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The push towards alternative fuels is well under way, but how are these models performing on the used market?

Alternative-fuelled vehicles are a growing and increasingly popular area of the new car market, and as Government uses a variety of measures to push more drivers into lower-emission vehicles, that is only going to increase.

But the equation for a used vehicle is very different to that of a company car, so how hybrid, plug-in hybrid and full electric vehicles are viewed by second-hand buyers can be very different to the demand levels for new vehicles.

“Growth in the alternative-fuelled vehicle sector has largely been driven by hybrid sales in recent years, and as hybrid volumes in the used market increase we’re seeing good levels of interest,” says Philip Nothard, Cox Automotive customer insight and strategy director. “Volumes of plug-in hybrids are increasing, but they’re nowhere near the level of hybrid vehicles as yet, and values and demand are more susceptible to market pressures.”

Chris Plumb, senior valuations editor at Cap HPI says: “Traditional hybrid cars have always been popular and well received in the used market. Today we continue to see demand increase as the used buyer is looking for alternatives to petrol and diesel vehicles.” He adds that PHEVs initially struggled, with higher new prices making them look expensive on the used market, and increases in volumes didn’t help matters. But the WLTP changes, cuts in the grant and publicity around PHEV real-world consumption figures combined to reduce volumes.

“With a reduction in cars entering the used market, we have seen an upturn in the performance of PHEVs,” Plumb continues. “Drivers are switched on to the fact that these cars can attract lower tax rates, are ULEZ exempt and you can achieve good consumption figures.”

The introduction of ultra low emissions zones in London and Birmingham is having an effect on low-emission vehicles. “Retailers are changing the profile of what they stock in these areas,” concludes Cox Automotive’s Northard. “That said, we’re not seeing an effect on used values because buyers do not source stock from one specific geographical area.”

FUEL TYPES: THE UPS AND DOWNS

The latest Society of Motor Manufacturers and Traders new car registration data shows the changing fortunes of different fuel types across the first half of 2019 as alternative fuels increase in popularity.

It SMMT - New car registration data showing changing fuel types across the first half of 2019 - Tabledoesn’t though tell the full story, though, because plug-in hybrid volumes have been badly affected by certain big-selling products not being available, including BMW’s 330e, which is about to return to the market following the launch of the new 3 Series earlier this year. BMW’s 330e volume expectations for 2020 would take PHEVs back well above 2018 figures on its own.

 

ELECTRIFIED EXPECTATIONS

Stuart Pearson, BCA’s COO UK Remarketing on the market’s attitude to electrified vehicles:

Stuart-Pearson - MD - BCA UK Remarketing

Stuart Pearson – MD – BCA UK Remarketing

 1. A receptive market

BCA’s experience is that the market is generally receptive to alternative fuels. Hybrids are more established with motorists, while plug-in hybrids are growing in popularity as they offer cheap electric-only power for short trips, yet longer journeys are free from range anxiety thanks to their petrol or diesel engines. PHEVs typically don’t attract any charges when using congestion charging zones, which can be a factor for drivers in central London areas.

 

2. Hybrids achieve normality

Hybrids are very much part of the remarketing fabric now, and while there are increasing numbers reaching the market, the volume is still relatively small compared to petrol and diesel models.  There is good demand for younger hybrids with the right specifications, and older, higher-mileage examples need to be sensibly valued to attract the right buyers.

 

3. PHEVs progressing gently as knowledge increases

While plug-in hybrids have grown in volume in recent years, they still remain relatively scarce. Although knowledge is growing, the buyer base is mainly grown out of franchise dealers who are more confident when dealing with the product and some smaller niche buyers. As ever, the vehicles with higher specifications are the most sought-after and it is crucial that charging cables are provided with vehicles and service history is well evidenced, particularly where a vehicle may still be under manufacturer warranty.

 

4. LCVs are slower – Euro6 diesel is still king

Volumes of electric vans reaching the remarketing sector are extremely low so it would be misleading to draw trends based on such small data sets.  In contrast, demand for Euro6 LCVs is growing and this has increased following the launch of the London ULEZ in April.