Chinese EVs spark finance concerns for used car dealers

Used car dealers are concerned they will not be able to secure stocking finance for the new wave of electric vehicles (EVs) from China when they reach the used market.

Data from Startline Motor Finance’s Used Car Tracker shows that 54% would be concerned about this issue, while 16% are apprehensive about the lack of a support network such as dealers or parts, 12% about poor customer brand awareness and 8% about the collapse or withdrawal from the UK of the manufacturer.

Paul Burgess, CEO at Startline Motor Finance, said: “While it’ll be a little time before they start to make their way onto the used market in any sizeable numbers, it’s clear that Chinese EVs from manufacturers generally previously unknown in the UK – as well as a number of EV start-ups from the US and elsewhere – are going to start making a potential impact on the used car sector during 2023.”

To help overcome these issues, 65% of dealers say that they would be convinced by a long manufacturer warranty, 56% by good quality engineering, 47% by franchise dealer network support, 30% by low pricing and 23% by manufacturer investment in marketing.

Burgess added: “There is a chance, especially at the budget end of the market, that these vehicles at least partially displace established brands, so this month’s Tracker seemed like a good opportunity to find out what dealers thought about their arrival.

“Our view of the results is that retailers have concerns about these cars but that many of these issues would be helped by manufacturers indicating that they are building a long-term presence in the UK, for example by the creation of a franchise dealer network - which we are now starting to see - alongside the availability of finance and through a long-term warranty.”

December’s Startline Used Car Tracker also highlighted that 38% of dealers are worried about compliance, 49% have doubts about stock availability and 51% are concerned about electrification.

Burgess said: “A lot is going on in the used car market and the wider economy for dealers to think about. The jump in compliance worries is perhaps prompted by the recent FCA Consumer Duty announcement becoming more well-known while the change in stock availability could be a result of moderately improving supply accompanied by moderately falling demand.”

Registrations of Chinese-built electric vehicles (EV) soared 78% across Europe during August as overall vehicle registrations rose for the first time in 2022.

In the latest market data report published by Jato Dynamics global analyst Felipe Munoz described Chinese OEMs’ market share growth to 20% – making it the second-biggest EV producer, behind Germany’s 28% share – as an early indicator of how “sooner or later, they will play a key role in the global market”.

AM100 dealer group Peter Vardy is the first franchised car retail partner for Great Wall’s affordable Ora electric vehicle (EV) brand. The Funky Cat will be the first model to arrive in the UK in early 2023.