Looking for a boat or car to invest your money on, but confused because of their depreciation rates, and don’t know whether boats depreciate faster than cars or cars depreciate faster than boats? Here’s a simple guide for that.
Boats won’t depreciate faster than cars because the boats are used less compared to cars in general, so normal wear and tear would be less. And there will be more demand and less (moderate) supply for a boat, which won’t depreciate the boat quickly. So, that’s why cars depreciate faster than boats.
So, cars depreciate faster than boats, not the reverse. However, if the boat isn’t maintained well and had any issues, its value goes down significantly (it could depreciate faster than a car). Later in the post, you will see all the reasons why boat’s depreciated rate is slow compared to cars.
Below is a table showing the depreciation rate of cars and boats at different price points. Those are the average (boat and car) values left at those respective years (source).
|Boats||Value left at|
|Value left at|
|Value left at |
|Value left at|
|Value left at|
(Lund 1650 Angler SS)
|100% ($15,547)||78% ($12,126)||68% ($10,571)||45% ($6,996)||30% ($4,664)|
|100% ($20,195)||72% ($14,540)||62% ($12,520)||50% ($10,097)||38% ($7,674)|
|100% ($37,000)||90% ($33,300)||84% ($31,080)||74% ($27,380)||60% ($22,200)|
|100% ($47,380)||86% ($40,746)||64% ($30,323)||42% ($19,899)||27% ($12,792)|
(Jeanneau NC 795)
|100% ($80,750)||66% ($53,295)||51% ($41,182)||39% ($31,492)||22% ($17,765)|
|Kia Rio||100% ($15,850)||71% ($11,391)||53% ($8,492)||30% ($4,847)||16% ($2,672)|
|Hyundai Veloster||100% ($20,450)||67% ($13,746)||51% ($10,485)||33% ($6,930)||18% ($3,875)|
|Ford Mustang GT||100% ($36,120)||70% ($25,554)||59% ($21,476)||32% ($11,595)||18% ($6,856)|
|Audi TT||100% ($49,800)||73% ($36,707)||62% ($31,055)||35% ($17,711)||21% ($10,786)|
|Cadillac Escalade||100% ($76,350)||69% ($52,957)||53% ($40,866)||23% ($17,966)||15% ($11,675)|
However, they are many ways to slow down the depreciation rate by maintaining the car or boat well, buying a car or boat that is desired by others, buying limited-edition models, etc. That being said, we will now see the reasons why cars depreciate faster than boats.
Reasons why cars depreciate faster than boats
Now it is clear that boats depreciate slowly compared to cars (cars depreciate faster than boats). We will now see the main reasons why cars depreciate faster than boats.
Unlike boats, cars are used often (daily), resulting in wear and tear soon, which could depreciate its value quickly, and cars supply is numerous (more) than boats, so this year’s new model could be outdated in the next 4 or 5 years. With all these factors, cars depreciate faster than boats.
If the boats were used frequently (daily) and the supply is more, boats will depreciate quickly. So, supply & demand and usage are the main factors causing cars to depreciate quickly than boats. We will now see them in a detailed way.
Supply and demand causes depreciation (more supply and less demand)
Unlike boats, cars’ supply is excessively more, and the demand is a bit moderate (not high like boats). If there is more supply than demand for any product, it results in a price drop and could depreciate quickly due to the availability of newer (existing) models in the market.
That’s why this year’s brand new model (car) will be outdated in the next 4 or 5 years. Every year or two, the same company will be releasing its upcoming model, making the people talk about that year’s model rather than the model that came 3 or 4 or 5 years back (depreciating its value).
All this happens because there is more supply of cars than the actual demand. In the case of boats, it’s not like that; there are less supply and more demand for a boat in most places, making the boats depreciate slower than cars (most automobiles).
Did you know? There are an estimated 1.4 billion cars on the road, putting the vehicle saturation at around 18 percent (source). On the other hand, there are an estimated 35 million boats around the world (source). The difference is quite big.
1.4 billion cars vs. 25 million boats; you can clearly tell the difference from there. However, many people aren’t into boats than cars, but the boats’ supply is less (not up to the demand) in the “boating circle.” But in the “car circle,” the car’s supply is more, and the demand is moderate (not high).
Since the boat’s demand is a bit high and supply is low, their depreciation rate will be less (compared to cars) because many people might be willing to buy a boat, and if they didn’t find what’s required in the market, they would buy a used boat rather than waiting for a new model to come out.
And generally, many people will buy a used boat than a brand new boat, and it can either be due to its less availability or the price (boats are overpriced than the actual values it should be selling for in most places). So, depreciation isn’t much of a concern in boats.
Related post – Why are boats expensive (overpriced)? Check this article to know more about the actual reasons why boats are being sold at higher prices than the actual value they should be selling for.
