Car depreciation: the data every Turo investor should watch

What is depreciation

Depreciation is the loss of value of an asset over time and with use. In cars, it is especially visible: a new vehicle loses a significant part of its price as soon as it leaves the dealership, and continues to lose value each year depending on its mileage, condition, and the demand for the model in the used car market.

For those investing in rental cars, depreciation is a real cost, even if it doesn’t come out of pocket every month: it materializes when the car is sold.

How much does a car lose in five years

The iSeeCars portal analyzes hundreds of thousands of used car sales each year for five-year-old vehicles. In its study of vehicles sold between March 2024 and February 2025, over 800,000 cars, it found an average depreciation of 45.6% compared to the new price, higher than the 38.8% in the previous study but less than the 49.6% in 2019.

In the study published in 2026, with about 950,000 cars sold between March 2025 and February 2026, the average depreciation improved to 41.8%. The used car market moves with the supply of new cars, interest rates, and demand.

An example to understand it

Imagine a car that cost 50,000 dollars and that, in five years, generates net operating income of 40,000 dollars after commissions, insurance, maintenance, and cleaning. If at the end it is sold with a 45% depreciation, 27,500 dollars are recovered. The total result is not 40,000 dollars of profit, but 17,500 (40,000 income plus 27,500 sale minus 50,000 purchase). The example is illustrative and does not correspond to a real asset.

That’s why the profitability of a rental car must include the estimated resale value, not just the daily rent.

How depreciation is managed

• Choose models with good demand in the used car market.
• Control mileage with appropriate rates and limits.
• Keep the car in good condition, with its service history up to date.
• Set an exit term before the loss of value accelerates.
• Insure the vehicle adequately against claims.

Differences with real estate

A well-located and maintained property can retain or increase its value over time; a car almost always loses value. In exchange, a rental car can generate high income relative to its price and has a shorter term. They are complementary assets with different risk profiles, so it’s advisable to understand both before combining them in a portfolio.

Risks

Besides depreciation, rental cars face claims, theft, platform rule changes, and variations in tourist demand. A bad year in the used car market can reduce resale value.

Conclusion

Depreciation is not a reason to discard cars, but a fact that must be included in the calculations. When reviewing a car on CityFraction, pay attention to the model, the expected term, and the estimated profitability after all costs.

• See rental cars in Miami