Summary
Indicata warns that the U.K.’s ZEV mandate is the biggest near-term risk to used EV residuals, as ex-fleet supply builds faster than demand, keeping prices under sustained pressure despite recent stability.
With more battery-electric cars set to enter fleets to meet rising mandate targets, a growing wave of de-fleeted vehicles is expected to intensify oversupply unless retail uptake accelerates.
Key developments
- Used EV market share held at 6.8% in late 2025–January 2026 while available stock rose to 8%, indicating a supply–demand mismatch.
- Headline used EV prices were flat for the past four months, but inventory growth is weighing on values and throughput.
- Market Days’ Supply (MDS) increased from 42 days in October to 57 days in early January (MDS = current stock ÷ average daily retail sales over the prior 45 days), signaling slower turn.
- 2025 mandate target was missed: battery-electric models reached 23.4% of new registrations vs a 28% target; the 2026 target rises to 33%, likely pushing more EVs into fleets and, in 1–3 years, into the used market.
- Fleet sellers are pacing disposals to avoid flooding wholesale and retail channels; retailers are leaning on ICE vehicles to anchor liquidity amid slower EV turns.
- Lower list prices and promotions on new EVs have not yet translated into stronger used demand; only small volumes of these newer, cheaper models have reached auction.
Implications
- Rising MDS and a static sales share point to longer selling times and weakening residual values for used EVs.
- Instability in used values can deter buyers and finance providers by complicating affordability and risk forecasts.
- Dealers are trimming exposure to faster-depreciating EV models and age‑mileage bands while prioritizing stock that turns quickly.
What to watch
- Trends in MDS and used EV stock share as leading indicators of pricing pressure.
- The pace at which ex-fleet EVs return to market versus how quickly retail buyers absorb them.
- Whether further declines in used EV pricing trigger a decisive demand response or deepen value instability.
Outlook
The coming months will test how policy targets, fleet replacement cycles, and consumer appetite interact. For now, the used market is relying on combustion models for stability while working through a growing backlog of electric stock.
