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Forecasting the future ‘residual value’ of cars has become a challenge for lenders and leasing companies over recent years as the marketplace shifts from internal combustion engine (ICE) cars to electric vehicles (EVs) at pace.

The trend for all fuel types has been one of declining residual values. Lower forecasted residual values, reflecting market trends, have resulted in rising monthly payments for PCP and leasing contracts. While the market dynamics are not yet stable, which requires greater consumer interest in EVs, some encouraging signs are emerging.

The latest trend data published by Autotrader for November revealed that the average price of a used petrol car was down 4.7% to £14,710, diesel cars were down 5.8% to £14,077, and electric vehicles were 11.7% lower at £26,390. The typical plug-in hybrid lost 10.5% year on year to £30,598.

Values are still falling, especially for EVs, but understanding the numbers in more detail is vital to seeing the broader picture.

The car parc for ICE cars is far more extensive than for EVs and has a broader age and price range, and consumer purchasing has trended towards older, cheaper cars in recent years. This is evidenced in the average prices. At least in part, EV and hybrid values are falling more sharply than ICE cars because the EV/hybrid parc is newer and more expensive – they have further to fall.

Falling values typically reflect supply exceeding demand, but this does not appear to be quite accurate on this occasion. In November, used cars sold two days quicker than in 2023, taking 31 days to leave forecourts. EVs sold even more quickly, at 28 days, with three-to-five-year-old EVs selling within 22 days on average.

The November demand numbers may indicate increased consumers’ confidence to switch to an EV. If this trend can be sustained, the imbalance between EVs and ICE cars will improve and used car values will establish greater consistency. Another factor that may benefit EVs is that the available parc of cars will be broader, including an increasing number of older, cheaper options.

The potential for this scenario is emerging. Autotrader’s latest used car forecast suggests the used car market will sustain the strong growth momentum seen over the last two years, rising from an estimated 7.61m sales in 2024 to around 7.70m in 2025.

One final observation: the increase in new EV sales has seen new diesel car sales collapse to under 6% of the market. This means there could be a shortage of new -3 diesel cars for people who want to buy such a car. This ‘final hurrah’ for newer used diesel cars could see their used car values increase.

·       https://www.autotraderinsight-blog.co.uk/auto-trader-insight-blog/used-car-prices-update

Used car values 2025

While consumer demand for used electric vehicles (EVs) has continued to increase, dealers have a crucial role in sustaining this trend, and this will be vital, especially for dealers retailing new – 5 stock, not least of all because newer used internal combustion engine (ICE) vehicles will continue to see supply falling, reflecting the growth in new EV sales.

The used ICE challenge for dealers is neatly summed up in the latest Cox Insight Quarterly Report* “a shortage of young ICE vehicles will likely elevate values and create fierce competition amongst dealers.”

On the other hand, the supply of N-5 EVs will only go one way, especially battery electric vehicles, as government benefit-in-kind benefits for hybrid cars start to be withdrawn.

Regardless of dealers’ personal views on EVs, they are moving rapidly to becoming the mainstream new car option for buyers, even if this is driven by government support. Thanks to de-fleeting cycles and salary sacrifice schemes, there will be ever more 2-5 age EVs and perhaps pre-registered EVs entering the used car landscape.

Embracing the transition to used EVs is one of those industry agility opportunity moments for dealers. Much of this will start with internal education so that a dealer’s team is equipped to help potential buyers make the switch.

In today’s social media-led world, where everyone can be an expert, dealers must get to grips with the truth about EVs, battery life, service and maintenance costs, range, recharging, charging, and more. A key message is that owning and driving an EV is different to an ICE car, but that typically, it is cheaper to run and very suitable for the average motorist who does under 7,00 miles a year, mainly on local journeys with occasional long-distance trips, especially if they have a home charger.

At MotoNovo, we will continue to publish validated independent insight about these factors to support the dealer network; we hope it will help dealers make the profitable transition to selling EVs in the months and years ahead.

*    https://www.coxautoinc.eu/news-and-insights/insights-quarterly-2025-predictions/

We explore why dealers need to make sure they are fully up to speed on information about EVs as consumer demand grows.

News - January 2025

Used car values 2025

Dealers have a crucial role in creating EV consumer confidence

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