New EV ‘price war’ is hitting used values says Autovista economist

The new and used car markets are returning to pre-pandemic dynamics more quickly than expected.

That’s the view of Doctor Christof Engelskirchen, chief economist at Autovista taking part in an Assurant webinar.

He told more than 100 delegates that a move was underway back to a situation where there was oversupply and tight demand.

“I guess what many of us are a little surprised about is how quickly we are moving back to pre-pandemic automotive industry dynamics. It has come faster than many people have expected.

“We’re returning to a market where there is increased supply and limited demand but there is cause to stay positive and optimistic.

“So, while car values might be falling as a result, consumer confidence and business confidence are trending up, and the industry needs to react appropriately to this changing situation throughout the year.”

Electric vehicles he said had suffered the biggest drop in values.

“This is the result of a number of factors – the lifecycle depreciation you’d expect and which is already a bit stronger for this technology but also recent price cuts that are happening across manufacturers.

“Some have started a price war which is washing through and affecting what you can command for a used vehicle which is 2, 3, 4 years old and was originally priced much, much stronger.

“Another reason why they are coming under pressure is because EVs are moving into the mass used car markets but we don’t appear to be ready to absorb these cars yet. The demand just isn’t there.”

There was a strong opportunity for dealers to maximise their business during 2024 by providing the best possible consumer journey, especially looking to an improved online presence, Christof added.

“It’s all about boosting the customer experience and loyalty with a seamless buying, leasing, owning and returning process, which is similar to something that we are seeing OEMs try to capitalise on when they implement the agency model.”