This info from a Dealer Principal who was at a meeting with Motability yesterday. The price hikes we have noticed this quarter are primarily driven by concerns about the residual (second hand) values of electric vehicles. As we know, Motability have been really pushing the adoption of EVs and therefore their exposure to the current market volatility in this segment is growing. Motability are warning that they are continuing to review this and that whilst they are currently trying to minimise the impact on customers, more price increases are likely. Someone posted a quote on here recently from a trade journal quoting Motability Operations as saying that each 1% movement in residual values affects them to the tune of £102m. Used values of ICE cars have been phenomenally high in recent years due to new car supply issues, and Motability Operations really cleaned up on the back of this, but as these supply issues are pretty much all resolved now that windfall is all but over. The specific problems with the residual values of EVs has been widely reported, and appears not to be lessening. I think we had assumed that this was being offset by manufacturers offering very good deals at the point of purchase, but it appears that isn’t covering all of the potential exposure. I am unclear as to whether future increases will be restricted to EVs (where the specific residual value concerns are) or will be spread wider (including ICE cars) so as to still encourage the take up of EV’s. I suspect it will be the latter.
Intersting but, it doesn’t take a genius to work out whats happening in the used car market.
Should Motability not restrict price increases soley to EV’s encouraging take up, then I can see alot of people who wouldn’t have otherwise done, leaving the scheme on affordability grounds!