Used EV market faces continued volatility as volumes rise

Cox Automotive believes the used electric vehicle (EV) market is poised for continued volatility as volumes rise, retailers gain confidence, stocking dynamics evolve, and price entry points decrease.

Several continuing trends, including the realignment of vehicle values, supply shortages, economic uncertainty, and continuing EV market volatility, are likely to underpin a complex used market in the year ahead, it says.

"Volumes of used EVs are growing fast, but consumer demand remains damagingly low," said Cox Automotive's insight director, Philip Nothard.

"The used market for them is yet to find its feet - all of which is fuelling the instability of values.

“These negatives will surely be diluted as the sector continues to evolve, as prices lower, range and technology improves, and pricing becomes more attractive thanks to competition from new entrants."

Vigilance in the face of used market complexities will be key to success for industry players in 2024,  according to Cox Automotive.

Writing in its Insight Report, multiple industry commentators point to a needed evolution by the remarketing industry to weatherproof their businesses in the year ahead.

Nothard explained: "The used market remains in a delicate transition, as we have seen over the past few years.

“Inconsistency persists in many areas, including where vehicle values and production shortages are concerned.

“The latter continues to have a marked impact on the number of vehicles entering the used arena.”

ICDP MD Steve Young gives a stark warning in the Insight Report about the used market road ahead, predicting that things are set to become “bloody” when it comes to vehicles from zero-to-four years old. 

Nothard concluded: "Ongoing value realignment is creating a market division between retailers and vendors.

“Dealers will strategically manage a mix of old and newly priced stock. At the same time, the fleet and leasing sector continues its vehicle de-fleeting process with residual values set before the pandemic bounce." 

Used car values at three years, 60,000 miles fell by 2.1% in December, following a cumulative drop of 8.4% over the past two months, according to analysis from Cap HPI.

The average December movement over the past 10 years has been 1.3%, with the largest drop being 2.2% in 2014.