Luxury cars look sleek, offer maximum comfort, and — except when it comes time to resell them, that is. For the well-to-do, this may be neither here nor there. But for those looking to recoup their investment, certain luxury cars spell trouble.
“The majority of the reasons these cars are on the list is because they lose almost 50% of their value within 5 years,” stated Jamie Mitri, manager at . “Jokingly, car manufacturers will tell you that the second you drive these cars off of the dealer lot, you are throwing money out of the car window.” So why such steep depreciation? Experts break down these factors into three main causes: technological obsolescence (flashier, more innovative models result in current models swiftly becoming outdated), exclusivity (the difficulty of re-selling costly, limited production models due to the smaller pool of buyers) and brand reputation and reliability (a history of quality issues and expensive repairs).
GOBankingRates spoke further with Mitri, as well as founder and owner at , Tomer Ruderman, automotive consultant and CFEI at , Gretchen Seidel, auto expert and mechanic at , Chris Pyle, and owner at , Mark Beneke, to uncover more While the opportunity to ride like a mob boss could seem enticing, “the high maintenance and low reliability rankings make [Range Rovers] less appealing to second-hand buyers,” stated Tomer. Specifically lowering the Range Rovers’ resale value? Their frequent need for repairs to the engine, electrical systems and suspension. Given the vehicle’s advanced features, these repairs are extremely costly.
“Parts and labor incredibly expensive and difficult to find,” added Mitri. While newer models do show some improvement, the brand’s overall history continues to affect resale prices. Earning passive income doesn't need to be difficult.
For Seidel, the Ghibli is top of mind when it comes to luxury cars with the worst resale value. And for good reason. Maserati “continually ranks at the bottom of reliability studies and has known problems with engine concerns and fuel leak recalls,” stated Seidel.
Yet, the inevitable resale depreciation didn’t deter her from purchasing her own Ghibli given its visual beauty. “If you research a car and find out there are problems but love it anyway, at least you know what you’re getting into. [.
..] He’s red, gorgeous, and lovely to drive — low reliability and all.
” When it comes to purchasing pre-owned Teslas, it makes sense that buyers would be terrified of an expensive battery failure from a used vehicle. “Every day you own an electric car, the distance you can travel drops a few tenths of a percent,” stated Pyle. “You may have gotten 300 miles on a full charge when new; after 3 years, it is 270 miles.
” Additionally, technological upgrades to the brand are akin to that of a cell phone — everyone wants the latest and greatest. Pyle equated buying an old Tesla with buying a flip phone: the value is bound to depreciate when the model becomes outdated. And it doesn’t help that, according to a report from , pre-owned Teslas are now trading even lower due to increased competition from other EV automakers.
.. an inevitable development on the open market.
While some Audi models can hold their value better than other luxury vehicles, Mitri stated that the resale value of those specified above drastically depreciates over time due to costly parts, repairs, and (fittingly enough) warranties. Pyle also added that these cars “were priced too high from the get-go and often are sold over MSRP (Manufacturer’s Suggested Retail Price) value. So it is not only a loss in car value, you lose the amount that you overpaid.
” “Being in the used car resale and financing business for over 20 years now, we learned very quickly which types of vehicles to stay away from,” stated Beneke. Which is why he, Mitri, and Pyle, all stated that when it comes to luxury cars, BMW’s have some of the worst resale values. Not only are BMW’s infamous for oil leaks, faulty fuel pumps and electrical component failures over time, but they require parts and labor that are incredibly expensive.
For this reason, pre-owned BMW’s may struggle to attract buyers willing to shell out those high maintenance fees and, therefore, “sit for sale too long, so car lots do not give them a good trade value knowing their funds are going to be tied up for a long while,” stated Pyle. In terms of the gas-powered, luxury models listed above, steep depreciation has been accurate up until now. Yet, given the switch to mostly electric or hybrid vehicles in the coming years, these luxury gas models could theoretically appreciate or hold their value due to their “vintage” status.
Additionally, if variables like efficiency of the EV’s, infrastructure of charging stations/homes, affordability of EV’s and availability of EV options “are not set up to make it consumer friendly for the masses,” stated Beneke, “the demand for gas-powered options would likely follow,” which could lead to less depreciation of these luxury vehicles than in recent years. Only time will tell. This article originally appeared on :.
