The Zero Emission Vehicle (ZEV) new car mandate risks damaging the used market as OEMS look to meet their zero emissions new car targets in 2024, according to INDICATA UK.
New and nearly new EVs are being aggressively pushed into the market at the same time as consumer demand for used EVs remains limited, and dealers are choosing to stock lower priced models to protect their cashflow and avoid falling prices.
With OEMs now working towards the government target of achieving 22% of their annual sales through zero emission cars by 2030, INDICATA UK’s group sales director Jon Mitchell (pictured), wonders how long the used EV market can sustain the pressure from the new vehicle market.
“With the UK offering tax breaks for buyers or drivers of new EVs but nothing for used EVs, there was always likely to be an imbalance between supply and demand. Higher priced used EVs are already in plentiful supply at the same time as volumes of new and nearly new cars are being pushed into the market.”
“The balance of supply and demand needs careful managing for fear of compromising the used EV market which heavily influences the new car market, in particular future residual values. The used EV market could be sitting on a knife edge in the coming weeks,” he added.
December’s UK new car registrations also gave some insight into the impact of the ZEV mandate with EV registrations down by -34.2% year-on-year, while sales of petrol and diesel cars were up by 29.2% and 22.1% respectively in the month.
OEMs held back EV sales until January to contribute towards the 22% target they need to meet to ensure they avoid fines of up to £15,000 per car by the end of 2024.
“Too many new, nearly new and used EVs are simultaneously in the market which could compromise prices. It needs a light touch to balance supply and demand,” said Mitchell.
Used EV stock levels continue to rise in January according INDICATA data with Market Days’ Supply (MDS) rising to 78 days, the highest figure recorded since March 2023. This compares with 60 days and 61 days respectively for used petrols and diesels. MDS is derived from dividing the currently available supply of stock by the average daily retail sales rate over the past 45 days.
INDICATA has published its used car price movement table for 13 European countries. In 2023 the UK suffered a price fall of -12.4% between January and the end of last year, the largest in Europe while Germany suffered the second largest price fall of -8.4%.
INDICATA’s Market Watch report has also witnessed the environmental legislation impact affect other European countries, with the MDS of used EVs increasing to an average of 111 days across 13 European countries in early January. That compares with just 73 for diesel and 79 days respectively for petrols.
