New, ‘nearly new’ or used: How much does depreciation influence our car-buying decisions?

Buying a used or ‘nearly-new’ car is a great way to save money on a vehicle, but how much of a saving is needed for us to consider a second-hand motor rather than one that’s fresh out the showroom?

To find out, we’ve asked Brits about their car-buying habits: what do they consider a good deal? How is the cost of living crisis making a difference to their purchase decisions, and are they really that keen to exercise savvy shopping habits when it comes to new or pre-owned cars?

We also reveal the depreciation values of the UK’s best-selling cars of 2022. Does your car make the list, and did you make the right call when it came to buying a new, nearly-new or used vehicle?

How to identify a new, nearly-new or used car^[1]

A new car is a vehicle that has not yet been registered and will have no previous owner history. Often, a new car will be built or ordered specifically for the customer. It will also come with a full warranty, which may be as long as seven years.

A car can be considered ‘nearly new’ when it is up to three years old, but they are usually less than 12 months old. Typically, a nearly-new car will have been used within dealerships for test drives and demos. For this reason, mileage tends to be very low.

A used car will have had one or more owners. Used cars can be purchased from dealerships, independent garages and private sellers. An approved used car scheme, offered by most dealerships, is a reliable way to source a quality vehicle with the peace of mind of full history checks, certificates, and warranties.

You can also buy used cars via an online dealership, although you should be sure to carry out your own checks when doing this, or you could end up purchasing a vehicle with a hidden past.

What is a car’s depreciation value?

Depreciation is the difference between a car's value when it is first purchased and when it is sold. This drop in value varies between makes and models but is typically between 15-35% in the first year and up to 50% or more over three years.

How much did 2022’s most popular cars depreciate?^[2]

How the most popular cars of 2022 held their value

How much can be saved on a used car and is it enough to make buyers consider a second-hand version rather than buying new? We’ve worked out the approximate depreciation values of the most popular cars bought last year. We identified their market value as of December 2022 and then compared them with three-year-old models for sale online.

Top 10 most popular cars 2022	% price depreciation of 2020 model
Nissan Qashqai SUV	43% - 48%
Mini Hatchback	40% - 45%
Vauxhall Corsa	39% - 44%
Ford Kuga	38% - 43%
Hyundai Tucson	37% - 42%
Kia Sportage	35% - 40%
Tesla Model Y	30% - 34%
Ford Puma Titanium	28% - 34%
Kia Niro 2	28% - 33%
Volkswagen Golf Life	27% - 33%

Shoppers who snapped up a 20-plate Nissan Qashqai or Mini Hatchback last year will have enjoyed a tremendous reduction in price tags, while those who opted for a Ford Puma, Kia Niro 2 or VW Golf Life may have noticed a smaller saving. However, every one of the top 10 most popular cars offers savings of at least £7,000, with some even being reduced by over £10,000, including the Qashqai SUV and Ford Kuga Zetec.

For many of those who usually drive new cars, these reductions would be enough to make them purchase a used model instead. Of those who usually buy a new car, half (52%) said that a saving of between £5,000 and £10,000 would make them consider buying a nearly-new version. In fact, 29% said that even a saving of less than £5,000 would make them think about it.^[3]

Overall, nearly a quarter (23%) of drivers surveyed said they usually buy a new car. If you are looking to buy one of these models new, be wary that its value will depreciate quickly once purchased, which could mean a more significant loss if you decide to sell it at a later date.

Who is buying used cars?

Most Brits tend to opt for a used car, with 54% telling us they usually get a second-hand vehicle. However, which motorists are more likely to go for a used or nearly new model?

Which age groups are buying the most used cars?

Three-quarters (75%) of Generation Z drivers (those born in the year 2000 or after) said they usually buy a used car. In fact, none of our respondents from this generation said that they often buy brand-new vehicles. Similarly, 54% of millennials (1982 to 1999), 50% of baby boomers (1946 to 1964) and 60% of Gen X drivers (1965 to 1981) also go for second-hand cars. When it comes to the silent generation though (those born between 1928 and 1945), only 39% tend to buy a used car.