More usage causes depreciation (Boats are used less compared to cars)
Unlike boats, cars are used daily by many people. Daily usage could increase the car’s natural wear or tear. However, you can maintain it well by doing regular checks or any. Eventually, the car’s performance or look will be degraded (reduced) if it is used quite often, depreciating its value quickly.
Similarly, the converse of that is true. If you use your car very little, maybe once or twice a week, and taken good care of, its value will not depreciate quickly because a good-looking car will catch more people’s eyes than a car which isn’t looking good.
Did you know? A brand new car, on average, loses its values by 20% to 25% as soon as it is purchased or drive off the lot (showroom). However, there will always be an initial loss in resale value when you buy a new car or a boat. If you get a bargain, you can reduce the amount of that loss.
That’s what happens to the boats. Since many people will not go boating quite often (4 or 5 times a week), its value will not depreciate quickly. And if you have taken good care of your boat, the resale value could get you 80% of the boat’s actual price, which is bananas (crazy).
Since most of the time, a boat is just sitting there on the trailer. It’s not really an everyday mode of transportation like an automobile often is. The depreciation on a boat is a fraction of what a car receives. However, a boat that isn’t maintained well will depreciate quickly than a car.
Ultimately, the depreciation rate is decided by how well the boat or car is looked after. If it’s subject to regular maintenance, properly used, and adequately cleaned, then the rate of depreciation may slow somewhat.
What else affects their (boats and cars) depreciation rates
Supply & demand and usage are the two main factors involved in a boat or car or any other vehicle’s depreciation. But, other than those two, some other factors could affect the depreciation rate. Let’s see what else depreciates their (boats and cars) value.
The boat’s or car’s depreciation rate most commonly depends on the brand reputation (popular or not), model (limited edition or any), location, supply & demand, and usage (well maintained or not).
Good reputed boats or cars could decrease the depreciation rate
Everyone who is purchasing a product will first look at the brand, whether it is well recognized or not? Because a well-known brand assures you many things. The same elements work for the boats and cars too. A boat under a well-recognized brand will be expensive than a similar boat under a less recognized brand.
People who can’t afford to buy a high-end (well-recognized) boat will try to buy a used boat. Since there is a demand for that boat, it won’t depreciate its value quickly. So, more importantly, buy a boat that others desire to get a good resale value (though its maintenance is crucial).
Sometimes, the same thing might not work for high-end boats or cars—for example, Jaguar XJL. The extended wheelbase version of Jaguar’s big XJ sedan loses a whopping sixty-six percent of its initial value after just five years. If the consumers didn’t like the product, its value goes down.
So, simply buying a well-recognized boat isn’t sufficient; you need to look whether others were also looking into similar kinds of boats or not. If many people like a boat similar to yours, then depreciation isn’t the thing you need to worry about; you need to worry about its maintenance.
However, if you are looking into special edition or limited edition boats or cars, those boats or cars will hold their value pretty well than normal ones. And sometimes, you may get more resale value than the actual value you have spent while purchasing them, which is crazy.
The location you are selling could reduce the boat or car value
The boat depreciation rate also depends on the location you sell the boat. Buying a boat in Florida is entirely different from buying one in California or New York. It will be a bit expensive in California or New York compared to in Florida due to more demand and less supply there.
Yes, in Florida, boats are a bit cheaper because the demand is steady throughout the year since more boats are available in Florida (new and used) than in other states. It also needs high maintenance due to high temperatures & salinity, and the long boating season drives the price down.
So, if you are selling your boat in those areas (with more supply and less demand), you will be losing value. So, where you will be selling the boat (location) is crucial; if you are selling in a place with more demand, you will get the most out of it and sometimes more.
For example, it’s hard to sell a bass boat in the Bahamas than in Michigan, Alabama, Texas, etc., since bass fishing is very popular at those places than in the Bahamas. So, the location where you are selling the boat is crucial, and it sometimes results in good resale value.
However, the same thing might not work for cars because, unlike boats, cars are used throughout the year and everywhere, and there is no off-season for cars. So, the location where you will be selling the car doesn’t matter much; demand matters much.
Boats won’t depreciate faster than cars because boat usage is less compared to cars, and generally, boat supply will be less compared to cars. Yet, the depreciation rate can vary due to many factors like brand reputation, model, usage (well maintained or not), supply & demand, and location.
However, if a boat or car is taken good care of, its value won’t reduce quickly. High-end or well-recognized cars or boats hold their value pretty well even after 5 or 10 years due to their brand reputation. Similarly, limited edition or special edition cars or boats won’t reduce their value quickly.
Finally, buying the right boat or car, which is desired by many, and selling the boat or car at correct times, when the demand is more, will be the right move and leaves you more cash.