Car depreciation UK 2026: what your car loses
Depreciation costs a UK new-car buyer roughly £16,500 over three years on a £30,000 car — more than fuel, insurance, servicing and tax put together, and the only running cost most drivers never see leave their bank account. The AA puts the average new car’s residual value at around 40% of its list price after three years at 10,000 miles a year; the RAC puts the typical range at 40–50% retained. The gap between a car that keeps half its value and one that keeps a third is, on a £30,000 purchase, about £5,000.
Direct answer
How much does a car depreciate in the UK?
A typical UK car keeps 65–80% of its price after one year, 40–50% after three years and 30–40% after five. On a £30,000 car that is about £8,400 gone in year one and roughly £16,500 gone by year three. The AA states the average new car has a residual value of around 40% of its new price after three years at 10,000 miles a year — an average loss of about 20% a year. The RAC puts first-year depreciation at 15–35% and says values fall for up to eight years before levelling out. MoneyHelper, the government-backed money guidance service, works its own example at exactly half: a £30,000 car worth £15,000 three years later.
Those are averages of an enormously wide distribution, and the average is the least useful number on this page. The real market data makes the point. Cox Automotive Europe found cars under 12 months old were selling at an average of 65% of original cost new in January to March 2026, but with petrol at 62% and battery-electric at 49% in the same window. At the other end, the AA’s own model-level figures show a Honda Jazz that was worth more at three years old than at one, alongside a Range Rover Sport down 46% over the same two years. Depreciation is not one number; it is a spread of roughly 40 percentage points that you partly choose at the point of purchase.
Two framings help. If you buy new and keep the car three years, depreciation is by far your largest motoring cost — several times the UK average car insurance premium and comfortably ahead of the repair, servicing and MOT bills set out in our UK car running costs hub. If you buy a three-year-old car instead, the first owner has already absorbed 50–60% of the loss for you, which is why the same car costs so much less to own from that point forward.
The data
The UK depreciation curve: what a £30,000 car is worth, years 1–5
The table below applies the published UK retained-value ranges to a single £30,000 new car so the loss is visible in pounds rather than percentages. The percentage column is the honest range; the pound column is the midpoint of that range, which is what the chart plots. Years one, three and five are anchored to published figures; years two and four are interpolated by us between them, and are flagged as such.
Source: midpoint of published UK retained-value ranges from the AA, the RAC, MoneyHelper and Cox Automotive Europe, applied to a £30,000 new car. Basis: private ownership at about 10,000 miles a year.
| Age of car | Typical value retained | Value of a £30,000 car (midpoint) | Lost so far | Anchor |
|---|---|---|---|---|
| At purchase (new) | 100% | £30,000 | — | Transaction price |
| After 1 year | 65–80% | £21,600 (72%) | £8,400 | Cox Automotive Europe: under-12-month cars averaged 65% of cost new, Jan–Mar 2026; RAC first-year loss 15–35% |
| After 2 years | 55–65% | £18,000 (60%) | £12,000 | Interpolated by us between the year-1 and year-3 anchors |
| After 3 years | 40–50% | £13,500 (45%) | £16,500 | AA: ~40% residual at 10,000 miles a year; RAC: 40–50%; MoneyHelper worked example: 50% |
| After 4 years | 35–43% | £11,700 (39%) | £18,300 | Interpolated by us between the year-3 and year-5 anchors |
| After 5 years | 30–40% | £10,500 (35%) | £19,500 | cap hpi five-year/80,000-mile benchmark; AA and RAC both note the curve flattens toward year eight |
Sources: AA car depreciation guidance; RAC vehicle depreciation guidance; MoneyHelper buying and running a car; Cox Automotive Europe cost-new analysis reported January–March 2026; cap hpi monthly used-value bulletins, July 2026. Basis: a £30,000 private purchase covering about 10,000 miles a year, in average condition with full service history. The percentage column is the published range; the pound column is its midpoint, calculated by us. Years two and four carry no published anchor and are interpolated on a constant-rate basis between the years either side — treat them as illustrative, not as measured market data. Any individual car will sit somewhere across a spread of roughly 40 percentage points.
The shape matters more than any single row. Roughly 85% of the five-year loss happens in the first three years. That single fact drives most sensible decisions about when to buy, when to sell and whether a three-year finance term is the right length. It is also why the cheapest way to run a car is usually to buy one that is already three or four years old and keep it: at that point you are paying for the flat part of the curve.
