Government support for the used electric car sector is now “essential” following the introduction of new car grants, says the Vehicle Remarketing Association.
Bringing down the price of electric cars in the new market only underlined the need for corresponding action in the used sector, said chair Philip Nothard.
“The key point here is to recognise that the entry point to the electric car market is, for most motorists, a used electric car – especially bearing in mind the depression in values that has been seen over the last couple of years, with some models now cheaper than petrol equivalents, despite much higher purchase prices.
“Yes, it’s a positive move that new electric car prices will be brought down by the new grant but it’s something that will have a limited immediate effect because used car buyers outnumber their new car counterparts by almost five to one.”
What was really needed – and which the new car grant scheme only made more obvious – was a similar form of support for the used sector, he said.
“To our minds, this is not only essential but is a more effective use of government money. There are many more buyers in the market for a sub-£20,000 used electric car than a £37,000 new one. A grant of £1,000 on a two-year-old electric SUV priced at £18,000 is arguably much better value than £1,800 on a £35,000 new example.
“There are, of course, other possibilities for intervention. The used car market doesn’t have to be supported with grants. For example, zero interest loans have been offered in some countries to encourage used buyers into electric cars, which is an option that could cost the government relatively little to adopt.”
In the worst-case scenario, Philip said, used car dealers could find that not only was their market not being supported by the government, but values of used electric cars they already held in stock would be further depressed by new car grants.
“This is quite a difficult impact to predict because used electric car values are already very low but if a dealer owns a 12-month-old example of a particular model and the new version is suddenly £3,750 cheaper, it’s likely to impact on its value.
“For dealers who took a substantial hit when used electric car values collapsed a couple of years ago and are already being adversely affected by other government actions such as increased employee National Insurance and the removal of employee car ownership schemes, that would be very unwelcome.”
There were also some questions, Philip added, around the electric vehicle infrastructure announcement the government had made last week.
“After price, dealers will tell you the biggest single obstacle to buying an electric car is access to charging, especially for the roughly half of the population living in terraced houses or apartments. However, only £25 million of the £68 million allocated by the government will be going to local authorities to install on-road and cross pavement solutions. More emphasis is needed on this area.”
