Depreciation (Wertverlust)
Depreciation is the reduction in an asset's value over time, driven by use, age, or changing market conditions. Wertverlust (value loss) is the German term for the same idea. It matters most for assets that lose value predictably — cars, electronics, furniture — because it turns a purchase price into a temporary asset, not a permanent one.
Why it matters
Depreciation turns a one-time purchase price into an ongoing cost that accrues silently between purchase and sale. Two everyday decisions depend on estimating it correctly: resale value (what an asset is worth if sold today) and total cost of ownership (the full cost of holding an asset, not just the sticker price it was bought for) both use a depreciation estimate as a direct input. Because depreciation is usually expressed as a percentage lost per year, reading it correctly builds on percentage arithmetic — a 15% annual rate compounds differently from a flat euro amount lost each year.
Worked examples
1. Declining-balance depreciation — a car. A car bought for an illustrative €30,000 loses an illustrative 20% of its remaining value each year, a common pattern for new vehicles. After year 1: €30,000 x (1 - 0.20) = €24,000. After year 2: €24,000 x 0.80 = €19,200. After year 3: €19,200 x 0.80 = €15,360. Because each year's loss applies to the previous year's value, not the original price, the euro amount lost shrinks every year even though the percentage rate stays constant.
2. Straight-line depreciation — a laptop. A laptop bought for an illustrative €1,200 is assumed to lose value evenly over an illustrative 4-year useful life: €1,200 / 4 = €300 per year, regardless of how much value remains.
| Year | Declining-balance (car, -20%/yr of remainder) | Straight-line (laptop, 4-yr life) |
|---|---|---|
| 0 | €30,000 | €1,200 |
| 1 | €24,000 (-€6,000) | €900 (-€300) |
| 2 | €19,200 (-€4,800) | €600 (-€300) |
| 3 | €15,360 (-€3,840) | €300 (-€300) |
The two methods answer different questions. Declining-balance tracks how resale markets actually price many used goods — the drop is steepest early on. Straight-line is a simplifying assumption, useful for budgeting a replacement fund evenly over an asset's expected life, even when the real-world resale curve is steeper in the first year or two.
Real-world rates
The illustrative curves above show the shape; resale markets set the actual rates, and they vary sharply by asset.
| Asset | Value kept after 1 year | Pattern |
|---|---|---|
| New car, Germany | ~75-80% (loses 20-25%) | Roughly half the purchase price is gone after about 3 years [1] |
| iPhone flagship | ~65-70% | Holds resale value better than most phones [2] |
| Android flagship | ~45-55% | Typically depreciates faster than an iPhone [2] |
The car and both phones follow the declining-balance shape — the steepest drop comes first. The gap between an iPhone and a comparable Android also shows depreciation isn't only about age or wear: brand demand, how long the maker keeps supporting the device with updates, and how fast newer models arrive all bend the curve (2025-2026 figures) [1][2].
Don't confuse with
Depreciation of skills describes a different kind of value loss: the erosion of a skill's or credential's market value over time — a certification going out of date, a technical skill falling behind industry practice, a foreign qualification losing recognition value before it is converted for the German labor market. Depreciation, as used here, applies to physical or financial assets with a resale price (cars, equipment, furniture) and typically follows a predictable schedule tied to age or usage. Skill depreciation has no fixed schedule — it is driven by external change, not by wear — and the mitigation strategies differ: maintenance and eventual replacement for physical assets, continuing education and re-certification for skills.
Check yourself
A laptop costs €1,200 and depreciates on a straight-line basis over a 4-year useful life. What is its value (in euros) after 2 years?
A car costs €30,000 and loses 20% of its remaining value each year (declining-balance depreciation). What is its value (in euros) after 2 years?
Which of the following is an example of depreciation, not depreciation of skills?
Which of the following statements about depreciation are true? (Select all that apply.)
Sources
- ADAC — Neuwagen und Wertverlust (new-car depreciation of roughly 20-25% in the first year and about half the purchase price after three years), https://www.adac.de/fahrzeugwelt/faq/faq-auto/neuwagen-und-wertverlust/ (2026)
- SellCell — Smartphone Depreciation Report (one-year resale-value retention, iPhone vs. Android flagships), https://www.sellcell.com/smartphone-depreciation/ (2025)