Why Luxury Cars Depreciate so Hurry

Luxury cars occupy quite a portion of the car world. Synonymous with latest technologies, status and the highest comfort levels, these cars capture the attention of many enthusiasts, but obviously, great things come with greater price tags, and beneath all the cash lies an economic reality, that being, the rapid depreciation of flagship luxury models. While some brands and models may hold up generally well over the years, most luxury cars tend to lose more than 50% of their value within the first three years of their ownership. In this article we fully dive into the reasons why luxury cars depreciate so hurry.


1. Rapid technological advancements:

The biggest reason for rapid depreciation is technological advancements. Luxury cars offer cutting-edge technology when they come out such as gesture control, power doors, complex multimedia setups, etc. While such technologies are not available in the market at the time, the market soon catches up and within a few years, budget cars even offer similar tech, making all that complex technology in expensive cars meaningless. For example, heated-cool seats used to be available only in the most prestigious and expensive cars in the past, but now even Corolla’s have them.

2. Pursuit of status:

The rich buy flagship luxury cars as a symbol of status. As new models come out, they make no hesitancy to switch out the old for the new. Considering the target customers are the rich, only the newest models hold meaning in their eyes, making even a slightly older model valueless. As the target customers move on, rapid decrease in the initial price occurs.

3. Maintenance & lack of parts:

Another primary reason why luxury cars depreciate so hurry is that they are not made in large numbers. While in many cases, rarity leads to increased price over the years, luxury cars become more of a burden, as the complex tech begins to malfunction. The lack of spare parts and replacements makes things worse. The few parts available online are at a ridiculous markup. Overtime, maintenance becomes a nightmare, as only trained people can do the repairing. Keeping the car in good condition also requires commitment. Any person who owns a car knows the importance of spare parts; it requires no explanation.

4. High initial costs:

Flagship models cost quite high, usually touching the $500,000 barrier. The high price is due to the innovative tech and the branding. With time, such things hold no value, as the incorporated technology becomes common and the car brand moves onto other models, causing a rapid decrease in price.

5. High ownership costs:

With all the comforts, luxuries and tech packed, the car weighs quite a lot. To get all the weight moving, the car is fitted with a strong engine such as a V8 or V12. Not only does it cause low mpg’s, but the aforementioned maintenance and parts unavailability also factor in, causing high ownership costs and make the car unpractical for daily commute. If gas prices rise, ownership costs increase, resulting in increased depreciation.

In conclusion, flagship luxury cars cost a fortune, but for good Reason. They provide you with tech you’ve never experienced, a ride that’ll leave you wanting for more and a mirror of your successes and achievements. While depreciation is high, and maintenance is a nightmare, they could still provide you with a great experience, one that makes you forget the money. It’s a matter of perspective, for some it is unresponsible, while for others it is the best way to spend their money.

For Further Reading:

-Why German luxury cars depreciate so fast

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