Used EV values are set to stabilise - cap hpi

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USED EV values are set to stabilise in the second half of 2023, according to the forecast expert at cap hpi.

It comes after warnings that flaky EV values were de-stablising Onto, the EV only car subscription business.

But cap hpi data experts say that numerous EV models have now stabilised or appear close to a plateau following substantial decreases in used values in recent months.

However, a small number remain weak and appear to still have some way to fall, with no common denominator or central theme governing how individual ranges are performing.

Dylan Setterfield, head of forecast strategy at cap hpi (pictured above), said:

Many EV models are now looking good value, with trade values for the majority of models, where a comparison is possible, actually now below ICE equivalents. There is potential for some to increase from their current used value position. We assume further deflation in future and have factored this into our forecasts. There are small positive adjustments for the handful of models which have seen the heaviest falls.

According to cap hpi, the used car market in July is expected to continue to be relatively robust, continuing along the lines of the overall strength seen so far in 2023, albeit with a continuation of the differences seen by age, price point and fuel type.

Retail demand is likely to remain constrained over the short term as the reality of the cost-of-living squeeze continues to make itself felt, and concerns remain over the impact of increasing interest rates on mortgage costs.

In addition, it says used car volumes are expected to slowly increase in the coming months, as fleets receive replacements for some long overdue vehicles.

Modest negative movements for the next few months can be expected for most sectors, it added. This remains slightly favourable to typical seasonality, with dealers continuing to pay good money for the best condition cars and for those at an attractive price point for a quick retail sale. EVs are frequently re-assessed individually to reflect the fractured nature of the market.

Commenting on future demand, Setterfield, said:

The negative economic impact of any potential recession is expected to be outweighed by the reduction in used car supply already guaranteed by the lower new car registrations from the start of the pandemic onwards. Used car prices are not generally correlated with GDP growth, partly because there is a substantial element of core ‘needs purchases’ and also because reductions in consumer confidence and disposable income result in changes in used car buying, rather than preventing it; buyers may turn to older, smaller or higher mileage cars or turn to the used market instead of buying new.

It is extremely hard to predict how retail demand will progress through the second half of 2023, especially given the complex economic situation. However, we still expect a gradual market adjustment over the next several months or so and certainly not a ‘mirrored’ fall from the earlier high point. The used value increases on some models have effectively set a new market and may not return to previous levels.

New car supply issues (including the semiconductor shortage) will remain and subject to frequent change for many OEMs, but most manufacturers are now experiencing improvements in supply on many models, which we expect to continue. There remain cases of derivative-specific impacts within the same model range, or individual options which continue to be difficult to obtain.

Setterfield concluded: “From the second half of 2023 onwards, we expect to see the positive impact of reduced used car supply as a result of more than 2.36 million fewer cars registered through the course of the pandemic, particularly from fleets – now equivalent to a whole year’s new car registrations in a normal market.”