Vehicle Depreciation: How Much Does Your Car Lose in Value?

By Hermes

Last updated: October 25, 2026

One of the biggest costs of car ownership in South Africa isn’t fuel or insurance — it’s depreciation. Understanding how quickly your vehicle loses value helps you make smarter purchasing decisions.

What Is Vehicle Depreciation?

Depreciation is the decline in your vehicle’s market value over time. New cars typically lose 15-20% of their value in the first year and around 10-15% per year thereafter.

South African Market Factors

South African vehicle depreciation is influenced by several factors including the rand exchange rate (which affects replacement costs), fuel price volatility, and the popularity of specific brands. Japanese and German brands tend to hold their value better in the South African market.

SARS Depreciation Allowances

For tax purposes, SARS allows depreciation on business vehicles. Passenger vehicles are depreciated over 5 years at 20% per year, subject to a cost cap. The annual write-off limit for passenger vehicles is R325,000 (2025/2026 tax year).

Tips to Minimise Depreciation

Choose popular brands and colours, maintain full service history, keep mileage reasonable, and consider buying slightly used vehicles that have already absorbed the initial depreciation hit.

Calculate Your Vehicle’s Depreciation

Use our Depreciation Calculator to estimate how much your vehicle will be worth in the future.

Practical Next Steps for Managing Vehicle Depreciation

If you own a vehicle in South Africa, the first step to managing depreciation is to understand how quickly your specific model loses value. Research the resale value of your car after three and five years, and factor this into your decision when you buy. Choosing a model with a strong resale record, such as a popular and reliable brand, can significantly reduce the financial impact of depreciation over the life of the vehicle.

Next, look after your vehicle to preserve its value. Keep up with the service schedule, maintain a full service history, and address any mechanical issues promptly. A well-maintained car with a documented history commands a higher resale price than one that has been neglected. When the time comes to sell, consider whether selling privately or trading in gives you the better return. Understanding depreciation and taking steps to manage it helps you get the most value from your vehicle over time.

The Hidden Cost of Car Ownership

For most South Africans, a car is the second-biggest purchase they will ever make, after a home. Yet while we pay close attention to the sticker price, the interest rate and the monthly instalment, one of the most significant costs of car ownership is often overlooked: depreciation. From the moment you drive a new car off the showroom floor, it begins to lose value, and the rate at which it depreciates can have a huge impact on your long-term finances. Understanding how depreciation works is essential for anyone who buys, owns or sells a vehicle in South Africa.

Depreciation is the decline in a vehicle’s value over time and use. It is driven by a combination of factors: the car’s age, the number of kilometres on the clock, its general condition, the supply and demand for that particular model, and the overall state of the used-car market. On average, a new car in South Africa can lose roughly 20% of its value in the very first year, and around 50% of its value over the first five years. This means that a car purchased for R400,000 today might be worth only around R200,000 after five years — a loss of R200,000 that many owners never fully appreciate.

Why Some Cars Depreciate Faster Than Others

Not all cars depreciate at the same rate. Some models hold their value remarkably well, while others lose value rapidly. In general, well-known brands with a strong reputation for reliability and a good network of dealers and parts tend to hold their value better. Cars with high demand in the used market, such as certain popular compact and family models, also depreciate more slowly. Conversely, cars with high running costs, limited demand, or a reputation for poor reliability can lose value very quickly.

Several other factors influence the depreciation rate. A car with a manual gearbox may hold its value differently from an automatic in the modern market, where automatics are increasingly preferred. Fuel efficiency matters, especially when fuel prices are high. Cars that are rare or expensive to service, or that are discontinued, can be harder to sell and may depreciate faster. Even the colour of the car can play a role — in the South African market, popular neutral colours like white, silver and black tend to be easier to resell than unusual or very bright colours, which can sit on the market for longer and sell for less.

The True Cost: Depreciation in Rand Terms

To put depreciation into perspective, it is helpful to think of it as a monthly cost. If a car loses R200,000 in value over five years, that is roughly R3,333 per month in depreciation alone — on top of your monthly instalment, insurance, fuel, maintenance and licensing. For many owners, depreciation is actually the single largest cost of owning a car, exceeding even the interest paid on the vehicle finance. This is why financial advisers often caution against buying a brand-new car if you want to minimise your total cost of ownership, and why buying a lightly-used car can be a far more economical choice.

