Small cars are still the vehicle of choice for thousands of buyers, people who don't need an SUV or a sports car.
The modern small car is practical, fuel-efficient, comfortable and safe. And because it's all of those things, it also offers good resale value when the first owner is ready to move on to a newer vehicle.
Average depreciation for a sampling of small cars from 2017 ranges from about 64 per cent after three years all the way up to just over 80 per cent, according to market research firm RedBook.
Japanese brands like Honda, Mazda, Subaru and Toyota have long been dominant in the small car market segment, and cars from those brands do depreciate at a slower rate than brands from Europe, including models from prestige brands Audi, BMW and Mercedes-Benz.
Korean brands Hyundai and Kia are beginning to earn respect from buyers and that is reflected in the Japanese-rivalling resale value of the Hyundai i30 hatch, which sits between the high-ranking Honda Civic and the Mazda3.
A new facelifted Hyundai i30 is due to arrive in Australia later this year, as is an all-new sedan version to replace the Hyundai Elantra, which shares its mechanicals with the i30 but hasn’t traditionally performed as well as the hatch in terms of resale value.
However, it still leads most of the European small cars analysed by RedBook and the Kia Cerato sits in the same range of values as the Elantra.
The Ford Focus is built to Australian specification in Thailand, but is a European design. For resale value the Ford sits interspersed among the Elantra and Cerato, but ahead of the prestige Europeans.
The Volkswagen Golf doesn't fare well for depreciation, the volume-selling Euro hatch taking out three of four positions at the bottom of the ladder.
This was the Golf 7, predating the current (and soon to be replaced) Golf 7.5, so the vehicle in question may have been discounted heavily in the months of dealer run-out leading up to the introduction of the facelifted Golf. That has some impact on retained value when the owner is preparing to sell it down the track.
For prestige cars, the entry-level BMW 118i Sport Line is not only cheaper to buy, it also holds its value better over time than the more expensive 118d Urban Line and 125i M Sport. These cars are the previous rear-wheel drive models, not the recently released front-wheel drive F40 generation.
Similarly, depreciation for the base-grade Mercedes A-Class (A 180) is also slower than the higher-priced A 250 and A 200d models.
The Audi A3 is the only prestige model in this dataset to run against the trend; depreciation for the $36,000 A3 with the 1.0-litre engine is worse than the 2.0-litre models, although that's only by percentage.
Due to the 1.0-litre model's much lower purchase price, the difference between new price and resale value is much smaller in dollar terms.
In many cases, high depreciation is often a sign that a car has been heavily discounted when sold new. It may also be the case that a buyer of a new car is leasing it, particularly if the car is more expensive.
There's a school of thought that owners trading in their current vehicle for a new car are often unconcerned about taking a hit with the residual if they're swapping into a new car. The RedBook dataset indicates that this is more prevalent among the prestige brands.
The table below outlines the vehicles in the small car segment that could be purchased new in 2017. Sorted in descending order, the table also lists the percentage of depreciation after three years, plus the good retail price determined by RedBook research.
Honda Civic VTi-LX – $33,590 (new) $27,100 (resale): 80.7%
Honda Civic VTi-L – $27,790 (new) $22,300 (resale): 80.2%
Honda Civic VTi – $22,390 (new) $17,900 (resale): 79.9%
Hyundai i30 SR Premium 1.6T FWD – $33,950 (new) $26,700 (resale): 78.6%
Hyundai i30 Elite 1.6T FWD – $28,950 (new) $22,100 (resale): 76.3%
Hyundai i30 Go 2.0i FWD – $22,290 (new) $16,900 (resale): 75.8%
Mazda3 SP25 Astina 2.5i FWD – $35,490 (new) $26,900 (resale): 75.8%
Mazda3 Touring 2.0i FWD – $27,290 (new) $20,500 (resale): 75.1%
Mazda3 Neo 2.0i FWD – $22,490 (new) $16,800 (resale): 74.7%
Toyota Corolla ZR 1.8i hatch FWD – $30,020 (new) $22,200 (resale): 74.0%
Toyota Corolla SX 1.8i hatch FWD – $26,000 (new) $19,100 (resale): 73.5%
Subaru Impreza 2.0i sedan – $24,990 (new) $18,100 (resale): 72.4%
Toyota Corolla Ascent 1.8i hatch FWD – $22,230 (new) $16,100 (resale): 72.4%
Subaru Impreza 2.0i-S sedan – $33,050 (new) $23,900 (resale): 72.3%
Subaru Impreza 2.0i Premium sedan – $29,980 (new) $21,400 (resale): 71.4%
Ford Focus Titanium 1.5T FWD – $32,690 (new) $23,100 (resale): 70.7%
Hyundai Elantra SR Turbo 1.6T FWD – $31,290 (new) $22,000 (resale): 70.3%
Ford Focus Sport 1.5T FWD – $27,490 (new) $19,300 (resale): 70.2%
Kia Cerato SLi 2.0i FWD – $32,490 (new) $22,800 (resale): 70.2%
Ford Focus Trend 1.5T FWD – $24,390 (new) $17,000 (resale): 69.7%
Hyundai Elantra Elite 2.0i FWD – $26,990 (new) $18,800 (resale): 69.7%
Kia Cerato Sport + 2.0i FWD – $27,290 (new) $19,000 (resale): 69.6%
Kia Cerato S 2.0i FWD – $22,290 (new) $15,500 (resale): 69.5%
BMW 1 Series 118i Sport line 1.5T RWD – $39,990 (new) $27,800 (resale): 69.5%
Hyundai Elantra Active 2.0i FWD – $24,250 (new) $16,800 (resale): 69.3%
Audi A3 Sport 2.0T FWD – $46,400 (new) $31,600 (resale): 68.1%
Audi A3 S-Line 2.0T AWD – $50,000 (new) $34,000 (resale): 68.0%
Mercedes-Benz A-Class A 180 1.6T FWD – $38,700 (new) $26,200 (resale): 67.7%
Audi A3 1.0T FWD – $36,200 (new) $24,500 (resale): 67.7%
BMW 1 Series 118d Urban line 2.0DT RWD – $45,390 (new) $30,000 (resale): 66.1%
BMW 1 Series 125i M Sport 2.0T RWD – $49,990 (new) $32,800 (resale): 65.6%
Mercedes-Benz A-Class A 250 Sport 2.0T AWD – $55,200 (new) $36,200 (resale): 65.6%
Volkswagen Golf 110 TDI Highline 2.0DT FWD – $36,990 (new) $24,000 (resale): 64.9%
Mercedes-Benz A-Class A 200d 2.1DT FWD – $44,800 (new) $29,000 (resale): 64.7%
Volkswagen Golf 110 TSI 1.4T FWD – $26,490 (new) $17,000 (resale): 64.2%
Volkswagen Golf 110 TSI Comfortline 1.4T FWD – $28,990 (new) $18,600 (resale): 64.2%