EVs and the used car market: What dealers need to know in 2025

At the end of November 2024, the UK government announced plans to revisit 2030 EV mandates, to help relieve pressure on the industry. While this relief is welcomed by many, the EV revolution isn’t going anywhere, and electrifying your business is still more important than ever. In this article we break down the latest EV data, while exploring actionable steps for dealers in the race toward electrification. 

Cox Automotive’s latest Insight Quarterly report, highlights new EVs led the way with new car registrations in 2024. Thanks to de-fleeting cycles and company car schemes, this means there will be more used EV cars for sale in 2025. This shift creates exciting opportunities for dealerships - but it also brings challenges.  

From managing residual values to meeting consumer expectations, the evolving landscape raises critical questions: What does the influx of used EV cars mean for profitability? How can dealerships adapt their strategies? And what role does reliable wholesale funding play in navigating these changes?  

2025 will see a boost in the used EV Market

The EV revolution is well underway, with electric vehicles becoming an increasingly mainstream choice for UK drivers. In 2024, two in every five (21%) new cars registered were EVs, and this figure is expected to rise by an additional 5% in 2025. This is of course led by Original Equipment Manufacturers (OEMs) scaling down production of internal combustion engine (ICE) vehicles to meet regulatory demands, as well as growing concerns with sustainability amongst consumers. 

Thanks to de-fleeting cycles and company car schemes, more EVs are starting to make their way to the used car market, meaning dealers need to consider how they’re going to meet demand while protecting their bottom line. 

What does the influx of used EVs mean for dealer profitability?

For dealers, this shift introduces a new sales mix requiring new expertise and strategies. In particular, EVs need less frequent maintenance than ICE vehicles, and their servicing requires specialised training, which can affect profit margins for after-sale services.  

Similarly, the need to invest in training and specialised services can reduce sales margins, while taking investment away from other areas of the business that can impact long-term profitability in the long run.  

These challenges are certainly troubling for many. However, there’s an exciting opportunity for dealers that adjust. 

How can dealerships adapt their strategies to keep up with used EVs?  

One of the most prominent concerns with selling used electric vehicles is the issue of their residual value.  

Vicky Gardner, Director of Development at NextGear Capital notes, “residual values are a key challenge for many of our dealers, as they adapt to an influx of used EV cars on the market. This is largely driven by consumer concerns around battery health and lifespan, as well as charging infrastructure and costs in the face of tough economic challenges.”  

It’s vital then, that dealers learn how to sell EVs and address consumer concerns, while educating them (and themselves) on how to tackle them. Dealers aren’t facing these concerns alone though. New technology is constantly making its way to the market, helping to ensure dealers purchasing used EVs, can do so with confidence. Manheim for example, expanded their Sure Check feature to cover EVs earlier this year, allowing dealers to dig into the vehicle’s history, before purchasing for their forecourts.  

Introducing new technology like this, will help dealers navigate the demand while increasing confidence in the EVs they’re buying.  

Additionally, the introduction of new players in the EV market are worth considering. While traditional OEMs have dominated the UK electric vehicle market until now, recent months have seen the rise in EVs from Chinese manufacturers.  

Brands like BYD, GWM, Omoda and Jaecoo, have brought lower-priced new energy vehicles to consumers, appealing to their need for a more affordable approach to sustainable transport. Dealers working with these manufacturers could give themselves a competitive advantage in the EV market.

What role does wholesale funding play in navigating more used EVs on the market?

Wholesale funding plays a crucial role in helping dealers navigate the growing presence of used EVs in the market. Helping to spread the financial risk of stocking used electric vehicles by providing the capital to acquire these vehicles and offer a competitive sales mix, wholesale funding frees up cash needed to invest in training and other areas.  

The industry has a responsibility to help drive the EV revolution, tackling consumer hesitation and helping them make the switch. Capital saved thanks to vehicle stock funding, can therefore be invested in the training required as well as marketing and communication tools to showcase the benefits of EVs, while addressing the concerns holding consumers back.  

We must also address that the used EV market is still evolving. Dealers need to remain agile to respond to the fluctuations in supply, demand, and pricing we’re expecting to see with EVs. Wholesale funding offers the flexibility to scale inventory up or down, helping dealerships stay resilient in a dynamic environment. 

By evolving your strategy to utilise wholesale funding to source used EVs and future-proof your sales mix, dealers can manage the challenges and position themselves as leaders in the market. Ready to meet the demands of a greener future. 

Want to understand how NextGear Capital can support your business in the shift to electric vehicles? Speak to a member of the team today.