The good news is that depreciation is not a uniform, inescapable cost. By choosing a car that holds its value well, maintaining it meticulously and keeping the mileage reasonable, you can slow the rate of depreciation. A full service history, a clean interior and exterior, and a well-documented ownership record all help preserve value. Conversely, a car that is neglected, modified in ways that reduce its appeal, or driven excessively high mileage will lose value faster. Small habits, such as parking in the shade to protect the paintwork, can even make a difference over time.

Depreciation, Tax and the Business Owner

For business owners and self-employed individuals, vehicle depreciation has an important tax dimension. The South African Revenue Service (SARS) allows businesses to claim a capital allowance, effectively a tax deduction, on the cost of vehicles used for business purposes. This allowance, often referred to as wear-and-tear or a capital allowance, allows you to deduct a portion of the vehicle’s cost from your taxable income each year, reducing the tax you pay. The specific rate and rules depend on the type of vehicle and how it is used.

For example, a vehicle used for business can typically be written off over a period of five years, deducting 20% of the cost each year. This is separate from the actual market depreciation of the vehicle — it is a tax concept designed to recognise the cost of using an asset in your business. If you are self-employed and use your vehicle for work, it is essential to keep accurate records of your business mileage and to claim the appropriate capital allowance and running expenses. This can significantly reduce your taxable income and is a valuable tax-saving opportunity that many business owners overlook.

Practical Strategies to Beat Depreciation

The most effective way to manage depreciation is to make smart choices at the point of purchase. Consider buying a car that is one to three years old rather than brand new — the steepest part of the depreciation curve is in the first year, so a lightly-used car lets you avoid the biggest loss while still getting a nearly-new vehicle. Choose a model with a strong resale reputation, and look for one with a full service history and low mileage. Think about the total cost of ownership, not just the purchase price, when comparing options.

Once you own the car, maintain it meticulously. Keep up with the service schedule, keep receipts and records, and address any issues promptly. Keep the interior clean and avoid modifications that might reduce its appeal to future buyers. And when the time comes to sell, price it realistically based on the current market and present it in the best possible condition. Depreciation is unavoidable, but with the right approach you can slow it significantly and preserve more of the value of one of the biggest investments you will ever make.

What Readers Ask About Vehicle Depreciation

How fast does a new car lose value in South Africa?

A new car typically loses 15% to 20% of its value in the first year and around 10% to 15% a year after that. Taken over five years, a vehicle bought for R400,000 may be worth only around R200,000 — a loss of roughly half the purchase price. Spread across those five years, that is about R3,333 a month in depreciation alone, on top of the instalment, insurance, fuel and maintenance you are already paying.

Why is the first year the worst?

When a car is driven off the showroom floor it immediately becomes a used car, so it takes the whole of that status change in one hit. It also leaves the manufacturer’s warranty period behind at a faster rate, and the market prices used vehicles against what a nearly-new example can be bought for. The result is that the steepest part of the depreciation curve happens in the first twelve to twenty-four months.

How does SARS treat vehicle depreciation for my business?

For tax purposes, passenger vehicles are written off over five years at 20% a year, subject to a cost cap, and the annual write-off for passenger vehicles is limited to R325,000 for the 2025/2026 tax year. That cap matters: the portion of the vehicle’s cost above it cannot be claimed as a wear-and-tear allowance. Vehicles used in a business that are not passenger cars are dealt with under different allowances.

How can I reduce the depreciation I absorb?

Buying a well-chosen two- or three-year-old vehicle means somebody else has already absorbed the steepest part of the curve. Beyond that, research the resale value of the model after three and five years before you buy, favour variants and colours that sell easily on the used market, keep a full service history, and maintain the vehicle properly. Low mileage helps, but a stamped service book often matters more to the next buyer.

Does depreciation differ between vehicle types?

Yes. Certain bakkies and a handful of niche models hold their value noticeably better than the average sedan, while luxury vehicles and large executive cars often depreciate fastest because servicing and parts costs deter second-hand buyers. Electric vehicles are a special case: battery health becomes a resale factor, and the market’s view of that is still forming, which adds uncertainty to their future values.