The spread
Which UK cars hold value best — and which do not
The AA publishes model-level valuations that compare what a car was worth at one year old with its value at three and five years. Read them as change from the one-year-old value, not from the list price — the steepest drop has already happened before the clock starts. On that basis the range is startling.
| Model | Change, year 1 to year 3 | Change, year 1 to year 5 |
|---|---|---|
| Honda Jazz | +3% | −18% |
| Hyundai i10 | −12% | Not published |
| Vauxhall Astra | −41% | Not published |
| Kia Sportage | −41% | Not published |
| Land Rover Range Rover Sport | −46% | −55% |
| Toyota Hilux | Not published | −54% |
Source: AA Lease depreciation analysis. Basis: percentage change in valuation measured from the one-year-old value, not from the original list price, so these figures understate total depreciation from new. Individual specification, mileage and condition will move any of these materially.
The pattern behind those numbers is consistent and useful even when the specific models change. Small, cheap, reliable and in short supply holds value; large, expensive, thirsty and heavily discounted new does not. A supermini that was never discounted at launch has little room left to fall. A large premium SUV that was launched with a five-figure list price, sold with manufacturer support and financed on a three-year PCP arrives on the used market in volume at exactly the same time as every other one, and the price reflects that.
Segment matters in the same way. Sports cars, compact 4x4s and pick-ups with genuine utility tend to hold the highest proportion of list price at three and five years; large executive saloons, big diesel estates and mainstream family hatchbacks sold in high fleet volumes tend to hold the least. Fuel type now cuts across all of it, and the picture there has changed twice in three years — which is worth taking on its own.
Fuel type
Petrol, diesel, hybrid and electric: depreciation by fuel type in 2026
The honest answer in 2026 is that the fuel-type gap is narrower than the headlines suggest, and that it depends entirely on whether you measure against list price or against what was actually paid. Cox Automotive Europe’s cost-new figures show battery-electric cars under 12 months old at around 49% of original cost new in March 2026 against 62% for petrol — a 13-point gap. But Cox’s own three-year analysis puts EV depreciation at 38–42% against 35–40% for petrol, a gap of only a few points. Both can be true: heavy discounting on new electric cars means the list price the percentage is measured against was never the price anyone paid.
Current trade data supports the narrower reading. cap hpi’s July 2026 bulletin recorded average values at the benchmark three-year, 60,000-mile point falling 0.7% (about £140) against a long-run July average of 1.0%. Within that, hybrids were the strongest fuel type at +0.3%, battery-electric slipped just 0.2%, diesel fell 1.1% and petrol fell 0.4%. Electric values, having fallen furthest and fastest between 2023 and 2025, have been the more stable end of the market for several consecutive months.
The retail market shows the same thing from the buyer’s side. Auto Trader’s Retail Price Index put the average used car at £17,397 in April 2026, flat year on year, with petrol at £14,988, diesel at £14,597 and electric at £23,555. Used EV demand was up 59% year on year in that month, and three-to-five-year-old electric cars were the fastest-selling segment on the site at 25 days. If you are buying rather than selling, the depreciation someone else absorbed is now your discount. We break the electric picture down model by model in our guide to electric car depreciation in the UK.
What moves it
Six things that change what your car is worth
Roughly two-thirds of depreciation is decided the day you sign — by the model, the fuel type, the specification and the price you paid. The remaining third is within your control over the years that follow.
- Mileage. The UK trade benchmarks values at about 10,000 miles a year, which is why cap hpi quotes three-year cars at 60,000 miles and five-year cars at 80,000 for trade purposes. Sit meaningfully above the benchmark for your age band and you are valued down a bracket; sit below it and you are valued up. High annual mileage also raises what you pay to insure — see our guide to high-mileage car insurance.
- Service history. The RAC is explicit that written proof of maintenance work increases the value of any used vehicle, and that non-genuine or second-hand parts can devalue it. A complete, stamped, receipted history is the cheapest value protection available; our car service cost guide sets out what the stamps actually cost.
- Condition, inside and out. The RAC singles out smoke and pet odours as lingering problems that suggest poor care, alongside unrepaired damage. Kerbed alloys, a cracked screen and a scuffed bumper are each cheap to fix and expensive to leave.
