Half of used car dealers reluctant to buy second-hand EVs
'Shocking depreciation' of electric cars last year has made half of motor dealers wary of buying them to stock their forecourts, according to a new report.
Owners of electric vehicles (EVs) are being warned to 'expect little enthusiasm' when trying to sell their battery-powered cars to dealerships, a poll of second-hand motor traders by HonkHonk suggests.
More than one in three dealers said they are 'much less interested' than a year ago in taking an EV off somebody's hands, while one in eight are 'a bit less interested' having seen thousands of pounds being wiped off the value of these cars when prices plummeted last year.
Used car dealers reluctant to add to their EV stock: A poll of second-hand motor traders found that half are less willing to buy second-hand electric vehicles over concerns about their value
EV price declines were widely reported by This is Money in 2023.
In December, we listed the 30 electric cars that had shed most value[1] during the calendar year based on data supplied by market experts, cap hpi.
The worst was the Seat Mii Electric. A year-old example of this battery-powered city car would have been worth GBP18,650 at the beginning of 2023, but a 12-month-old Mii by December was valued at only GBP10,150 - that's deflation of 46 per cent.
In fact, the 10 biggest nosediving EVs last year slipped in value by over 39 per cent - and older models were hit just as hard.
HonkHonk, a trading platform that brings motorists together with dealers who want to buy stock of used motors, says that because price falls last year wiped almost half from the value of some EVs, dealers are 'afraid' to stock them today believing there is little to gain in terms of profit.
In a survey of 66 independent dealers across the country, it asked if their attitude toward buying EVs for their forecourts had changed compared with 12 months earlier.
Used car dealers asked: 'How do you feel about stocking EVs compared to a year ago?'
I'm much more interested: 3.1%
I'm a bit more interested: 4.6%
Unchanged: 41.5%
I'm a bit less interested: 12.3%
I'm much less interested: 38.5%
Source: HonkHonk poll of 66 UK used motor traders
More than half said their intention to purchase stock of EVs had declined.
Over a third - 38.5 per cent - said they were 'much less interested', while another 12.3 per cent were 'a bit less interested' to take on fresh EV stock.
In contrast, only 7.7 per cent answered the survey to say they were much more interested or a bit more interested in taking on electric cars from owners.
Dealers' refusal to take on fresh stock of EVs could push values even lower, with owners forced to take less if they want to replace them with something else.
Sebastien Duval, chief executive of HonkHonk, said: 'The problem is that the shocking depreciation we saw last year for many EV models has left dealers worried that they'll lose money if a car doesn't sell fast.
'It's a dramatic contrast with dealer appetite for buying in general for stock, because we're seeing demand go through the roof for other cars, when HonkHonk users offer them.
'Right now, dealers can't get enough small or medium petrol cars, medium diesels and even hybrids, since the market began recovering in 2024. But less than one in ten want to snap up a battery EV car more than they did than a year ago.'
Dealers' refusal to take on fresh stock of EVs could push values even lower, with owners forced to take less if they want to replace them with something else
Market analysts have reported that EVs are partly the victim of their own success, with supply increasing in the used market and rapid improvements to the latest new models making used examples less rare but also less attractive to motorists.
Combined with the ongoing problems of an inadequate charging infrastructure, the previous generations of EV - with their lower mileage ranges - are losing out to the kind of smaller petrol and diesel cars drivers trust and the improved but expensive new EV model ranges.
This is pushing down the price dealers are willing to pay for EVs in cases where they are happy to add them to their stock.
One Jaguar I-Pace[2] driver commented on an owner's forum[3] that the JLR dealer they use offered to take their 18-month-old, 5,000-mile electric luxury car - which cost GBP77,000 new - in part-exchange at a value of GBP27,000.
That represents a loss of GBP50,000 (-65 per cent) in just a year-and-a-half.
Duval said: 'Dealers are much more risk averse after the difficult market they experienced last year, which means they're hungry for cars that they know they can turn around for a quick sale.
