How to cut new car depreciation in half. (Dead easy.) Three easy tips in this report are all it takes.

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You buy a new car. It depreciates. It’s like throwing a $50 bill out the window every few days.

The truly insidious thing about depreciation is the way it attacks covertly. You don’t pay it to the end, when your knuckles are white and you’re waiting for the sales dude to come back with his trade-in offer. You know you’re about to get bent over, and the question is: ‘How hard?

If you had to pay your depreciation once a week, perhaps in cash, at the post office (like, if that was a law) new car sales would plummet over the perceived injustice.

So, I’ve got three tips for you that will cut the depreciation you pay in half - inspired by a somewhat disappointed dude named Laurie Howell, who’s one of us. One of you - whatever.

"In 2017, partly on the strength of your reviews, we bought a Kia Sorento. It is a wonderful car - silent, economical, packed with features, comfortable and with enough power to do what you want. However, I recently saw an ad for a second-hand Sorento of the same spec and similar kilometres to ours and noted that it was selling at approximately 60% of what ours cost new. A quick check of other ads, and some Googling has revealed that the Sorento has one of the highest depreciation rates around - interestingly exceeded only by the CX-9.

"What is behind this high depreciation rate? Has the 7 seater SUV bubble burst? It certainly doesn't seem to be anything about the car itself - in fact if you want a roomy, comfortable SUV, a second hand Sorento or CX9 would have to be a good buy I would think. Also, with such a high depreciation rate ($130 per week by my estimation) would we have been better off leasing the vehicle?" - Laurie Howell

We’ll look at the data in detail, but no - no bubble bursting there, with seven-seat SUVs. Used car values are underpinned by supply and demand. In fact there’s a bubble in used cars generally at the moment - COVID-19 has caused many new car supply shortages, and that’s reduced the supply of late-model used cars in the market, because trade-ins are delayed, which has ramped up the value of whatever used cars are available.

Also, leasing is not a hedge against depreciation - unless you jump into one of those ‘guaranteed future value’ deals with a manufacturer, and those are often completely extortionate in terms of the other aspects of the finance contract. There’s no free lunch on depreciation, and you cannot beat it with finance.

Let’s crunch the numbers in this report.