We’ve all heard how fast cars depreciate. The second you drive them off the lot it is estimated that they lose about 10% of their value. But what about motorcycles? Do they depreciate the same way?
Motorcycle depreciation is the difference between how much your motorcycle was originally worth and how much it is worth currently.
Depreciation happens to everything we own, from our cars and motorcycles to our computers and phones. The value of objects tend to decrease as they get older because they are more likely to break and become more out of style as time goes on. From the moment you buy a motorcycle or commit to a motorcycle loan and drive it off the lot, the value of your motorcycle will reduce, then continue to depreciate the more you drive and the more wear and tear your vehicle accumulates.
Like cars, motorcycles depreciate the most in the first two years. Motorcycles tend to lose 5% when they leave the lot, and then lose about 19%-27% by the end of year two.
After the initial two years, motorcycles lose about 5% per year after that, up to year ten. After year ten motorcycle depreciation drops to about 2%-3%, as many owners don’t want to deal with the maintenance issues required by older motorcycles.
Motorcycle depreciation varies a lot from model to model. This depends on a number of factors.
Production Numbers. The fewer of a certain model that were built and sold, the less they tend to depreciate. Since they are more rare, they will retain their value more.
Accident History. If the motorcycle was in any accidents, it will accelerate depreciation.
Condition. If the motorcycle is well maintained, it will retain its value more. The more dents, scratches, and oil buildup the motorcycle has, the less it will be worth as years go on.
Mileage. The more miles a motorcycle has, the less it will hold its value.
Fads and Trends. If the motorcycle was trendy one year, it will most likely fade from the limelight and depreciate faster. If however the motorcycle was iconic for one reason or another (think the 1990 Harley Davidson Fat Boy from The Terminator), it may depreciate less as there will be a longer lasting market.
There are many factors when it comes to motorcycle depreciation, but depreciation mainly boils down to how desirable the make and model is, and how well the motorcycle has been maintained.
According to MotorcycleHabit.com, some motorcycle brands have a tendency of depreciating faster than others. Here are their fastest depreciating brands:
Victory Motorcycles. They were discontinued in 2017, causing an increase in depreciation.
Hyosung Motorcycles. They are depreciating quickly because they are a new brand and are not widely trusted yet. Until the brand has been around for a bit longer, they will depreciate at a faster rate.
BMW Motorcycles. These depreciate quickly because the people who buy them tend to get new models every few years, causing them to depreciate quicker.
Triumph Motorcycles. New models tend to depreciate quickly because they have struggled as a business throughout the decades.
Honda Motorcycles. Honda motorcycles tend to depreciate more simply because they have very high production numbers, thus there are a lot of them on the market. This drives down their price and causes them to depreciate quicker than other brands.
If you are looking to make a quick calculation on the depreciation of a motorcycle, you can follow the steps below.
How much did you originally pay for the motorcycle? Whether it was new or used, find out how much you paid.
Use Kelley Blue Book or a similar website to estimate what your motorcycle is currently worth. You will need the make, model, year, and current condition of the motorcycle to give you an approximate value.
How many years have you had the motorcycle? Or how many years will you have had the motorcycle when you decide to sell it?
To calculate the depreciation you can use the following formula.
(Cost of Motorcycle - Salvage Value) / Estimated Useful Life = Annual Depreciation
Let’s plug in some numbers to see how this is done. Let’s assume your motorcycle initially cost $13,000. You know that you will be able to sell it for $2,000 according to Kelly Blue Book, and you have had it for 8 years.
(Cost of Motorcycle - Salvage Value) / Estimated Useful Life = Annual Depreciation
($13,000 - $2000) / 8 years = Annual Depreciation
($13,000 - $2000) / 8 = $1,375 per year
While it’s impossible to stop motorcycle depreciation completely, there are some steps you can take to reduce its effect.
Cutting back on driving is an effective way to curb depreciation. The less miles you put on your motorcycle, the less it will depreciate.
Make sure to keep up on maintenance on your motorcycle. Regular oil changes, air filter changes, and shock replacements are just some of the routine maintenance you should keep up on.
Wash and wax your motorcycle regularly to protect the paint and keep the exterior looking as new as possible.
Keeping up on maintenance records is good practice in general, and can help increase your motorcycle’s value.
If you took out a motorcycle loan to purchase your bike, depreciation is definitely something you need to be aware of. If depreciation occurs very suddenly, you risk becoming upside down in your loan, meaning that you owe more on your loan than the motorcycle is worth.
Do your research before you buy your motorcycle to ensure that the model you are purchasing does not depreciate abnormally fast, and do what you can to control the depreciation through proper maintenance.
Depreciation is an inevitable part of ownership, but it’s good to be aware of how fast and why your motorcycle depreciates in value.
If you have a loan out for your motorcycle, you should look into motorcycle refinance today. Motorcycle dealerships rarely give good rates to consumers, so you are probably overpaying on your loan by a lot every month.
Don’t risk an underwater loan; refinance today with Auto Approve to start saving money!