The used car market is experiencing a notable shift in valuations, with electric vehicles (EVs) particularly affected as supply outstrips demand. Industry analysts report that average used car prices have fallen by up to 10% year-on-year, driven by a combination of factors including increased new car availability, changing consumer preferences, and economic pressures.
EV Depreciation Accelerates
Electric vehicles are seeing some of the steepest declines, with some models losing over 20% of their value in the past 12 months. This trend is attributed to a surge in new EV registrations, which has flooded the used market, and concerns about battery longevity and charging infrastructure. According to recent data, the average used EV now sells for around £30,000, down from £37,000 a year ago.
Supply and Demand Imbalance
The imbalance is most pronounced in the premium segment, where luxury EVs from brands like Tesla and Audi have seen values drop by as much as 30%. Meanwhile, traditional internal combustion engine (ICE) vehicles are holding their value better, though they too are experiencing downward pressure. The overall market is adjusting to a post-pandemic normalization, where supply chain issues have eased and new car production has ramped up.
Finance and Affordability
Rising interest rates and tighter lending criteria are also impacting buyer behavior. Many consumers are reconsidering large purchases, and those who do buy are increasingly opting for cheaper, older models. This has led to a glut of nearly-new cars on the market, further depressing prices. Finance companies are adjusting their residual value forecasts, which could affect lease and PCP deals going forward.
Expert Outlook
Market watchers predict that used car values will continue to soften through 2024, with EVs likely to see further declines before stabilizing. However, they note that the shift towards electrification is irreversible, and long-term demand for used EVs will eventually rebound as infrastructure improves and battery technology advances. For now, buyers may find bargains, but sellers face a challenging environment.
