Could dealers be shunning a ready-made profit opportunity with used EVs?
May 14, 2024 by Sally Foote
![](https://images.prismic.io/carwow/ZsNVOkaF0TcGJEKG_4.EVs.png?auto=format&cs=tinysrgb&fit=clip&ixlib=rb-1.1.0&q=60&w=750)
As a marketplace with over 3.5 million monthly consumers and a network of over 5,000 dealer partners, Carwow is in a unique position within the automotive retail industry to access data and insights into consumers’ and retailers’ buying and selling needs.
Drawing upon all of that data, there is one conspicuous portion of the used car market where we're currently seeing a sizeable gap between consumer interest and what retailers are offering: used electric vehicles (EVs).
Despite negative press around consumer appetite for EVs and retailer hesitancy, EV consideration amongst consumers is high, with four out of five that we surveyed saying they would consider a new or used EV for their next car. But they also tell us that switching to an EV is “a bit of a minefield” and they “worry about making the wrong decision,” so there is an opportunity for brands, retailers and marketplaces to better educate prospects.
Our OEM partners continue to invest extensively in generating demand for new EVs through our platform, creating a halo effect that is also stimulating interest in used EVs. Of Carwow's 130+ 'vehicle type' pages on its website, EV is the most popular by far, achieving at least double the traffic of the next most popular. Looking specifically at car reviews, Carwow's top two in 2023 were both EVs and that's continued this year, with six of the top 10 most viewed reviews in Q1 being EVs - including our Car of the Year, the Volvo EX30, the Audi Q4 e-tron and Tesla Model Y.
In April 2024 46% of shoppers configuring an EV on Carwow said that they would consider a used model, and the number of views for the used EV stock marketed on our site shows a year-on-year increase of 23% - again a strong indicator of buying intent.
However, this continued increase in demand for used EVs is not being met with an increase in supply on forecourts. Our data indicates that, of the franchise sites currently retailing used EVs, 58% of them have fewer than five examples in stock. For independent retailers, this is even more acute, with 81% stocking fewer than five EVs. Overall the used EVs listed for retail on Carwow accounted for only 6% of the stock mix in April, yet formed 11% of the enquiries sent to retailers.
Many retailers remain reticent, but is it misplaced?
The level of reticence from many retailers toward EVs is evident in Carwow’s auction data, too. Despite the 48% rise in used EVs listed in Carwow's daily online auctions in Q1 2024 versus the same period in 2023, we are seeing conversion rates for EVs underperform those of ICE equivalents – amounting to a seven percentage-point difference so far this year.
It appears that retailers could be shunning a ready-made profit opportunity with used EVs. So why the hesitancy?
In an April poll of retailers actively bidding in Carwow auctions, 78% said they were currently choosing not to buy used EVs; the primary justification (cited by 30% of respondents) being a lack of demand. Just over a quarter (26%) of those questioned said they are not stocking used EVs due to 'market volatility', while 20% said it is because they simply had no interest in selling EVs. Concerns around battery health was the reason given by 17%, while a lack of expertise was only an issue for 4%. Those who are stocking used EVs say they are doing so in low numbers to protect profit if demand stalls.
But early adopters are seeing results
Whilst we've seen volatility in EV residual values over the past year, the case for adding used EVs to forecourts is however becoming more compelling by the day. Retailers who are responding to consumer demand and selling used EVs in larger volumes are reporting higher margins and faster stock turn.
Used EVs also now sell more quickly than used ICE vehicles*. The average stock turn for a used EV is 41 days which is 10 days less than a typical used petrol model (51-day average).
The profit is there, too. Comparing selling prices for EVs in our daily auctions with the eventual retail prices of the same vehicles during the first four months of 2024, used EVs delivered an average profit potential 5% higher than that of used ICE cars.
Over the last six months, EV metal margins have been stable so there does not appear to be evidence to suggest profit margins are less secure from EV stock than ICE equivalents.
The future of the used EV market
According to the SMMT**, almost half a million new battery electric (BEV) and plug-in hybrid (PHEV) vehicles were registered during 2023 and the number of BEVs in use increased by almost half (47.3%) compared with 2022. There are already over one million BEVs on UK roads and, with the fleet market driving much of the demand (only one in five BEVs sold so far this year have been to private buyers) the volume of used EVs for sale is predicted to jump over the next two to three years as more examples are defleeted.
With ongoing innovation, investment and education, we believe EV demand will keep pace with this improved supply. The 2035 ban on new ICE car sales, coupled with improvements to public infrastructure, the emergence of new (mostly Chinese) EV brands and the introduction of Clean Air Zones in more locations will stimulate further growth.
Choice is critical for fostering demand. If a prospective EV buyer checks a retailer’s listings and sees it has no used EVs in stock, they will inevitably go elsewhere. So, how can retailers break this cycle?
As ever, the devil is in the details. Without accessing insights into changing patterns of demand and profitability, retailers will be none the wiser and attribute the low EV enquiry volumes to low customer demand. For example, EVs listed on our platform in London this April had almost twice the number of views per car than the UK average, indicating an imbalance between supply and demand in this area.
Retailers also need to source stock from sites where there are higher volumes of quality EVs to choose from. As one of the leaders in online trade auctions, we’re now seeing greater volumes of EV stock available than ever, presenting a prime opportunity to realise the substantial commercial benefits of retailing greater numbers of used EVs.
Used EVs undoubtedly offer a good potential profit opportunity for dealers, it’s just whether more are willing to take the plunge to capitalise on them.
*Data from CarCondor
** SMMT Data: https://media.smmt.co.uk/motorparc-2023/