November automotive update: BEV carmageddon

2024 will be characterised by oversupply of new and used BEVs, with little inherent demand for the used vehicles coming through unless they are at a significant discount to their ICE equivalents. The new car oversupply will be caused by:

• New automotive entrants from China.
• A glut of new models from traditional manufacturers.
• The requirement for sales to go from 16% market share to 22% market share in 2024, or else £15,000 fines – although this will probably be fudged.

All this will lead to manufacturers being forced to discount their BEVs to make the sales they require. This will then have an follow-through effect on used residuals, which will be exacerbated by the following issues:

• The bulk of demand for new BEVs is driven by the tax benefit (worth between £10,000 – £15,000) but this does not then feed through to residuals.
• The significant growth in EVs started during Covid and we are now seeing these come back to the market in greater numbers than the natural demand can soak up.
• Consumers do not want or trust EVs that are 3 years old so will want a discount to their ICE equivalents.
• Insurance for BEVs is more expensive than ICE equivalents and this needs factoring into the lifetime ownership of a second-hand BEV – not something you worry about when your company is paying.
• A number of finance houses will be taking a beating as they write down their residuals. They will no doubt question why they are in the BEV segment, and their rates will go up to reflect the greater risk they’re taking.

All in all 2024 will be a year of significant challenges for anyone retailing BEVs. However, they still have a relatively small market share. So, as long as you have a strategy to manage your used stock, then all will be fine. But beware manufacturers bearing BEV gifts, as they use retailers balance sheets to try and trade their way out of the problem.

Read my latest blog about the emerging trends you need to be aware of, and watch out for my Linkedin blog in for my agency update showing the SMMT Mercedes and Volvo sales compared to Audi and BMW. If you do not get this in your feed, feel free to connect to me on Linkedin and it will start showing up.

Enjoy the rest of the month and remember that every lead is precious. The biggest challenge is making sure your teams are logging and following them up properly. This is especially true of your phone leads. Be phone fit and you’ll be ahead of your peers.