The recovery in used electric vehicle (EV) values has continued to gather pace in October due to the combination of increasing consumer demand for greener vehicles according to Auto Trader’s Retail Price Index.
Fuelled by attractive prices and a softening in the recent surge in supply of second-hand EVs entering the market, the average retail value of a used EV has increased 0.6% so far in October on a month-on-month (MoM) and like-for-like basis with prices at £32,203.
In September prices were flat MoM, which followed 12 consecutive months of decline. While prices are still down on a year-on-year (YoY) basis, the stabilising market leaves prices -19.6% down YoY – the shallowest rate of YoY decline since June.
At 0.6%, the monthly price growth for EVs is slightly ahead of the 0.2% MoM improvement for petrol values, but just below the 0.7% monthly increase for diesels. On an annual basis ICE vehicles remain well ahead of their electric counterparts, with current petrol and diesel prices up 1.3% YoY (£16,315) and 0.8% YoY (£16,000) respectively.
The increase in used EV prices is being fuelled by favourable market dynamics, with levels of consumer demand outpacing supply levels on Auto Trader’s online marketplace. Demand for used EVs is up 78.4% so far in October – far ahead of petrol (up 2%) and diesel (down -1.1%). What’s more, used EVs are taking just 23 days to leave the forecourts, the fastest since December 2018 and almost a week faster than the 28-day average for the used market overall.
Crucially, whilst demand growth is accelerating, the overall rate of supply growth of used EVs is softening, falling from an increase of 115% YoY in August, and 57% in September, to an increase of just 24.3% so far this month. This imbalance is not only helping to stabilise prices, but also improve potential profitability, as highlighted by Auto Trader’s Market Health metric, which for second-hand EVs is up 43.5% YoY so far in October. It marks the strongest Market Health score for second-hand electric cars since March 2022, and is well ahead of the otherwise healthy 3.7% YoY rise in overall used car Market Health.
Commenting, Richard Walker, Auto Trader’s data and insight director, said: “The continued realignment in used electric pricing is the real stand-out so far in October, with another month of improvement after a year of decline. For the moment we’re seeing the stars align for second-hand EVs; greater affordability and rising prices at the pumps is helping to make them a more viable alternative to their ICE counterparts which are still increasing in value. The combination of accelerating demand with softening supply is good news for retailers; although the market remains volatile, for those who follow the data to find and price the right stock for their forecourts, EVs currently represent real profit potential.”
Although softening on recent highs, he said the volume of electric vehicles entering the second-hand market remains strong, due largely to the ongoing de-fleeting of the circa 750,000 new EVs bought over the last three years. This factor has been the main contributor to the recent contraction in values among younger aged vehicles by pulling down the overall average price levels of all sub-3-year-old cars. The decline in the retail price of used cars less than a year old deepened in mid-October to -2.9% YoY from -2.5% in September, whilst 1–3-year-old cars are currently down -6.7% YoY, which was the same rate of decline recorded last month.
Walker explained that it is this fall in younger vehicle values which is driving the -0.6% YoY easing of used car prices overall to £17,778 in the year to mid-October. However, the overall health of the market is underlined by the 0.8% increase in prices on a MoM basis, which is consistent with typical seasonal trends, and the massive 44% price growth on pre-pandemic levels in October 2019. This is further highlighted by the fact that overall current levels of consumer demand on Auto Trader is up 5.7% on the same period last year, as well as the current speed in which used cars are selling: at 28 days it’s the fastest since May, and faster than the 29 days taken in September and 30 in October 2022.
The headline decline continues to mask a highly nuanced market. Whilst newer car prices are contracting, at the older end of the market, 10–15-year-old used car prices maintained double-digit price growth, rising 10.2% year-on-year and 2.2% over the month. Five- to 10-year-old car prices are meanwhile up a robust 2.5% YoY.