to cost more to repair when they are in an accident. Also, many luxury cars are equipped with more powerful engines than cars in other classes, which can raise the cost of your policy. This can make luxury cars less desirable for some prospective buyers, which lowers the resale cost.
  • Brand Reputation - You should definitely consider the reputation of each vehicle manufacturer before making a purchase of a luxury vehicle. There are a few manufacturers currently trying to break into the luxury car market for the first time. You may be able to save some more money now by purchasing one of these cars, but you may find the vehicle has lost a significant percentage of its value if you try to sell it down the road. Going with an established brand like Mercedes, BMW, Lincoln or Lexus may save you some money in the long run.
  • Model Reliability - No one wants a luxury car that has a reputation for costly repairs. Because luxury cars already have a higher cost of ownership than normal cars, you should always make sure that you're buying a reliable model.

Remember people that are in the market for luxury cars often have a bigger budget than those searching for cars in other categories. That means they'll have no problem with skipping over a vehicle with a low price to buy a car that is more desirable. Pick the right one and you'll end up lowering the cost of owning the car that will resist depreciation in the long run.

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