[Car Tips] How to Calculate Car Depreciation in Hong Kong

🚗 Let me tell you: Depreciation is not a dead number

There are several characteristics of car depreciation in Hong Kong:

• The First Registration Tax (FRT) makes the landing price of new cars significantly higher than the ex-factory price.
• Market supply and demand, as well as brand value retention, mean that the depreciation curve is not a straight line downward.
• The same car can have a huge price difference depending on its usage and maintenance record.

Therefore, calculating depreciation is not simply a matter of "how much the price drops each year", but requires considering three aspects: tax, market, and vehicle condition .

1️⃣ Composition of the landing price of a new car in Hong Kong

First, we need to understand that the On-the-Road Price is calculated based on points, because the basis for depreciation calculation is:

Landing price formula

落地價= 製造商出廠價+ 運輸費+ 首次登記稅（FRT） + 牌費+ 保險

📌Current calculation method of first registration tax (private cars) (as of 2025):

• First $150,000: 40%
• Subsequent $150,000: 75%
• Balance: 115%

example :
If the car price is $300,000 (before tax),

• First $150,000 × 40% = $60,000
• $150,000 × 75% = $112,500
• Total FRT = $172,500

Landed price: $300,000 + $172,500 + other fees (license fees, insurance, etc.)

2️⃣ Basic method of depreciation calculation

🅰️ Percentage method (commonly used in the market)

• The first year's depreciation is the heaviest, generally 15%–25%.
• 8%–15% per year thereafter (depending on brand and usage)
• After the fifth year, the decline narrows as the market price approaches the "basic use value"

Example (assuming the land price is $400,000):

• After the first year: $400,000 × (1 - 0.20) = $320,000
• After the second year: $320,000 × (1 - 0.12) ≈ $281,600
• After the third year: $281,600 × (1 - 0.12) ≈ $247,808

📌 Editor's opinion: Japanese cars depreciate slowly, while European cars depreciate quickly; commercial vehicles and popular cross-border vehicles depreciate even lower.

🅱️ Market comparison method (most accurate)

• Check the prices of used car platforms (such as 28car and Car1.hk) for the same model, year, and mileage.
• Average price is adjusted (according to your vehicle condition and maintenance record)

step:

1. Find 3-5 similar car plates
2. Average price
3. Adjust according to your vehicle condition ±5%–10%

📌 Editor’s opinion: Although this method is troublesome, it is closest to the actual market transaction price.

🅲️ Commercial depreciation method (for accounting purposes)

• If a company buys a car, the accounting method uses the fixed asset depreciation rate (the Hong Kong Inland Revenue Department often uses the 30% straight-line method).
• This is a tax calculation, not the market price.

3️⃣ Characteristics of the depreciation curve (Hong Kong version)

• The biggest drop in the first year : because new cars become "used cars" as soon as they are delivered, and FRT cannot be passed on.
• The decline slows down in the 3rd to 5th year : the market price is closer to the balance point of supply and demand
• After 10 years, the price will drop very little : the price is close to the scrap value, mainly affected by the price of parts and the export market.

📊 I'll draw a line with words for your imagination:

價錢
│█
 │ ███
 │ ████
 │ ████
 │ ████
 │ ████
 └──────────────── 年份
   0   1   3   5   8   10 +

4. Hong Kong-specific factors affecting depreciation

1. Brand value retention
   • Toyota, Honda, Suzuki → Slow decline
   • BMW, Mercedes-Benz, Audi → Rapidly declining (especially after maintenance period)
2. Vehicle type and purpose
   • Commercial/cross-border vehicles (Alphard, Hiace) have low depreciation
   • Niche cars and unpopular sports cars depreciate quickly
3. Policy changes
   • The tax incentives for electric vehicles are limited in time. Once the policy changes, the prices of new and used vehicles will fluctuate significantly.
4. Supply
   • Popular car models are experiencing price increases, and used cars are even appreciating in value (e.g., Suzuki Jimny)
5. Vehicle condition and maintenance records
   • Complete records, no accidents, factory maintenance → Selling price can be 5%–15% higher
6. Miles
   • High mileage vehicles depreciate faster, but if used for long-distance highway driving, the impact is relatively small

5️⃣ Editor's Tips for Avoiding Pitfalls

• Don't use the percentage reduction from the official price of a new car : this will underestimate the drop because it excludes the first registration tax.
• Remember to compare the "actual transaction price" rather than the "asking price" : the platform's asking price is usually higher than the transaction price
• Calculate selling costs : Some car dealers charge handling fees/consignment commissions
• Electric vehicles need an extra layer of battery health checks : Battery degradation can significantly impact resale prices

6️⃣ Editor's practical example

Suppose you bought a Toyota Corolla Cross in 2022

• Land price : $320,000 (with FRT)
• Sold in 2025, 3 years old, 35,000 km
• Average secondhand market price for the same model: approximately $230,000–$240,000
• Depreciation rate = (320,000 - 235,000) ÷ 320,000 ≈ 26.5% (3 years)
• Average annual depreciation = approximately 8.8%

📌 Editor's analysis: Japanese SUVs have a good ability to retain their value, with the decline in value over the past three years lower than the market average.

❤️ Summary

📌Hong Kong's car depreciation calculation method cannot be based on a single formula. It should be combined with:

• Landed price (including FRT)
• Depreciation curve characteristics (the biggest drop in the first year)
• Market comparison (closest to the real price)
  📌The value of cars that retain their value may decrease slowly, but that doesn't mean there's no depreciation. 📌Policy, supply, and maintenance records are all important factors affecting depreciation.