Against the backdrop of faltering economic growth, many OEMs are responding to the restoration of new car supply and ongoing pressures to comply with the zero emissions vehicle (ZEV) mandate by increasing marketing spend and introducing new tactical offers and incentives.
Driving demand for EVs
The SMMT estimates that discounts for EVs across the full year will be worth around £2 billion – a trend which is evident, too, in our own data. New BEVs promoted on Carwow are currently being offered with an average discount of 8.43%, equivalent to £4,512 discount per vehicle (based on average RRP). That’s currently 27% greater than the average discount of £3,276 for ICEs. When trended over the last two years, BEV discounts have increased by 84%, whereas ICE discounts have actually remained static.
It’s clear that, in the continued absence of government incentives to help drive BEV retail demand, OEMs will continue to be forced to offer substantial discounts to help consumers make the transition from ICE to EV. We expect discounting by OEMs to become more entrenched in 2025, as EU targets become more stringent, the ZEV target ramps up to 28%, and new Chinese entrants establish or further build their brand profiles in the UK.
An opportunity to win with used
While demand for new EVs remains behind where we’d all like it to be, used EVs represent an accessible stepping stone for many consumers. For the most proactive retailers, the opportunity to win with used EVs is clear. Following the autumn Budget, Carwow found that 30% of car buyers are now more likely to buy used rather than new, while 37% say they are now more likely to favour a cheaper car over the one they were previously considering. Meanwhile, used car enquiries generated via Carwow increased 63%, year-on-year, to the end of October.
Elsewhere in the used car ecosystem, the constrained supply of one-to-five-year-old stock is forcing many retailers to explore alternative profiles and sources of stock. The smartest retailers are leveraging increasingly sophisticated strategies and technologies to increase their stock turn, and many are now scrutinising their processes to improve speed and efficiency to further reduce costs.
More dealers are sourcing stock from Carwow’s daily online auctions, aided by consumers increasingly choosing to sell their cars online. Year-to-date, 2.6 million people have valued their car with Carwow. Daily listings in our auctions are up 58%, year-on-year, to almost 20,000 a month. To the end of October, over 197,000 used vehicles have been listed via Carwow auctions.
Powering BEV sales
With a new government in power, there are fresh hopes that we could see more BEV incentives that will foster demand and also give franchised and independent retailers added ability to further step up their BEV marketing efforts.
It remains possible that manufacturers could pull back on ICE production quotas for the UK to throttle ICE sales to help them meet ZEV targets; albeit Ford has recently rowed back on assertions it might take this drastic step.
It’s evident that making the shift to EV, in volume, will require a leap of faith – for retailers as well as for consumers. The composition of the UK car parc is changing right in front of us, and the data proves the rewards for proactive retailers – both with new and used BEVs – are there for the taking.
With the right marketing and stock sourcing strategies, coupled with digital tools that can showcase new and used EV stock to in-market customers, retailers can unlock the impressive margins that are now available.
Philipp Sayler von Amende, Chief Commercial Officer – Get Your Car