Published: November 2022

Is there a difference in the degree of depreciation between foreign and domestic cars?

Given that the value of a new car can drop to less than 65 percent within five years of purchase, it is not surprising that buying a car is one of the worst investments a consumer can make. But it is also one of the most necessary investments, especially if you live in suburban or rural areas where public transportation is less reliable than in urban areas.

Some people prefer the good old American car, others do not. There are many reasons for car depreciation, but careful research can reveal why one particular vehicle is better than another when it comes to getting the most for one’s money in the long run.

In general, foreign cars, particularly Japanese ones, hold their value better than American or domestic ones because of their inherent reliability and changing economic conditions over time. The current exchange rate is also a determining factor. If the exchange rate falls, foreign cars become more expensive, but this forces the U.S. to lower the price of imported cars; if the exchange rate remains low, demand for domestic exports increases, offsetting some of the drop in volume.

Rising fuel prices also have a significant impact on the value and preservation of cars. Fuel-efficient vehicles retain their value better when fuel prices are high than non-fuel-efficient vehicles. Although most Japanese imports are generally more fuel efficient and reliable than their U.S. counterparts, domestic automakers have also stepped up their efforts in recent years, creating a range of more competitive vehicles over the past decade that, in most cases, are as fuel efficient and reliable as Japanese cars. They produce cars that are as economical and reliable as their Japanese counterparts.

However, it is important to remember that the value of a car in any country decreases over time. Therefore, the best way to buy a new car is to buy a used one. That way you can focus on your needs, which is the purpose of the purchase, without worrying about declining values. How much can you afford and how much money should you set aside? Consumers should consider all the variables and make the best decision for their needs, rather than simply choosing between a foreign or domestic vehicle.