EV Owners Have Different Habits, What this Means for Dealers

Greetings,

We hope you'll have time for some auto industry news in between bites of leftover turkey. But falling prices for used cars and cooling new vehicle sales in November may cause indigestion. Yet, new car prices continue to set records. It's all part of this topsy-turvy market. 

And speaking of market changes, new information shows that EV owners aren't behaving like their counterparts with ICE-powered vehicles. 

Enjoy the read and the holiday! Cheers!

Market At A Glance

Take a wild guess where a used car's average transaction price (ATP) headed in the last week. If you said down, then give yourself a pat on the back. Of course, this comes as no surprise, given recent market trends. The CarGurus Index reports the ATP for a typical pre-owned vehicle is $29,309, a $101 drop from last week.

Asking Prices Fall For Used Vehicles

Things also continue to head down when it comes to what dealers are asking for their used cars. New data from Cox Automotive shows listing prices for October 2022 fell to their lowest average since April. At the end of October, the average used car sitting on a dealer's lot had 70,113 miles and an asking price of $27,564. 

During this time, unsold second-hand inventory at franchised and independent dealers sat at 2.44 million units, 10% higher than in October 2021 and almost identical to pre-pandemic levels. October also closed out with 51 total days' supply, a decline of two days from the previous month and 26% greater than a year ago. 

November New Car Sales Slow

As JD Power and LMC Automotive tell it, demand for new cars in November is cooling off. A collaborative report forecasts that new vehicle retail sales will hit 933,400 units this month, an adjusted 0.3% decrease from November 2021. However, when not taking in the extra selling day this November, transactions grew by 3.8% from the same period last year. 

But while individual sales are cooling off, transaction prices for new cars continue to rise. The report shows November will be another record-setting month, with the average new vehicle selling for $45,872, a 3.1% increase from November 2021.

EV Owners Keep Cars Longer, Drive Fewer Miles

A new report from the Chicago Federal Reserve Bank uncovers the changing habits of vehicle owners since the rise of EVs. 

Notably, people with EVs hold on to their cars longer. Researchers looked at registration details for 2010-2021 model year cars and came up with some eye-opening facts. 55% of ICE-powered vehicles become used cars by the time they're five years old. But only 14% of EVs entered the second-hand market after half a decade. The Chicago Fed also reveals that the typical EV accumulated 50,000 miles over ten years, about half the usage of a conventional vehicle. 

There's no hard data about the differences, but one possible explanation involves vehicle pricing. The average cost of a new EV in 2021 was $66,000, $20,000 higher than the average price for all new cars. Consumers may be more inclined to hang on to these premium-priced vehicles. But it's anybody's guess about the differences in mileage. Do urban dwellers (who drive less) make up a more significant share of EV owners? Is it a range thing? What about more people working from home? Your guess is as good as ours.

Give your dealership the upper hand with exclusive access to hundreds of consumer sellers in your area that you can't find on Craigslist or Facebook Marketplace.

• Improve profit per vehicle with inventory direct from local consumers.

• Focus on what matters with up to 5x higher lead-to-acquisition rate through our managed seller pipeline.

• More potential buyers

Sign up today and get your first 3 vehicles free - Sign Up

Advertise with Us || View Dealer Site || Apply to be on our Podcast