See exactly how much your vehicle loses in value each year — and find the smartest time to sell or trade in.
Common Canadian vehicles — click to populate
| Year | Vehicle Value | Lost This Year | % of Original |
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Depreciation is the reduction in a vehicle's market value over time. It is the single largest cost of vehicle ownership — often exceeding fuel, insurance, and maintenance combined. Yet most Canadians never factor it into their vehicle budget.
A new vehicle typically loses 20–25% of its value in the first year alone — the moment you drive it off the lot. This is why a one-year-old certified pre-owned vehicle can offer such strong value: someone else absorbed that initial drop, and you get a nearly-new vehicle at a significantly lower price.
Most vehicles hit a "depreciation sweet spot" around years 3–5, where the steepest drop has already occurred but the vehicle still has many reliable years ahead. Selling in this window often gives the best balance between what you recover and what a buyer will pay.
Most new vehicles in Canada lose between 15% and 25% of their value in the first year of ownership. The exact amount depends on the make, model, and market demand. Popular vehicles like the Toyota RAV4 and Honda CR-V depreciate on the lower end of this range due to strong resale demand. Luxury vehicles and vehicles with limited used market appeal can depreciate 25–35% in year one. After the first year, typical annual depreciation slows to 10–15% of the remaining value per year for most Canadian vehicles.
Most financial experts recommend selling between years 3 and 5. By this point, the steepest first-year depreciation has already occurred, the vehicle still has significant reliable life remaining, and it typically still falls within what buyers are comfortable purchasing privately or as a certified pre-owned. Selling in spring (March to May) tends to yield better prices in Canada because demand picks up with warmer weather. Avoid selling in winter when fewer buyers are actively shopping.
Currently, yes — most EVs except Tesla depreciate faster than comparable gas vehicles in Canada. This is primarily due to rapidly improving battery technology (making older models seem outdated), government incentive structures that only apply to new vehicles, and range anxiety among used EV buyers. However, this varies significantly by brand: Tesla vehicles have historically held value better than other EVs. As charging infrastructure improves and EV adoption grows, depreciation rates for popular EV models are expected to stabilize and approach gas vehicle rates.
The Canadian average annual mileage is approximately 15,000–20,000 km per year. Vehicles driven significantly above this average depreciate faster because they have shorter remaining useful life. As a rule of thumb, every 10,000 km above average annual mileage can reduce resale value by $500–$1,500 depending on the vehicle. Low-mileage vehicles command a premium in the used market. When evaluating a used vehicle's price, always factor in whether the mileage is above or below the Canadian average for its age.
Yes — if you use your vehicle for business or employment purposes, you may be able to claim Capital Cost Allowance (CCA) on the vehicle's depreciation. Class 10 vehicles (most passenger vehicles) have a CCA rate of 30% per year using the declining balance method. Class 10.1 applies to luxury passenger vehicles costing more than the prescribed limit (currently $36,000 for the 2025 tax year). Self-employed individuals and commission employees can deduct vehicle expenses including a portion of depreciation using the business-use percentage. Keep a mileage logbook to support any vehicle deduction claims with the CRA.