Several key factors determine what your car will be worth when you sell or trade it in.
Depreciation: The Biggest Factor
Depreciation is the largest single expense of vehicle ownership. Most new cars lose about 20% of their value in the first year. Over five years, expect your vehicle to lose roughly 50% of its original price. According to AAA's 2025 Your Driving Costs study, depreciation costs average $3,462 to $6,041 per year depending on vehicle type.
Vehicle Type Matters
Different vehicle categories hold value differently. Compact and medium sedans typically depreciate more than SUVs and trucks. Here's what typical annual depreciation looks like:
| Vehicle Type | Annual Depreciation |
|---|---|
| Medium sedan | $3,462 |
| Compact SUV | $3,554 |
| Medium SUV | $4,760 |
| Pickup truck | $6,041 |
Electric vehicles currently face steeper depreciation than gas-powered cars, losing an average of $7,088 annually. However, EVs recorded the largest cost improvements recently, with ownership costs falling 16% as battery technology improved.
Mileage and Condition
Your driving habits directly impact resale value. The standard assumption is 15,000 miles per year. Cars with significantly higher mileage sell for less. Beyond miles, mechanical condition, accident history, and maintenance records heavily influence buyer interest and final price.
Age and Model Year
Newer vehicles command higher prices, but the steepest value drop happens immediately after purchase. As your car ages, depreciation slows. A five-year-old vehicle typically loses value more slowly than a one-year-old car.
Market Demand and Fuel Type
Popular models hold value better than niche vehicles. Fuel type affects resale potential too. Gas-powered vehicles remain the most predictable for resale. Hybrid vehicles depreciate at moderate rates, while EVs show more volatility as the market evolves.
What You Can Control
While you cannot control market demand or initial depreciation, you can influence resale value through maintenance and driving habits. Regular service, keeping detailed maintenance records, and driving conservatively all help preserve your vehicle's worth.