The average three-year-old used electric car is now 43.8 percent cheaper than eighteen months ago according to INDICATA UK’s latest Market Watch report.
Used EVs experienced a 2.0% price fall in June, which contributed further to achieving price parity between equivalent EVs and ICE cars across many different sectors. UK used prices fell by just 0.1% during June which gives a clear sign of prices levelling off after falling by 16.5% since January 2023.
More good news for used EVs is that demand continues to rise on the back of falling prices and is more in sync with supply. Market Days’ Supply dropped to 50 days at the beginning of July, slightly behind hybrids at 47.5 days and diesel and petrol respectively at 45 and 41 days.
This means the UK had the lowest MDS in Europe in June, due to a combination of stronger demand and dealers continuing to be cautious about stocking zero emission cars on their forecourts.
Market Days’ Supply is derived from dividing the currently available supply of inventory by the average daily retail sales rate over the past 45 days.
Manufacturer-backed tactical registrations also played a key role in the June market, with the sale of used cars under 12 months old up 15.9% month-on-month. Many nearly new EVs are being fed into the market in this way as OEMs strive to achieve their 22% ZEV mandate 2024 target.
EV’s market share of used cars up to four years of age also continued to rise accounting for 9.3% in June, followed by diesel (10.8%) and hybrids (30.6%) while petrol remained the dominant fuel type with a 49.1% share.
Dean Merritt
“Our latest used EV trends do not make enjoyable reading for leasing companies who have got used cars to sell at the end of customer contracts. Some are turning to secondary leasing for their younger lower mileage used EVs as a means of reducing the residual value pain, which also helps to reduce the chance of ex-fleet cars flooding the market,” explained Dean Merritt, INDICATA UK’s head of sales.
“The good news is that consumer demand for used EVs continues to increase as prices get cheaper as they continue to find their feet in the used market. However, it remains a slower process than most would like,” he added.
Ian Hare, Managing Director of Motor Management, said: “I have highlighted concerns about used values for battery electric vehicles previously. Latest trends identified by the BVRLA (British Vehicle Rental and Leasing Association) show that the divide between fleet take up and the private motorist for electric vehicles is widening.
“Business contract hire is up 7.5% year on year but personal contract hire has dropped by 11.3%. Salary sacrifice which sits between the traditional company car and a private registration is up a massive 63% year on year with the majority of those registrations including electric cars.
“It goes without saying that demand for electric vehicles in the used market needs to keep pace to avoid residual values spiralling downwards. We already have a situation where battery electric vehicles are retaining only 37.8% of value compared to the new retail price on a three-year old 60,000 mile vehicle. This compares to a figure of 52.5% for internal combustion engine vehicles.
“Measures are therefore needed to support the used market for electric vehicles and the new government will need to ensure the market does not collapse completely if it hopes to achieve net zero by 2030. In the meantime, the leasing sector is attempting to adapt to the volatile market by offering used car leasing. Demand for used BEVs on lease has increased by 7.7% in the last quarter. In part this is no doubt due to the fact that the leasing companies are not achieving their forecast future values and are therefore re-leasing vehicles on used vehicle contracts to defray losses.
“Going forwards, leasing companies will also need encouragement to take the risk on underwriting new vehicle future residual values. Inevitably they will be cautious. This in turn means that manufacturers will need to provide extra support in the form of larger new vehicle discounts and selective registration bonuses.”
