If you're considering changing your car and are undecided about whether to go for a combustion engine, a fully electric vehicle, or a hybrid, the impact of current demand on residual values could help influence your decision. Additionally, as the used car market slowly adjusts to the decline in demand and the return to normal supply levels post-pandemic, it's worth noting which markets are adjusting more quickly than others.
While many reports indicate a slowdown in the demand for fully electric cars, and in some cases, a potential decline, the price reductions being offered by nearly all manufacturers for new electric vehicles make them more attractive than before. However, this has led to a situation where the residual values of many electric cars are now lower than those of comparable hybrid or combustion engine models, particularly if the list price of the electric car is significantly higher than that of its counterparts.
Are People Beginning To Be Tempted?
According to popular car sales platform Auto Trader, the appeal of fully electric motoring is growing, but not as rapidly as many might expect. A significant number of combustion engine car owners who haven't yet made the switch remain firm in their belief that they’re unlikely to buy a fully electric vehicle anytime soon, if ever—unless they’re left with no other option. Many are still hesitant, even in light of the upcoming combustion engine ban.
For those still weighing their options or curious to see how electric motoring might fit into their lifestyle, a hybrid powertrain appears to be an appealing solution. Many modern hybrids offer a reasonable electric-only range while also providing the security of a combustion engine if the battery runs low or a longer journey is needed. With the average daily commute being just under 20 miles, a hybrid car strikes a good balance, offering the best of both worlds in terms of convenience and flexibility.
What Are The Facts?
According to automotive industry data from Autovista24, the overall car market in May saw an average residual value (the percentage of the original list price retained after 3 years and 36,000 miles) of 51.9%. This represents a 21.2% drop compared to the previous year, highlighting the ongoing price adjustments in the used car market since the pandemic.
When broken down by fuel type, we can see how different vehicle categories compare to the overall market average. For the same 3 years and 36,000 miles, the residual values were as follows: petrol cars at 53.4%, diesel at 52.8%, hybrids at 55.1%, and electric vehicles (EVs) at just 37.6%. While hybrids have experienced the largest drop in residual value over the past 12 months (down 22.2% compared to the overall average drop of 21.2%), they still perform the best among all vehicle types in May.
This is likely due to strong demand for hybrid powertrains, but why exactly are hybrids proving more popular than other vehicle types right now? It could be due to reluctance to switch to fully electric power, uncertainty about how such a transition will impact daily life, or simply the fact that there are more hybrid models available on the market.
One thing is clear: if you're looking for the type of vehicle that will offer the best residual value when it's time to sell or part-exchange, a hybrid currently leads the pack. With more options than ever and many performance brands embracing hybrids as a stepping stone before going fully electric, the hybrid is emerging as the ideal choice for many drivers—for now, at least.
Funding With Approved Finance
At the Approved Motor Finance we have your next car’s funding sorted, no matter how it is powered. Our expert Account Managers use our panel of over 125+ specialist lenders to help you to find the perfect package, bespoke to you and your circumstances. Our team are always on hand should you have any questions about arranging car finance and your dedicated Account Manager is ready to take your call today
Get in contact today via email at info@approved-finance.co.uk or call us on 01908 429888