- Colour. There is no reliable published percentage for this in the UK, so treat any figure you see with suspicion. The RAC’s guidance is directional rather than numeric: a flashy colour, or one never offered on that model, narrows your pool of buyers, while neutral silver, white, grey and black hold value more consistently.
- Model changes. A facelift or an all-new generation instantly ages every example of the outgoing car. So does a manufacturer cutting the new list price — every used one is repriced downward the same week, through no fault of the owner.
- Number of owners and provenance. Fewer owners, a clean HPI record, no outstanding finance and no recorded write-off all support the price. A recorded category-S or category-N marker follows the car permanently and is one of the largest single deductions a valuer can apply.
None of these will turn a fast depreciator into a slow one. Together they move a specific car within its own band — typically a few hundred to a couple of thousand pounds on a mid-market car, which is real money for effort that mostly costs nothing.
Finance and cover
How depreciation drives PCP balloon payments and GAP shortfalls
Depreciation is not an abstraction if you bought on finance — it is the number the whole agreement is built on. Finance & Leasing Association members funded over 85% of private new car registrations, so most new-car buyers in Britain are exposed to it through a contract rather than through a resale.
On a personal contract purchase, the lender sets a guaranteed minimum future value (GMFV) at the start — its forecast of what the car will be worth at the end of the term. Your monthly payments cover the difference between the price and that GMFV, plus interest. The balloon payment at the end is the GMFV. That produces three practical consequences. A car with strong residuals gets a high GMFV, so the monthly payment is low — which is why fast-depreciating cars often have surprisingly expensive PCP quotes for the same list price. Exceeding the contracted mileage triggers an excess-mileage charge because you have taken value out of the lender’s forecast. And at the end you can hand the car back and walk away from any shortfall, because the guarantee sits with the lender — but if the market has fallen further than forecast there is no equity left to put into the next deposit, and if you want to keep the car you pay the balloon regardless of what it is now worth.
Hire purchase behaves differently: there is no guaranteed value, so the risk is entirely yours, but you own the car outright at the end. The trade-off is a higher monthly payment for the same car and term.
The other product tied to the curve is GAP insurance. If a car is stolen or written off, a motor insurer settles at market value on the day of the loss — not the invoice price and not the finance balance. In the first two years of a new car’s life those three numbers can be thousands of pounds apart, and GAP is designed to bridge that difference. It is a regulated insurance product and we are not authorised to advise on it, so treat this as description only: the shortfall it covers is largest on a new car bought with a small deposit on a fast-depreciating model, and smallest — often nil — on a cash purchase, an older car past the steep part of the curve, or where the finance balance is already below the car’s value. The FCA’s own value data showed the share of GAP premium returned as claims rising from 6.26% in 2022 to 53% in 2025 after it intervened on fair value. Our page on GAP insurance cost in 2026 sets out the prices and the rules without recommending it either way.
One footnote that catches people out: depreciation and insurance interact directly on a total loss. A lower market value means a smaller payout, and a claim also affects your discount — see how no claims bonus works for what a write-off does to it.
FAQs
Car depreciation: common questions
The AA puts the average at around 20% a year over the first three years, leaving a residual value of about 40% of the new price at three years on 10,000 miles a year. The loss is heavily front-loaded rather than even: the RAC puts year one alone at 15–35%. On a £30,000 car that is roughly £8,400 in year one and about £16,500 by the end of year three.
Between 15% and 35% according to the RAC, so a typical new car retains 65–85% of its price after 12 months. Real market data sits at the tougher end of that: Cox Automotive Europe found UK cars under 12 months old selling at an average of 65% of original cost new between January and March 2026, with petrol at 62% and battery-electric at 49%.
Typically 30–40% of its original price, so about £10,500 on a £30,000 car. Crucially, most of that loss already happened by year three — roughly 85% of the five-year total. Both the AA and the RAC note that values keep falling until around year eight and then flatten, which is why older cars are so much cheaper to own per year.
Small, reliable, in-demand cars that were never heavily discounted new, plus utility vehicles in short supply. In the AA’s model-level data the Honda Jazz was worth 3% more at three years old than at one, and the Hyundai i10 lost only 12%, while the Range Rover Sport fell 46% and the Toyota Hilux 54% by year five. Those figures are measured from the one-year-old value, not from list price.
Yes, and the UK trade prices it explicitly. Valuations are benchmarked at about 10,000 miles a year — cap hpi quotes three-year cars at 60,000 miles and five-year cars at 80,000 — so a car meaningfully above the benchmark for its age is marked down and one below it is marked up. High mileage also feeds into what you pay to insure the car.
