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Car Depreciation: How annual mileage affects your vehicle's value
Discover how your car's annual mileage impacts its overall value. Learn tips on managing mileage to maximise your vehicle's resale price in our guide.
Your car’s value begins to depreciate the moment it leaves the showroom, but one of the most significant factors in this is its annual mileage. Maybe you’re planning to sell your car in the future, or just want to maintain its value; either way, understanding how mileage affects resale price is essential.
In this guide, we’ll look at the relationship between mileage and depreciation, take a look at high-mileage and low-mileage cars, and give you some tips on how to manage your mileage effectively.
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What does car depreciation mean?
Car depreciation refers to the decrease in a car’s value over time. While a handful of particularly desirable or rare cars can actually get more valuable, this is exceedingly rare; most cars lose value due to age, wear and tear, and market demand. However, mileage plays a crucial role in determining just how quickly a car depreciates. Generally speaking, higher-mileage vehicles lose value faster than those with lower mileages, as increased use of the car means more wear on its components.
What is annual mileage? How does it affect car depreciation?
The term 'annual mileage' refers to how many miles a car covers in a year. The average UK driver clocks up around 7,000 miles annually, and cars that exceed this benchmark tend to depreciate in value at a faster rate.
Why? Well, a car with higher mileage indicates greater wear and tear, which increases the likelihood of mechanical issues and therefore reduces resale appeal. Conversely, lower mileage cars are generally perceived as having had an easier life, which makes them more desirable as second-hand purchases.
That said, a vehicle with excessively low mileage – say less than 3000 miles a year – might also raise concerns, as prolonged periods of inactivity can cause issues with the battery, brakes and tyres.
The biggest depreciation hit occurs in the first year, with cars losing around 20% to 30% of their value. After three years, a typical car will have lost 50% to 60% of its value, while cars with mileage exceeding 60, 000 miles generally see a sharper decline in resale price, as buyers perceive them as having higher maintenance costs.
High mileage vs low mileage – which is better for your car's value?
Both high and low-mileage cars have their own advantages and disadvantages when it comes to resale value.
High-mileage cars are often cheaper to buy used, and the larger numbers on the odometer indicate regular use. They can mean increased maintenance costs because of wear and tear on essential parts like brakes, tyres and suspension components.
Low-mileage cars are generally more desirable and fetch better prices. There’s usually less wear and tear and reduced strain on engine components and other critical parts. That said, cars that aren't driven enough can suffer from seized brakes, battery deterioration, and oil degradation. Still, buyers could – and often do – pay a premium for low-mileage cars, even if they’re not necessarily in a better condition than higher-mileage cars with a good service history.
Tips for managing your annual mileage to reduce depreciation
Lowering your annual mileage can help slow depreciation and maintain your car’s resale value. Here are a few ideas to think about:
- Car sharing: If possible, share driving responsibilities with your family or colleagues to distribute mileage across multiple cars.
- Plan your trips: Why make several trips for errands when you can make one? Combine them into a single trip instead of multiple short journeys.
- Use efficient routes: Apps like Google Maps or Waze can help you find the shortest and most fuel-efficient routes (and those two things are not always the same).
- Work from home: If your job allows, remote working can drastically cut your daily mileage.
- Use public transport more often: Using buses, trains or cycling for short trips can keep unnecessary miles off your car.
- Car maintenance: Keeping your car in tip-top condition can ensure that even if you have higher mileage, the impact on depreciation is as minimal as possible.
How to calculate your car’s depreciation
There’s no hard and fast rule for how much a car will depreciate – it varies by make, model, variant and all manner of other factors. But there are industry organisations that do their best to make educated guesses, and there are various online calculators that consider the variables to give you an estimate of your car’s value.
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