The vehicle rental and leasing industry faces a potential existential threat from used EV market volatility, according to the BVRLA.
The organisation’s director of corporate affairs, Toby Poston, made the remarks while introducing its latest Road to Zero Report, which analyses its members’ progress towards fleet electrification.
Speaking at the BVRLA’s Fleets in Charge conference, Poston said that while overall the industry was “at the cutting edge of carbon reduction”, the used market picture was among several issues it still faced.
Poston said: “I think for many the volatility and collapse we’re seeing in the used market pose a potential existential threat to our industry.”
Poston explained that while values of used ICE vehicles had held up “pretty well” since their post-Covid high-point, EV values had declined by 50% since then, and by 25-30% over the past year.
He said: “What we’re seeing really is a situation where the incentives that are driving the company car market and salary sacrifice market are pushing supply into that area, and we just aren’t seeing the retail demand, and that imbalance is causing that fall in prices.
“The real concern is that we have depreciation losses that members are seeing. Yes, you can say that there’s fantastic bargains out there for used buyers, but that depreciation burden that members are having to bear is eventually going to have to result in higher lease rates, which is not good for the transition.”
BVRLA chief executive Gerry Keaney also voiced used market concerns at the conference, saying: “We are very close to what any economist would call market failure in the used market for EVs.”
SMR concerns
Another potential issue raised by Poston was around EV SMR costs, which he said had been the subject of close investigation by the BVRLA with its members over the past year.
He said: “Average maintenance and repair costs for EVs are lower [than ICE cars] for a variety of really good reasons. [There are] fewer moving parts, and these vehicles typically have the latest safety technology so they are involved in fewer crashes.
“However, when you look at the actual cost of the repairs and service and maintenance, particularly with accidents, they are a lot higher, and this is data that’s come from insurance companies.
“What also came out is the fact there’s huge variation depending on the make and model, or where you are in the country. You can have huge differences in how much EVs cost to repair, and also how long that vehicle is off the road.
“I was speaking to one expert recently who actually said they think that SMR risk assessment is almost going to be as important a skill to have in a fleet as residual value risk assessment forecasting going forward, because there is so much uncertainty in this area.”
