Recent falls in trade values for electric vehicles (EVs) has deterred almost two-thirds of dealers from stocking them, according to research from Startline.
Its Used Car Tracker for March shows that 56% of dealers believe EV values have become too volatile in recent months. A further 20% said stock turnaround for electric models is “too slow”.
Paul Burgess, CEO at Startline Motor Finance, said: “The dramatic fall in EV values in recent months has generated a lot of headlines in the motor industry and is clearly having a very real effect on whether dealers choose to stock these vehicles.
“This is understandable. Some popular models of EV have seen a double-digit percentage fall in values month on month and, for dealers, this can translate into potential losses of thousands of pounds on every vehicle. Not many dealers can afford to take those risks.
“Added to this, there is a widespread perception that EVs are slower to sell than petrol and diesel equivalents, which also makes stocking them less attractive. It’s undeniably a difficult period for the used EV market.”
Used EV prices fell by 15.3 percentage points between October 1, 2022, and January 31, 2023.
The recent decline in used electric vehicle (EV) values has kickstarted demand among buyers and led to an increase in sales, however.
The massive price fall helped reduce Market Days’ Supply (MDS – Indicata’s measure of marketability, the lower the better) levels by approximately one third to 117 days in early February. However, that meant used EVs were still taking twice as long to sell as used hybrids and even longer than used ICE cars.
Startline found that 24% of dealers expect EV values to recover with 15% saying worries about values and prices are overstated. Additionally, 18% say that EVs are now an important part of their model mix.
Burgess added: “There is, of course, no doubt that the used car market will electrify over the coming years but dealers are finding that this journey will not be necessarily linear. There will be periods when this relatively young market sees supply race ahead of customer demand, as we are seeing now but it’s worth remembering that it was only relatively recently that EVs were perceived as being in short supply.
“What we all want to see is a situation where EV values settle down and can be priced at a point where they look good value compared to petrol and diesel equivalents for everyday used car buyers. Getting to that point might turn out to be quite a bumpy ride, though.”
Elsewhere in the Startline Used Car Tracker, there appears to have been a recovery in confidence with 24% of dealers saying they are optimistic about the used car market compared to just 8% in February. The leading reason given is that consumer confidence is strengthening. However, 31% of dealers remain pessimistic about the sector’s prospects.
Tesla has risked further hit to used car residual values and increases to monthly finance payments with further price cuts to certain models in its electric vehicle (EV) line up.
Elon Musk’s EV brand has levied new reductions of between 4% and 9% in the UK and US markets a matter of weeks after January cuts which deliver a saving of over £8,000 for its flagship Model Y Performance model alone.
At the time AM reported that the cuts had not only sparked “ill-feeling” among thousands of owners that had recently purchased a new Tesla. The brand had registered a third of its entire 2022 volume in December.
It also triggered a fall in residual values that, in turn, increased monthly finance repayment rise by over 50% in some cases.