'It's good news for anyone wanting to sell their traditional economical family car direct to a dealer but we warn anyone wanting to sell their older EV not to expect much enthusiasm from dealers.
'They are probably better advised to trade their older EV in to the dealer who is selling them another new EV.'
Auto Trader says EV values are down but consumer demand for used models remains
However, Auto Trader paints a slightly different picture of the existing level of demand for second-hand EVs, based on activity on its website. In fact, it says market health for electric cars is far greater than petrols at the moment.
In its February Retail Price Index, which is based on analysis of around 800,000 motors for sale on its platform, it said it is seeing plenty of demand for second-hand EVs.
Appetite for used electric cars 'surged a massive 81.5 per cent year-on-year in February,' the report states.
It said this combined with a -1.1 per cent fall in supply, which in turn drove a whopping 83.6 per cent increase in what it calls 'market health'.
Auto Trader says it is seeing strong demand for EVs on its website, though this isn't stopping the value of EVs declining in the last 12 months. The average advertised price for an electric car on the platform in February was 16% lower than a year earlier
Demand for a premium brand EVs was up 77.3 per cent (supply up 10.4 per cent), while mainstream 'volume brand' EVs were up 58 per cent (supply down -10.7 per cent).
Appetite for 'super premium' brand electric cars (like Porsche's Taycan[4]) was up 175 per cent in February, despite a 37.6 per cent increase in supply of models entering the used market.
By contrast, demand for used petrol cars (6.2 per cent) was only just ahead of supply (5.6 per cent), resulting in a conservative 0.6 per cent increase in market health.
Yet Auto Trader's own data shows there has been a big fall in average used EV values in the last 12 months.
In February 2023, the average asking price of a second-hand electric car was GBP33,701. Fast-forward a year and last month's average price fell by almost 16 per cent to GBP28,488.
Deflation is even more significant looking back over a two-year period.
For premium-branded EVs - such as BMWs, Mercedes' and Teslas - the average asking price last month of GBP34,500 was 32 per cent down on February 2022 (GBP50,500).
While second-hand petrol cars have also dropped, they have fallen at a slower rate.
The average price of a used petrol model fell from GBP16,062 to GBP14,978 - a dip of 7 per cent.
Richard Walker, data and insight director at Auto Trader told This is Money that the increase in supply of used EVs and greater competition is great new for buyers - though not so much so for sellers.
'Demand for second-hand electric cars has been strong with advert views on our marketplace almost doubling year-on-year to 17.5million in January and February and the share of enquiries sent to retailers for EVs has also increased.
Therefore, with more supply comes more choice, and so more buyers - it's great to see the market maturing and opening up electric vehicles to a wider range of drivers,' he explained.
'Two-year-old electric cars in particular are gaining lots of interest as their more attractive price points enable consumers to afford the cars - whereas brand new EVs still carry a hefty price premium putting them out of reach for many.
'Whilst price drops last year did have an impact on confidence in the used electric car market, the growth in demand now that pricing is more accessible shows that people are keen to try an electric car - crucially when the price is right - and with potential running cost savings currently GBP131 per 1,000 miles driven, it's not surprising more people are considering making the switch.'
A recent poll of almost 12,000 drivers by AA Cars found that almost a fifth (18 per cent) are more open to buying a second-hand EV in the next five years as a result of falling used prices.
Some 16 per cent said they are now more likely to buy a second-hand EV in the next five years - an additional 2 per cent said it made them more likely to buy one in the next year.
Only one in ten drivers (9 per cent) said that if they buy an EV, it would need to be a new one.
References
- ^ 30 electric cars that had shed most value (www.thisismoney.co.uk)
- ^ Jaguar I-Pace (www.thisismoney.co.uk)
- ^ owner's forum (www.ipaceforums.co.uk)
- ^ Porsche's Taycan (www.thisismoney.co.uk)