Used electric market poised for significant growth

Used EVs are now becoming a viable alternative to new models with sub £20,000 electric stock accounting for 25% of the market at the end of 2023, according to Auto Trader’s latest Road to 2035 Report.

In 2023, pockets of the second-hand electric market saw price parity between internal combustion engine (ICE) and electric cars for the first time ever.

This resulted in record demand for second-hand electric cars in 2023, with the electric share of used car enquiries in the up to five-year age cohort growing from 5.2% in 2022 to almost one in ten in 2023 (9.2%), showing that, when price is removed as a barrier, consumers are keen to consider electric.

“With more affordable supply heading for the used electric market in 2024, buyers will have a lot more choice and for the first time, used electric cars will be a viable alternative to new counterparts, adding further competition for carmakers’ ambitions,” it said.

The report findings come as another recent survey found that 11% of franchised retailers say the move to electric – even more than the current economic climate - will be their greatest challenge this year.

The Zero Emissions Vehicle (ZEV) mandate in 2024 will also add to the pressure on prices as manufacturers look to tempt retail buyers. Under the ZEV regime, 80% of new cars sold in the UK must be electric by 2030 and data shows that the current average share of electric sales across brands is just circa 16%, and for some, it’s as low as 3%.

Auto Trader noted that the competition among electric manufacturers to capture consumer interest is becoming more intensive with average discounts of 10.6% on the typical new electric car compared to non-electric cars with 7.7% average discount, and four in every five new EVs now comes with a reduced or zero finance offer as manufacturers try to tempt buyers and maintain their market share.

Dealer Challenge

The report findings come as an Auto Trader poll shows that the move to electric – even more so than the impact of the economic climate which took nearly 30% of the vote - will be their biggest challenge in 2024. Overall, 5% of all retailers, including independents, selected the move to electric as the biggest challenge for this year.

Geopolitical factors also look set to drive up the cost of oil again in 2024, and with petrol prices historically driving interest in electric vehicles, retailers should prepare for the impact of these factors on the electric market.

Ian Plummer, commercial director at Auto Trader, commented: “Data shows that when price is no longer a barrier – seen in the success of salary sacrifice for new EVs and the pockets of price parity in the used market leading to record levels of demand - consumers are interested in going electric. Now, the industry must address the same affordability concerns for retail buyers of new EVs so that they can realistically hit the growing ZEV targets.

“As multiple factors continue to impact the market, retailers must be ready to react to whatever comes their way and building a data-driven culture is the best way to future-proof a business.

“With new partners to work with, new consumer questions to answer and new logistical challenges to overcome, those who begin their electric journey now will be in a much stronger position in years to come.”