Do more men or women buy used cars?

Around a quarter (27%) of men surveyed prefer to buy brand-new cars, compared to 19% of female drivers.

Which areas buy used cars?

People in Wales and the East Midlands are the least likely to buy a new car, with only 15% of drivers in each of these regions saying they typically purchase a brand-new vehicle.

Around a third (30%) of those in the North West who usually buy their cars brand new would still get a new car even if it meant paying more. Meanwhile, drivers living in the South East are keen to hunt out a bargain, as 90% of those who usually buy a new car here said they’d consider getting a used one instead to save cash.

Do drivers consider depreciation when purchasing a vehicle?

Around two-thirds (70%) of drivers say they wouldn’t buy a car with a high depreciation value.

It seems that all Gen Z drivers have future finances in mind, as 100% of those surveyed from this generation said they’d be put off buying a new car if it depreciates quickly. Other motorists are less concerned with depreciation, with approximately 30% of drivers across all other age groups not considering high depreciation an issue.

However, 83% of those who usually buy a new car have admitted that they could be persuaded to buy a nearly-new car if it saves money. Though 20% of baby boomers would still prefer to buy brand new.

Has the cost of living crisis impacted car buying decisions?

The cost of living crisis has impacted Generation Z’s buying habits considerably, with one-third of younger drivers reporting they will no longer purchase a new car because of the poor economy. The older generation has been affected even more, with 42% of those born between 1928 and 1945 changing their minds about purchasing a car because of the cost of living crisis.

Only 22% of drivers have the same budget as before the cost of living crisis, with a fifth (20%) completely changing their minds about buying a new car. Around a quarter (26%) of drivers have said that the state of the economy has swayed them to search for a cheaper alternative. Meanwhile, a similar number of drivers (24%) say the current climate has not impacted their car-buying habits at all.

What to consider when buying a used vehicle^[4]

For most drivers, depreciation is a key factor in their car buying decisions. Those who opt for a nearly-new or used car should also be considering a list of essential factors to ensure they’re getting their money’s worth, with no nasty surprises later down the road.

Mileage: The more miles a car has done, the less it’s worth. However, high ‘motorway miles’ are less damaging to a car than city driving.

History: Ask plenty of questions about the history of the vehicle. There could be underlying issues or accident damage.

Reliability: Some makes and models have a reputation for unreliability, so do your research.

Number of owners: The fewer the better, so check the number of previous owners on the car’s logbook or V5C.

General condition: Damage to the bodywork, interior and exterior will reduce value, so inspect a used car carefully before buying.

Service history: The more complete, the better. The service book should have stamps or receipts that prove a good service history.

Length of warranty: Three years is good, but some manufacturers now offer as much as a seven-year warranty, which is a bonus when it comes to selling your car.

Desirability: Some car models are ‘face-lifted’ or replaced every few years, making them more desirable. The more recent the model, the better it will hold its value.

Size: Large luxury cars tend to depreciate more than small cars because fuel, parts and maintenance are more expensive.

Fuel economy: For many buyers, the more miles per gallon, the better.

Road tax: Fuel-guzzling cars cost more to tax each year, which makes them less desirable when selling. If you’re in London and your car doesn’t meet the emission standards for the ULEZ, it could also affect the value. Find out more on the TfL site.

About the data

[1] Within this report and throughout our survey questions, we have considered a nearly-new car as one under three years old, in line with definitions shared by popular used car marketplaces and car review websites, including Carbuyer, BuyaCar and heycar.

[2] We identified the market value of the ten most popular cars of the year in December 2022. We compared them with three-year-old, like-for-like models for sale online. This resulted in approximate depreciation values for 2022’s most popular cars.

[3] In order to collect the car buyer behaviour data used in this report, we conducted a survey of 2,000 UK residents via YouGov. The survey was run on 19 December 2022 and all responses were selected at random.

[4] Information regarding the factors affecting used car value was sourced from Motorway and the RAC.