Slumping Used EV Prices Force Automakers To Repay Leasing Firms

I thought I would share this link to an enlightening article, first shared by Simon Vessey (whom I thank for sharing; As used EV prices fall, automakers repay leasing firms | Automotive News Europe ( autonews.com ) in order to try and prompt some grown up debate in the upper professional echelons of automotive markets; why?

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Well because the subjects covered in the article are so serious that they do not present a “Let’s Kick The Problem Down The Road and Hope It Goes Away” problem; no they are an existential threat for those involved, and thus pose some serious and grown up operational and retailing challenges for all those involved.

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The number 1 challenge being that the industry and governments have created a trading landscape where the customer (the most important individual in this situation) does not want to purchase what manufacturers are producing (EV’s); at least in nothing like the numbers required, Fact!

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If this fact was incorrect we would not be seeing the reductions in new registrations for new EV’s and the collapsing of values for EV’s in used car markets; a market for EV’s that actually doesn’t exist in any volume whatsoever. I have disrupted asset markets for over 25 years, including specialist used car markets, and every market reading sense I possess tells me that the EV market is reaching a “Tipping Point” from which it will never recover.

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Not because prices for used EV’s will not collapse enough for people to then consider purchasing one; on the contrary I think they will, but because the process of this pricing collapse and the associated market realignment, will drag the entire market (and those involved) down with it. Financially it is not viable.

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Now until everyone involved (governments and manufacturers – but especially governments) are open and honest about these issues, they cannot begin to resolve them. In fact to continue down the current path (increasing the percentages of new EV registrations required on a yearly basis) will only make them worse. You just can’t continue to make products for which there is not enough demand and then try and legislate and/or discount your way to a successful retail sales solution; the proof of that is already with us.

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By the same token, you can’t use price and discounting as blunt weapons either; this is what has lead the EV market to where it is today; the entire retailing ecosystem being brought down from within, by discounting and collapsing residual values.

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The only winner here is the consumer who (by the way) does not need to change their car; a point seemingly lost around government cabinet tables and in the boardrooms of some manufacturers.

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Having said all this I have no doubt that there is a natural organic market for EV’s; in my opinion it has already reached its high water mark in the UK at just under 20% of total new car registrations. Making the remaining 80% of new registrations “Greener” will (in my opinion) require alternative solutions. If it were down to me I would be calling the board of Toyota; they seem to have their fingers on the pulse of the market and consumers.

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As for used car markets for EVs? Well this is the fatal flaw undermining the entire EV market(s), especially in the UK. This will not be an easy situation to correct and/or an easy market to mature and grow into one that operates with a sense of retail normality. The market is awash with product and struggling to attract buyers; the consumer is aware and in no rush to purchase, so it is beholden on those paid the “Big Bucks” to come up with the solutions.

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At the moment no one appears to have the foggiest idea about how used car markets operate and how to build a used car acquisition and retailing programme that is successful, thus therefore supporting residual values and the new car retailing ambitions of the associated manufacturer.

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Until those involved have secured access to capable and proven used car professionals, the answers they so desperately need to find will continue to allude them. Time to get the cheque book out and do things very differently!