Used car market hit by electric shock

In a context where prices are on the rise and where supply no longer meets demand, we should be especially careful and analyze prices carefully, suggests AutoHebdo’s senior marketing director. (Photo: The Canadian Press)

Faced with the difficulty of getting a new electric vehicle in a reasonable time, a staggering number of consumers are turning to second-hand models, but with used vehicle prices soaring, it’s best to exercise caution before completing a transaction.

It’s a bit of an upside down in the used car market. Typically, a vehicle depreciates as soon as it leaves the dealership, but today, used vehicles sometimes feel like investments, particularly certain electric car models.

For example, last December, the average price of a used Tesla Model S increased 41% compared to December 2020, according to data from an analysis conducted by vehicle sales platform AutoHebdo.

“The increase in the value of used vehicles is unprecedented,” says Benoît Béland, Senior Marketing Director at AutoHebdo. Dealers are buying our used vehicles,” and this is particularly the case for electric vehicles (EVs), he specifies.

In Quebec, searches for EVs on the AutoHebdo website increased 85% in March 2022 compared to the same period last year and the number of consumers who are considering connecting and asking for information from dealerships via the AutoHebdo platform increased by 1218% in one year !

In a context where prices are on the rise and where supply no longer meets demand, we must be especially careful and analyze prices carefully, suggests AutoHebdo’s marketing director.

“In our platform, we have an algorithm that will compare all the prices of similar models in real time, so if we refine our search it is super easy to see if the asking price is above average or below average”, says Benoît Béland, which adds that even in this unprecedented context, there are good opportunities for consumers who take the time to use the right tools and look carefully.

profitability

CAA-Quebec automotive expert Jesse Caron gave a talk on the myths and realities of EVs and another on buying a used electric vehicle at the Montreal Electric Vehicle Show this weekend.

According to him, buying an electric vehicle, new or used, is usually more profitable than buying its gasoline equivalent.

“It is true that the price difference can be quite pronounced at the time of purchase, which can be a brake, but the least you drive with an electric vehicle, you start to monetize it after a few years”.

Jesse Caron backs up his statements with very recent data analyzed by his team in anticipation of the Montreal Electric Vehicle Show on used vehicles.

These estimates indicate, for example, that a 2016 Kia Soul electric costs almost $6,000 more than its gasoline version on the second-hand market, but avoids spending an average of $2,750 on fuel a year. The electrified version, therefore, becomes a “better deal” after just over two years.

Also according to CAA’s analysis, you have to pay about $3,600 more for a 2018 Mitsubishi Outlander plug-in hybrid than for its gas-powered equivalent. However, the plug-in hybrid version saves an average of $1,700 in fuel a year, becoming “more profitable” after two years.

Conventional hybrids are also more beneficial, to a lesser extent, for consumers who want to keep their vehicle for several years. For example, a 2017 Toyota RAV 4 Hybrid has a market value of about $5,000 more than its gasoline-only equivalent, but saves an average of $770 in fuel per year. The hybrid version of this used vehicle therefore becomes economically more attractive after approximately 6 years.

analyze the battery

Jesse Caron strongly advises consumers to review the used vehicle battery they intend to purchase before completing a transaction.

“As they get older, there is a loss of autonomy that is natural, batteries degrade over time”, indicates the CAA automotive specialist, specifying that this is particularly the case for the first electric vehicles that hit the market about ten years.

It is possible to check the status of a battery by looking at the screen of some electric vehicles, but this method has limitations.

“Relying on the bars on the screen can be an option, but it is better to find a repair shop that does an exam with devices that accurately measure the percentage of battery degradation” underlines Jesse Caron, adding that simply relying on the vehicle information screen ” It’s like visually examining a vehicle without having it inspected by a mechanic.”

If you need to change an electric vehicle battery, “which is very rare” according to Jesse Caron, the CAA recommends negotiating with the original manufacturer and avoiding using a third-party supplier.

According to AutoHebdo, two-thirds of Quebec consumers think their next vehicle will be an electric vehicle. To determine whether a hybrid, plug-in hybrid or all-electric formula is right for you, it’s best to ask yourself about your actual range needs and the type of trips you plan to take. We should also take the time to review the subsidies offered by the various governments. In Quebec, only certain models and years of used vehicles may be eligible for the discount. Subsidies may also differ depending on the value of the vehicle and its battery capacity.

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