Fleet & business

Residual values

Ever-improving technology bolsters residual values

The increasing popularity of plug-in vehicles and enhanced technologies is helping to close the residual value gap on petrol or diesel alternatives.

Key points:

  • Residual value forecasts for plug-in vehicles are improving as electric vehicles capabilities grow and more models enter the market
  • The UK’s largest leasing companies now take a more positive view on plug-in vehicle residual values
  • As technology helps address range anxiety, the momentum for electric vehicles in the used market is growing

A residual value revolution

Until now unfamiliar electric vehicle technology and a lack of second-hand electric vehicles to provide solid resale data has historically made electric car and van residual value (RV) forecasts difficult.

But now you’re less likely to find electric car residual values an issue as the gap is closing on traditional fuel types (see the table below). Growing electric vehicles registration figures are evidence that more and more fleet operators and company car drivers are open to the idea of taking up a plug-in vehicle.

This is being driven by a number of factors, including potentially lower costs of ownership, reduced emissions and improved range and reliability. Dealerships are also increasingly better informed now too.

More electric vehicles on the market

Of course, there are now lots more new electric cars and vans to choose from, including more models from premium brands, which helps to give further confidence to fleet operators and company car user choosers.

For example, leasing companies investing heavily invested in EVs – Lex Autolease has a massive 10,000 plug-in vehicles on its books. The growing industry-wide acceptance has led to a more optimistic view on electric car residual values, which you can now see in the competitive lease rates for plug-in vehicles.

Electric vehicles go on, and on, and on…

Electric vehicle technology can provide the required reliability – the major leasing company have experienced no battery failures among the vehicles on their risk fleets. What’s more, C&C Taxis, a 100% pure electric vehicle fleet based in Cornwall, recently retired its second-generation Nissan LEAF after an incredible 174,000 miles (Source: Fleet News, 2017).

As the electric vehicle used car market develops and technology eliminates range anxiety, residual value forecasts will improve further and momentum for plug-in vehicles will accelerate.

Expert view

The increase in availability of plug-in vehicles means that there is now a much wider choice, with plug-in versions of premium brand products attracting the attention of drivers. These factors will widen the interest for plug-in vehicles in the used car market, providing motor retailers with greater confidence to carry these vehicle types in stock.

As a result, we expect to see decent improvements in residual values over time. This is especially so given several car manufacturers have committed to some form of range-wide electrification by 2020, lifting acceptability, availability, and choice.

Mark Jowsey, KeeResources

Data

Make Model Spec RV         12m/12K RV %   12m/12K RV         36m/36K RV %   36m/36K
Audi A3 Sportback A3 Sportback 5Dr 1.4TFSi PiH e-tron 204 e-STron Auto6                            20,320 60.70%                            14,850 44.36%
Audi A3 Sportback A3 Sportback 5Dr 2.0TDi 150 DPF SS Sport STron Auto7                            15,955 58.04%                            11,965 43.52%
Volkswagen Golf Golf Hatch 5Dr 1.4TSI PiH 8.7kWh 204 SS GTE DSG Auto6                            18,005 64.12%              12,765 45.46%
Volkswagen Golf Golf Hatch 5Dr 2.0TDI 184 DPF SS GTD DSG Auto7                            18,545 62.91%                            12,935 43.88%

Source: KeeResources, 2017

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