Vehicle depreciation rate in NZ: How much value your car loses each year

You wouldn’t notice it day to day, but your car’s value is steadily depreciating – and often faster than you’d expect. In fact, some data suggests New Zealand has one of the highest depreciation rates in the world, with vehicles losing potentially over half their value before they even hit the 60,000 km mark.

For Kiwis, understanding this cost is massive. Whether you’re eyeing a fresh ute for the worksite or a city runabout for your commute or family, getting a handle on car depreciation can save you tens of thousands of dollars over the life of your vehicle. It’s the difference between selling your car for a decent return later or realising you’ve burned through value unnecessarily.

In this guide, we’ll look at exactly how quickly cars lose value across New Zealand, which brands hold their value the best, and how you can slow the decay.

What is car depreciation, and how does it work?

Depreciation is the difference between what you pay for a car and what it’s worth when you sell it. While it’s not a fee you pay at the mechanic, it’s typically the single biggest ‘invisible’ cost of car ownership.

The decrease in value doesn’t happen in a straight line, but in a series of well-recognised drops.

As soon as you drive a new vehicle away from the dealership, its value takes an instant hit and drops by about 9 to 10% simply for moving the car a few tens of metres. The next steepest drop continues through the first year of ownership, and can range from 20% to 40% depending on the car.

Why does this matter? If you are aware of these dips, you can buy smart (letting the first owner take the big financial hit) and sell before the value falls off a cliff.

How fast do cars lose value in New Zealand?

For typical vehicle depreciation rates in New Zealand, the drop is usually heaviest upfront. While every car is different, the general rule of thumb, supported by local data like the Dog & Lemon Guide, is that a new car can lose up to 40% of its value in the first year alone. After that shock, things settle down to a more predictable 15 to 20% drop each year on the remaining value.

Here is what that looks like for the average vehicle:

A real-world example

Putting a price tag on those percentages, let’s imagine you buy a new car for $50,000.

• Year 1: You lose roughly 40%, dropping the value to $30,000.
• Year 2: You lose another 20% of that remaining value, bringing it to $24,000.
• Year 5: By the time the car is five years old, it might be worth just over $12,000.

That’s a $38,000 loss over five years for… just owning the vehicle!

Note: For a precise calculation for tax or business purposes, you can also use the official Inland Revenue Department (IRD) Depreciation Rate Finder. It’s a type of car depreciation calculator New Zealanders can use to calculate specific rates, like 30% Diminishing Value for passenger vehicles.

Things that affect a car’s value

Not all cars are created equal, and although a luxury European sedan might plummet in value, a trusted Japanese model could hold onto its price tag much more readily.

Here is what affects value the most.

Market demand

When people want something, it holds its value much more effectively. In NZ, that currently means brands with a strong reputation for reliability, like Toyota and Mazda, which consistently outperform the rest.

On the flip side, the market can be brutal when trends shift. Recently, EVs have faced a ‘depreciation crisis’ due to the end of the Clean Car Discount and the introduction of Road User Charges (RUC). While petrol cars might lose 30–35% in year one, some EVs are now dropping 40–50% in the same period.

Age

Newer cars bleed value the fastest. As you can see from the table above, the first three years are the ‘danger zone.’ Once a vehicle hits about five years old, the depreciation curve flattens out, meaning you lose much less money each year.

Size

In the Kiwi market, size is important, but utility tends to matter more. Utes hold their value really well, keeping up to 65 to 70% of their value even after four years.

Small, economical cars like the Suzuki Swift also hold value incredibly well because they are cheap to run and always in demand. Meanwhile, large luxury sedans (like the BMW 7 Series) are often the worst performers, losing huge chunks of value very quickly.

Mileage

The magic number in New Zealand is roughly 12,000 to 15,000 km per year. If you can keep your driving near this average, you’ll get a much better resale value as a result. Once you start racking up high kilometres, the value drops off much more quickly, because buyers assume the engine and parts are more worn.

Condition

It sounds obvious, but a car that looks rough sells for rough prices. Dents, scratches, and missed services are instant value killers. Conversely, a full service history and a fresh WOF help hold value when it comes time to sell.

How to minimize the depreciation

You can’t stop car depreciation entirely, but you can definitely slow it down by following these simple approaches.

Get a carVertical report before you buy

Buying a used car with an unknown history is a significant financial risk. A vehicle may have been involved in major accidents, imported from overseas without full disclosure, or had its odometer fraudulently tampered with.

These hidden issues do more than just increase your immediate maintenance costs; they can drastically affect the car’s resale value and make it far more difficult to sell when you are ready to move on.

The first step in avoiding heavy depreciation is ensuring you aren't buying a poorly maintained vehicle with undisclosed baggage.

The Mileage section of the carVertical report is probably your best weapon against a bad deal. The report plots out the odometer readings from various points in the car's life – inspections, title transfers, and service visits.

This helps discover if someone has previously "clocked" the car. If the mileage suddenly drops between two dates, the system flags it immediately. Similarly, finding unusual gaps in the history or longer periods of inactivity can be a major warning sign.

There is a lot more to a car's health than just the numbers on the dashboard. A full report digs into areas that sellers often conveniently forget to mention:

• Historical photos: This can add valuable information. Seeing a photo of the car in a salvage yard before it was "fixed up" tells you a lot more about its condition over time.
• Market value: It helps to know what the car is actually worth right now, so you can tell if the price tag is realistic or completely inflated.
• Theft status: It runs a check against international police databases to ensure the vehicle isn't currently stolen.
• Past usage: You can find out if the car started its life as a taxi, rental, or police vehicle, cars that usually take a beating compared to personal vehicles.

Getting access to this information is simple. You just need the car's VIN (Vehicle Identification Number). Enter it into the “Enter VIN” field on the carVertical homepage and click “Get report” – you’ll receive it within a minute.

Choose the car model accordingly

The maker you choose also plays a big role in a car’s future value. In New Zealand, you generally can’t go wrong with Japanese staples. Vehicle types like Utes and SUVs generally hold their price better than sedans, and hybrids (like the RAV4) are currently commanding premium resale prices.

Try to avoid vehicles known for steep drops, such as large luxury European cars or specific models or vehicle types that the market has lost interest in.

Take care of your car

Maintenance is one of the few factors you can fully control in car ownership, so bear in mind the following when looking to preserve value:

• Stick to the recommended service schedule.
• Keep a folder of all receipts and service records.
• Fix minor scratches or paint chips before they rust.
• Keep the mileage reasonable if possible (near that 12,000 km annual average).

Avoid customization

While you might enjoy aftermarket alloys, lowered suspension, or a loud exhaust, the next buyer probably won't. Modifications usually narrow your pool of potential buyers, making the car harder to sell and lowering its market value. Keeping it ‘factory standard’ is usually the safest way to secure a better price later.

Wrap up

Even though car depreciation is an inevitable part of owning a vehicle, you can certainly make life easier with a bit of research and planning beforehand. By understanding how cars lose the most value in their first few years and why factors like brand, mileage, and condition can affect the value, you can make smarter buying and selling decisions.

Whether you buy a reliable, modern Toyota or a year-old SUV, always check the history of a used import before signing the paperwork. A little research now can save you thousands later.