The majority of cars depreciate over time. However, luxury cars typically depreciate the most compared to other automotive segments. With their high retail prices, luxury cars usually drop considerably in value after buying one new.
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Find out the top 3 luxury cars with the highest depreciation after 10 years of ownership, and why you should avoid buying them in Nigeria.
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What Does Luxury Cars Depreciate the Most?
On average, luxury cars lose around 40-50% of their original value in the first five years of ownership. However, some luxury cars depreciate even more. Here are the luxury cars with the highest depreciation after five years:
The BMW i3
The BMW i3 might seem like a beautiful luxury car to own, but it depreciates quickly making its ownership in Nigeria risky. The BMW i3 is the luxury car with the highest depreciation after five years of ownership
With an average depreciation rate of 68%, the all-electric BMW i3 compact hatchback takes the top spot as the luxury car that deprecates the most after five years of ownership. Launched in 2013, the i3 was BMW’s first mass-produced zero-emissions vehicle. Since then, the German automaker has sold around 250,000 units of the i3 worldwide.
However, BMW now offers other electric vehicles, including the i4 and iX. These BMW EVs provide better performance and driving range, which lessens the demand for the i3. The estimated depreciation rate of the i3 after 10 years is even more extreme — with it losing 81% of its value.
Also, BMW cars are not made for Nigerian roads, which means having this car is all shades of tricky in Nigeria. It will even lose all of its value before the 10-year mark.
The Mercedes-Benz GLE500
Who would have thought that it’s equally easy for the Mercedes to lose value after 10 years? Well, the Mercedes-Benz GLE500 has a very high depreciation rate.
The Mercedes-Benz GLE500 midsize luxury SUV takes the second spot for the luxury car that depreciates the most after five years of ownership, with a depreciation rate of 65%. It has some positive attributes, including an attractive design and a luxurious interior, but a major drawback is its significant drop in value. Experts note that if you buy a new GLE500 and take up an average of 12,000 miles annually, after five years, the luxury SUV would be worth less than half of the price for which you purchased it.
The Mercedes GLE might seem like a beautiful ride to own, but if you plan on reselling the cars you own at some point in life, then avoid buying this car because its resale value after 10 years is almost non-existent.
The Land Rover Range Rover SUV
If there’s one SUV you should avoid buying in Nigeria if you have plans of reselling one day, it is the Range Rover SUV. Land Rover Range Rover loses much of its value after five years, and you wouldn’t be happy knowing the car you bought for N50 million is now worth less than N5 million.
The Land Rover Range Rover has a depreciation rate of 63%. Much of this depreciation is tied to the cost of repairs and maintenance for the Range Rover. While the Range Rover is a highly capable SUV and offers a plethora of luxurious amenities, the drop in value is a big drawback. If you want to save some money, you might be better off buying a used two-year-old Range Rover.
Why Do Luxury Cars Depreciate Easily?
Luxury cars depreciate easily because a majority of them are not built to be everyday-commuter vehicles, as such, they don’t have strong reliability and durability. The majority of them are designed to be appealing to buyers and have beautiful and exotic interiors but are not as efficient as the regular Toyota Corolla, Honda Accord, and many others.
In Nigeria, most luxury cars lose their value because they are not popular and in high-demand in the country. Also, cars whose mechanics are not readily available in Nigeria lose value easily compared to those with experienced mechanics in Nigeria.
Conclusion
Luxury cars are very appealing. However, along with the high original price, they tend to depreciate considerably. With models such as the BMW i3, Mercedes-Benz GLE500, and Land Rover Range Rover, the significant drop in value after five years of ownership means that you might not get as much money as you hoped if you decide to sell it.
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