Rise of tactical registrations could damage residual values

Used car values are under threat from a rise in manufacturer-backed tactical registrations, warns Indicata.

The company’s latest Market Watch report highlights the significant role tactical registrations played in the April used market. Sales of sub-12-month-old cars increased by 39% year on year.

This is major sign that the car supply is now back close to pre-Covid levels, according to Indicata, but one that could contribute to damaging used car values in the long term if the trend continues.

Currently a number of nearly new used cars, in particular electric vehicles (EVs), are being registered but are failing to be wholesaled as dealers continue to limit the number of used EVs they are buying to add to their forecourts.

But if the used EV floodgates open then it could further compromise used values just as EV prices have stabilised during 2024.

The Market Days’ Supply of used EVs is lower in the UK than any other European country at 57 days with petrol leading the way at 40 days, diesel at 44 days and hybrid at 45 days.

Market Days’ Supply measures available used stock in the market versus its current daily run rate which saw EVs compete favourably with ICE cars once again in April.

Average UK used car prices fell by 0.71% from April to May as the market is in a healthy state despite an increase in the number of older cars coming into the market as companies continue to update their fleets.

“The used market continues in its healthy state as supply and demand remain finely balanced. If the volume of nearly new used cars getting pumped into the market continues to increase it will impact the used values of all cars, not just EVs,” explained Dean Merritt, Indicata UK’s head of sales.

“Used prices are definitely heading back towards pre-Covid levels having fallen by 16% since January 2023,” he added.