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Researchers at iseecars.com just came out with some very interesting research on the depreciation of cars based on their paint colour, and the results may surprise you.
As we have covered in previous articles, the depreciation of a new car should play a deciding role in the purchase making decision, especially if you like to upgrade your car regularly. $5000 lost to depreciation when it is time to resell is $5000 flushed away without earning you any value at all.
A study of 20 million previously owned vehicles last year found that less popular shades lead to lower price depreciation, and the most popular colours lead to higher depreciation. Surprising? Well, the difference is very substantial too. A yellow car depreciates 26.2% on average over 5 years compared to 34.4% for a black vehicle. That means that the depreciation on a $40,000 model, with all things being equal except for the colour, the yellow car will lose $10,480 and the black one will lose $13,760 from its initial purchase price.
How can this be? Well, it seems that this is caused by simple supply and demand. The price for the car on the lot will be the same, no matter what colour you choose (aside from speciality paints) but the used market is variable based on what is available in each variation. It is reported that 1.1% of cars on the road are yellow or orange, so on the used market you pay a premium for them over common colours.
Car Color and its Average Depreciation Over 5 Years (slide number listed)
- Yellow 26.2%
- Orange 27.6%
- Green 31.3%
- Teal 31.4%
- Red 31.7%
- Beige, Brown, Gold 33.3%
- Blue 33.6%
- White 33.7%
- Silver 34.0%
- Gray 34.2%
- Black 34.4%
The study claims that these results are true no matter the make, model, or type of vehicle. So if you are trying to maximize your resale value you may want to purchase a rare and exciting colour for your next purchase.