We now know that the electric vehicle revolution is completely upon us. Every day we see a new electric car being launched or read a new story about greater investment in the charging infrastructure.
The speed at which this the EV revolution is changing the face of the company car market is truly amazing. More drivers are choosing to get into a new EV, but we must not lose sight than in two, three or four years’ time they will be sold and become a used car for the first time.
USED MARKET STARTING TO ACCEPT ELECTRIC
As recently as 2019, the used market was still unsure about who was going to buy EVs and hybrids as used cars, and so struggled to work out how much they were worth. In the beginning the residual values were very difficult to predict without any historic knowledge of appetite or depreciation intelligence.
Consequently, EV monthly rentals were high, but fast-forward to 2021 and the hybrid and EV used market is now much more established with dealers confident in buying used cars to put on their forecourts.
KNOW YOUR MARKETPLACE – AND YOUR CUSTOMERS
Dealers better understand the profile of buyer that are likely to purchase an EV or hybrid and dealers have played a huge part in the used market becoming established very quickly.
Contract hire monthly rentals have dramatically reduced as residual values have increased, and generally the overall supply chain is maturing extremely rapidly.
Aston Barclay has kept a close eye on used trends since it added alternatively fuelled vehicles to its quarterly insights report back in January 2017. In Q1 2017, the average price of AFVs was £10,602, which was a quite considerable £2345 more than a diesel of similar vintage, and £6922 more than a petrol.
During Q3 2019 the gap between used AFVs and diesel and petrol reached its peak. Average AFV prices reached £14,012 – respectively £6622 and £9799 more than the average price of a comparable diesel and petrol car.
Restricted supply of used AFVs in 2019 kept prices high, but during 2020 consumers and dealers started to consider that the price gap between running a low- or zero-emission car compared with an equivalent petrol or diesel was too large.
The result has been a mixed situation whereby certain AFVs have been popular and wholesaling quickly, and these appear to have been driven by price range on the retail forecourt in and around the sub-£15,000 retail price.
However, where the differential of higher-valued stock becomes significantly above the internal combustion-engined counterpart, these have had resistance from the consumer. The pricing starts to conflict with the new car prices boosted by manufacturer incentives and government grants bringing them too close to the used market.
DIFFERENT BUYERS WANT DIFFERENT THINGS
We are also seeing many different buyers for different types of AFV to meet the needs of different drivers. This in turn means demand and prices can be very different for EVs, plug-in hybrids (both petrol and diesel) and self-charging hybrids, which is why the industry can no longer lump in all the low- or zero-emission vehicles under one label.
The devil is in the detail and a 30-mile plug-in hybrid might not be every green motorists’ cup of tea but for a driver who doesn’t want the worries of charging on long journeys it might be perfect.
BUY THE POWERTRAIN THAT BEST SUITS YOUR NEEDS
Taxi drivers have found the self-charging hybrid to be extremely practical while an earlier EV may be perfect as a second car.
We must not forget that the EVs coming into the used market currently offer a range of 100 miles or so.
The models with ranges of 200-300 miles are just being launched into the market and will take a little while before they enter the used arena. So, we can guarantee the appeal, usability, and market size of hybrids and EVs will continue to change as and when these new models become used cars. I guess that is all part of the fun of being part of the EV revolution.
Dealer belief boosts used market for EVs and hybrids
Martin Potter, managing director, Aston Barclay