Market Report: Electric vehicles in the used market

Demand for electric vehicles (EVs) in the retail market is growing. In August registrations of hybrid, plug-in hybrid and pure electric cars rose 88.7%, with the sector accounting for 8% of the market, its highest ever level. The number of pure electric cars now include the Nissan Leaf, Renault Zoe, BMW i3, Tesla S and X, Hyundai Ioniq Electric, VW e-Golf, Smart electric range, VW up and Kia Soul EV.

So, how is this impacting on the used car market? The first fact to acknowledge is that while the market for EVs is growing it is from a very, very low base. According to Glass’s EV sales make up less than 0.2% of auction volumes.

Jayson Whittington, Glass’s chief car editor, argues that the majority of dealers are reluctant to buy electric vehicles at auction.

“According to the results of Glass’s latest online dealer survey, only 5% of independent dealers who responded, say they regularly stock electric cars.

“Comments included concern around charging infrastructure, particularly in rural areas, a perception that they do not represent good value for money, unfamiliarity with the technology and generally poor demand from consumers. Whilst there are some retailers who specialise in EVs, they tend to be small in scale, with franchise dealers still the most common outlet for used examples.

“As electric cars continue to increase in the new market, there will come a time when franchised dealers are unable to cope with the volume of used examples, with online trade and auction channels likely to be the preferred route for remarketing. It is therefore essential that buyers are introduced to and encouraged to try selling EVs.”

There have been some positive initiatives in the wholesale market, according to Whittington.

“Shoreham Vehicle Auctions in conjunction with the Energy Savings Trust set up a series of training sessions designed to give independent dealership sales staff, the knowledge needed to sell EVs, to the customer best suited to buy them. The aim is to give dealers the confidence to start regularly stocking them and ultimately to improve auction sales performance, by helping to create demand.”

Chris Plumb, Black Book editor at cap hpi, also commented on new moves taking place in the EV market.

“We have seen a number of specialist EV retailers pop up of the past few years who have been successful in selling used EVs as they have seen a market for this niche product. Qualification and education is the key to selling EVs and these specialists seem to be very good at it,” he said.

Guides aside where do the auction houses think the EV market is going in 2018?

Philip Nothard, from Manheim, is among those who argue the market for EVs is set to grow with more dealers buying pure electric vehicles.

“They are doing so as result of increased knowledge, increased confidence they can sell certain models, rising consumer demand and knowing exactly what their customers want.

“However these are in low numbers for what is currently a low volume market. The problem lies in the huge gulf between those knowledgeable dealers who understand the EV market, those who know very little or those more informed but still cautious about the potential costs and inefficiencies involved.

“A major dealer concern is focused on the maintenance and servicing of EVs. Labour intensive servicing requirements that impact on business efficiencies and productivity are often cited as reasons for dealers to steer away from EV vehicles. Specialist storage requirements, safety concerns and a lack of skilled, specialist technicians to service the vehicles are further concerns. For those knowledgeable dealers there is the opportunity to carve a niche, particularly when you consider the vast variance in EV expertise within the market. It’s from this base point we will see the emergence of increasing specialised electric car retailers.”

Stuart Pearson, BCA COO UK Remarketing, argues that professional buyers continue to remain cautious when buying pure EVs and take a risk-averse approach.

“They tend to focus on the best examples. Buyers generally prefer younger, lower mileage examples, mainly because of perceived worries about the reliability of the batteries as they get older however as this is still an emerging market, many of these concerns are likely to be dispelled as more volume works its way through the system.

“As older models reach the market, questions about longevity and even replacing the fuel cells can emerge, however, the reality is that the data available shows a genuinely positive picture. Many dealers appear to absorb EVs into their stock mix rather than specialise in this, currently, niche sector albeit some specialist retailers are becoming established,” he said.

It all comes down to knowing the product. Alex Wright, managing director, Shoreham Vehicle Auctions (SVA), said: “We find that once a dealer understands the EV market, there is no issue with buying at auction, in fact quite the opposite. The old deterrents based on negative rumours surrounding EV battery depletion, battery ownership and range limitations are now proven to be ill-informed.

“Dealers, especially large independents now regard EVs as an essential part of their vehicle mix. We are also seeing specialist EV retailers emerge and I know of at least one that has been set up directly off the back

of our training offering. We are also seeing commercial vehicle dealers, in certain geographical locations, embrace the EV opportunity,” he said.

Martin Potter, group operations director, Aston Barclay, agrees, knowledge is king and dealers are now more confident about EVs.

“We are seeing more bids as dealers understand the cars in more detail and the buyer dynamics. As more consumers start to ask dealers for EVs then they will start to buy more cars at auction,” he said.

We asked the guides and auction houses what sort of challenges they face placing valuations on electric cars? Whittington at Glass’s said accurate and consistent valuations was more difficult because the numbers of cars was so small.

“It can be challenging to value cars that are observed in such low volumes in wholesale channels. However, we also received thousands of retail observations from some of the UK’s most popular online retail advertising platforms, which helps us to provide our subscribers with accurate and reliable values.”

Plumb at Black Book agrees with Glass’s, picking up many of the common themes.  “The current challenges when valuing EVs include battery leases.  cap hpi only values 100% ownership vehicles and sometimes this  is not stated or clear in the description of the vehicle. 100% owned

EVs achieve a much higher price than the leased options. The sector is very sensitive to supply and demand.

“Moving forward there may be a time when battery degradation could be taken into consideration or a requirement to value an EV.

The reason for this is currently an EV that has for example done three years 30,000 miles and has only lost 20% of its capacity is currently valued the same as an EV that has a degradation of 40%, in theory,

the car with less degradation could be worth more. The challenge for this will be if the information for the battery state will be openly available to either the trade or consumers.”

The last word goes to Jon Mitchell, group sales director, Autorola UK, an online specialist who said demand for EVs is growing, albeit from a low base. “The demand for used EVs will further increase now that London boroughs have started to roll out their ultra-low emission zones. Greater consumer demand will lead to traders bidding and buying more electric and hybrid cars in and around the London area. This will continue to grow as Glasgow, Leeds and Southampton make plans for the roll out of their Low Emission Zones.”