Stock starved car retailers are avoiding used electric vehicles (EV) as zero-emission vehicles continue to decline four times faster than their diesel-powered equivalents.
Despite struggling to source a sufficient volume of cars to fill their dealership forecourts, Cap HPI director of valuations told AM that retailers’ appetite for EVs has stalled as the UK encounters “consumer pushback” amid rising energy prices and media coverage of queues at public charge points.
While Martin suggested that the used car market had enjoyed a better than expected start to 2023, EVs are declining at a rate of 2.1% at one year and 10,000 miles, compared to 0.9% for petrol and 0.5% for diesel and hybrid cars
“EVs aren’t moving off forecourts quickly,” Martin said.
“As yet we haven’t seen much pricing adjustment from retailers. They’ve sunk a lot of money into those vehicles and, realistically, would a price cut change things in the current climate?
“What we’re seeing is consumer pushback against EVs at a time when volume is starting to come into the market.”
Martin suggested that used EV value declines are a symptom of a ‘new normal’ being established in just one part of the market.
“Manufacturers are starting to deliver EVs in greater volume and, at the same time, finance repayments are looking more appealing on a new EV than they might in the used sector. It makes for a difficult part of the market for used car retailers to operate in.”
Last week AM reported on Tesla’s decision to cut pricing on its new car range just a month after delivering almost a third of its 2022 car registrations in December alone.
The move is likely to compound falling residual values with have seen the average Model 3 lose 23% of its value in the past 12 months.
Martin said that Tesla is not alone in suffering residual value decline, however.
Its Model 3 was down 6% month-to-date at the end of last week, with the, the Model S down 4% and Model X and Model Y each down around 5%. Audi’s etron is down 3%, the BMW i3 down 5% and Fiat 500e also down 5% in the same period.
On Friday (January 13) a new Net Zero Review delivered on behalf of the Department for Business, Energy & Industrial Strategy (BEIS) which made a total of 129 recommendations with some geared towards accelerating the adoption of EVs.
The swift delivery of an electric vehicle (EV) mandate and VAT cuts to make public charging more affordable were among the key actions recommended by the Review led by chair of the Net Zero Review Chris Skidmore MP.
Commenting on the wider used car market, Martin told AM that the average used car declined by 0.6% month-to-date to the end of last week at three years and 30,000 miles, with older cars faring better.
Average used car values grew 0.3% at five years and 80,000 miles and by 1.3% at 10 years and 100,000 miles during the same period.
“The market has started 2023 better than we had anticipated. We’re seeing strong conversion rate sand retail has been pretty healthy.
“Dealers are out to buy again and, all-in-all, it’s all quite positive apart from the EV picture.”
Martin recommended a cautious approach for car retailers stocking their forecourts, however.
“My advice right now would be not to overstock and to keep a keen eye on live market data”, he said.