Less than they did, and it depends on the measure. Against original list price the gap is wide — Cox Automotive Europe recorded under-12-month EVs at 49% of cost new against 62% for petrol in early 2026 — but that partly reflects heavy discounting on new EVs. Measured over three years Cox puts EV depreciation at 38–42% against 35–40% for petrol. In cap hpi’s July 2026 trade data electric values fell just 0.2% in the month, ahead of petrol at 0.4% and diesel at 1.1%.
It affects how quickly a car sells more than it sets a fixed percentage, and no reliable published UK figure exists — be sceptical of any specific number. The RAC’s guidance is that an unusual or flashy colour, or one never offered on that model, puts buyers off, while neutral silver, white, grey and black hold value more consistently. On a mainstream car the effect is measured in hundreds of pounds and days on the forecourt, not thousands.
On a PCP the lender forecasts the car’s end-of-term value as the guaranteed minimum future value, and that figure is the balloon payment. Your monthlies cover the depreciation in between, which is why a fast-depreciating car can carry a higher monthly cost than a pricier one that holds value. GAP insurance exists because a motor insurer settles a total loss at market value on the day, which in the first two years can be thousands below the invoice price or the finance balance. It is a regulated product; we describe how it works rather than recommend it.
Keep exploring
Set depreciation alongside the bills you actually pay in our UK car running costs hub, benchmark your premium in the UK car insurance cost index, read the model-by-model electric picture in electric car depreciation, see what bridging a shortfall costs in GAP insurance cost 2026, and check the servicing spend that protects your history in our car service cost guide.
Our sources
Sources & editorial
- The AA — car depreciation: average residual value of around 40% after three years at 10,000 miles a year, and model-level one-to-three and one-to-five-year valuations
- RAC — vehicle depreciation: 15–35% in year one, 50–60% lost over three years, values falling for up to eight years
- RAC Drive — six ways you are wiping the value off your car: service history, parts, colour, smoke, pets, mileage
- MoneyHelper (Money and Pensions Service) — buying and running a car: the £30,000 to £15,000 three-year worked example, and how PCP uses a guaranteed minimum future value
- Auto Trader — Retail Price Index, April 2026: average used car £17,397, petrol £14,988, diesel £14,597, electric £23,555
- Cox Automotive Europe — EV versus ICE depreciation and residual values: 38–42% for EVs against 35–40% for petrol over three years, plus cost-new tracking for cars under 12 months old
- cap hpi — monthly used-value bulletins, July 2026: three-year/60,000-mile benchmark down 0.7% (£140), hybrid +0.3%, BEV −0.2%, petrol −0.4%, diesel −1.1%
- Financial Conduct Authority — general insurance value measures data: GAP claims costs as a share of premium, 6.26% in 2022 to 53% in 2025
- Finance & Leasing Association — motor finance statistics: members funded over 85% of private new car registrations
Reviewed by the Car Insurance Expert editorial team. Methodology: the depreciation curve is not a single published dataset. We took the published UK retained-value ranges for years one, three and five from the AA, the RAC, MoneyHelper and Cox Automotive Europe, applied their midpoints to a £30,000 new car, and interpolated years two and four on a constant-rate basis between those anchors; the interpolated rows are labelled in the table and should be read as illustrative. The basis throughout is a private purchase covering about 10,000 miles a year in average condition with full service history — the same benchmark the UK trade uses. Model-level figures are reproduced from the AA’s published analysis and are measured from the one-year-old value, not from list price, which understates total depreciation from new. Fuel-type and trade-value movements are cap hpi’s July 2026 bulletin and Cox Automotive Europe’s cost-new tracking; retail prices are Auto Trader’s Retail Price Index for April 2026. Percentages are rounded. Any individual car can sit far outside every range shown.
Car Insurance Expert is an independent research site. We are not authorised or regulated by the Financial Conduct Authority, we do not advise on, arrange or sell insurance, car finance or GAP cover, and nothing on this page is a recommendation to buy or not buy any financial product. GAP insurance, PCP and hire purchase are regulated products; if you want advice on whether any of them is right for you, speak to an FCA-authorised firm. Valuations are illustrative and are not an offer or a guarantee of what any car will sell for.
Last updated: 3 September 2026