An average Volvo almost depreciates about 55% in the 5 years after its purchase.
Volvo is known for its safety and smooth drive, but it is certainly not known for its resale value. The depreciation rate of every luxury vehicle is very quick and in the case of Volvo, it is even quicker. Volvo ranks 3rd from last in the resale value list, just over Jaguar and Land Rover, which are known for their unreliability.
Volvo’s depreciation rate
Volvo is known for its quick depreciation rates due to its high maintenance and expensive parts. The Swedish company was not always like this though. They used to have a good resale value, but that changed when they started making modern-shaped cars.
The use of new technology and shapes made them just like other high-maintenance European luxury cars. However, they still lack high-performing fast engines due to their focus on family cars. This has resulted in even less demand for used Volvo cars.
Depreciation by years
Volvo cars depreciate really quickly, even after the first year of ownership. They depreciate around 20% in the first year. This is a bit higher than some of its competition. Audi depreciates 19% and Mercedes-Benz depreciates 18% after the first year.
The depreciation after 2 years is around 28.5%, which is still 4% more than Audi and 1% more than Mercedes-Benz. This is then followed by a depreciation rate of 35% after 3 years which is again more than Audi. The depreciation rate after 4 years is around 44%, which is less than Mercedes-Benz but more than Audi and BMW.
The resale value of Volvo drops drastically after its 5th year with a depreciation rate of 55%, which is more than Mercedes, Audi, and BMW. This is a very swift increase of depreciation rate from the year before, with a rate of around 10% in just one year.
After 6 years, the depreciation rate is 63%, which is 4% more than BMW, 6% more than Mercedes, and 8% more than Audi. Volvo then continues to depreciate very quickly and eventually, after 10 years, it will be worth 79% less than its original value. This is 2% more than BMW, 5% more than Mercedes, and 9% more than Mercedes. All of this indicates a very high depreciation rate of Volvo cars.
A quick breakdown of Volvo depreciation rates over the years:
- 1 year- 20%
- 2 years- 28.5%
- 3 years- 35%
- 4 years- 44%
- 5 years- 55%
- 6 years- 63%
- 10 years- 79%
Reasons for depreciation
Volvo cars have a high depreciation rate for a few reasons:
- Less demand from customers due to other fast cars like BMW or Audi.
- High maintenance rates and Volvo also requires its customers to get their maintenance done by their authorized dealerships, which are really expensive.
- The parts of Volvo cars are extremely expensive.
Volvo also lost its uniqueness a bit due to its making of high-end cars. They used to have their own niche of making boxy, inexpensive, highly reliable, and easy-to-maintain cars. People bought them for their safety and less complex systems.
However, this has changed now. Volvo still makes safe cars, but they are more luxurious and are extremely expensive, which results in less demand for Volvo cars.
Volvo used to be an extremely reliable car that even lasted more than 30 years. However, resale has always been an issue with Volvo cars. People often pass their Volvos on to their children because the car has a very bad resale value. This even impacted Volvo when Volvo’s reliability dropped in recent years due to its high problems per 100 cars and high maintenance rates.
Common issues in Volvo cars
Some issues found in Volvos have impacted the reliability of Volvo cars. In turn, this has impacted its resale value and leads to them depreciating so quickly. The common problems with Volvo cars include:
- Reported issues with the transmission system
- A power steering fluid leakage problem
- Issues reported with failure of the cooling system
- Failure of the auto-braking system
If there is one thing where Volvo still shines, it’s their safety features. Volvo has maintained its safety ratings all this time. They even invented some safety features. The crash facility Volvo owns is one of the best in the world. Overall, they have made themselves a safe luxury car manufacturer.
Why do Volvos depreciate so fast?
Volvo depreciates really quickly, even more than other luxury cars manufacturers. The depreciation of Volvo cars is linked with its decrease in its reliability and increase in its maintenance rates. The expensive prices of parts also contribute to its low resale value, affecting its depreciation rate.
Do luxury cars have good resale value?
Luxury cars usually do not have good resale value. They are hard to buy and then cheap to sell. They depreciate more quickly than budget cars. After 5 years, they usually have depreciated by almost 50%, which means you can literally buy a Maserati or a BMW for half the price after 5 years.
However, the main issue with buying a luxury car is its high maintenance rates and expensive parts. Luxury cars are complex to repair, so an owner can hardly repair their own car. Though buyers have to face these issues, the quality of luxury cars is always the best.
What are the reasons for the bad resale value of luxury cars?
There are plenty of reasons for the low resale value of luxury vehicles. The technology luxury cars use is always new and innovative, but it comes with a high price and number of malfunctions. The malfunctions due to new technology can lead to expensive repairs.
People are usually scared of paying high repair bills, which is one of the biggest reasons for the bad resale values of luxury cars. Luxury cars also use very high-quality parts which last longer, but if they break, it’ll be a very expensive bill. Another reason is that people do not like to buy the used cars due to their age and mileage.
Is it better to own a mass-produced car, like a Toyota?
Budget cars or mass-produced are always cheaper to buy than luxury cars. They have better fuel efficiency than luxury cars, and overall, they are more practical than luxury cars. However, they lack the premium quality of luxury cars.
Luxury cars provide the smoothest rides with a comfortable sitting experience. Cars like Toyotas or Hondas also offer a decent driving experience, but it can’t really compare to that of more top-end brands. It really comes down to what type of car the buyer wants to buy and can afford.