With new EV prices softening and used car stock drying up, we are facing a market full of contradictions. In this month’s One Auto API Market Insight, CEO Mark Fretwell explores how data-driven pricing, stock sourcing and decision-making will be critical to staying ahead of the competition.

In case you were in any doubt — we’re back in a push market for new vehicle sales.

After a period of high monthly payments and a stalling new car market, manufacturers are now working harder than ever to shift stock, throwing incentives and discounts en masse to keep things moving.

Yet despite these efforts, the market remains under pressure with the SMMT predicting that just 1.95 million new cars will be registered this year — a stark reminder that we’re still operating in a contracting market. 

That’s disappointing for the industry, with long term implications for used vehicle supply – and the consensus is that weak consumer and business confidence are to blame. I don’t disagree but I’d argue there’s a lot more to it. 

Electric vehicles (EVs) are distorting the market.

There’s a huge push behind them but that doesn’t mean they’re what many people actually want. Retail buyers of new cars are still hesitant, and the market is reflecting that reality.

EV Leasing: The Pricing War Intensifies

One of the best ways to take the pulse of the industry is through personal leasing pricing and, right now, there is a lot of value to be had for buyers across the board – but particularly when it comes to EVs.

A quick search on leasing marketplaces shows you can lease a BMW i5 Touring M60 — with a list price approaching £100,000 — for just over £500 per month (inc VAT) on a 24-month deal with nine months upfront.

That’s either a staggering level of discount, or incredible optimism in future residual values.  

What’s driving these aggressive pricing tactics?

Well, for starters, manufacturers are under huge pressure to hit their ZEV Mandate targets. If they don’t register enough EVs, they face financial penalties — so right now, racking up the numbers takes priority over protecting margins.

At the same time, leasing companies are doing what they can to manage residual values. 

Just this week I read a story about Zenith extending 29% of their EV contracts to manage their exposure to residual value losses. By keeping drivers in their existing cars for longer, the idea is to mitigate the depreciation. This makes sense for the leasing company but it also acts as a drag on demand for replacement EVs from drivers who have already switched. 

There is also fast growing competition from Chinese brands. 

Unlike the US and Europe, the UK isn’t putting up the same trade barriers, which means we’re an attractive landing spot for budget-friendly Chinese EVs. That is forcing traditional manufacturers to compete even harder on price, in order to meet their ZEV obligations.

This is great news for consumers, but I can’t help wondering — how long can manufacturers sustain this level of discounting before something gives?

EV Sales vs Tax Policy: A Mixed Message

Despite heavy manufacturer support, EV demand remains below expectations. 

The SMMT now forecasts that EVs will make up just 23.7% of new car sales in 2025, well short of the 28% ZEV Mandate target. 

So, what is holding consumers back?

The usual barriers remain – charging infrastructure concern and battery health anxieties.

But now, government tax policy is set to play a bigger role. 

One of the key incentives for EV adoption in the UK has been their exemption from Vehicle Excise Duty (VED), commonly known as road tax.

But that exemption ends on April 1, 2025. 

From that date, owners of new zero-emission cars will face a first-year VED rate of £10, followed by the standard annual charge of £195 from year two onwards.

More significantly, the Expensive Car Supplement (ECS)—which applies to vehicles with a list price over £40,000 — will also extend to EVs registered after April.  This means many new EV buyers will pay an additional £425 per year for five years, adding £2,125 in extra costs.

At the same time the chancellor is hitting ICE vehicles with an even bigger stick, raising the top rate of first-year VED to £5,490.   

While this may be intended to drive demand towards EVs, the combined effect is more likely to keep buyers in their current vehicle or divert demand towards the used market — with long-term implications. 

Used Car Market: Supply Squeeze

The used car market isn’t just facing weak consumer confidence — it’s also running out of stock, so auction prices continue to outperform the trade guides, particularly in the sub-£10,000 segment.

Many dealers are now holding onto overage stock for longer, because replacing it is becoming so difficult.

A lot of the best used vehicles in the private market are now being snapped up by car-buying platforms, before customers arrive in the showroom – and an increasing proportion of fleet disposals are now being sold directly to trade buyers.  

This is reflected in the profile of vehicles being sold through physical auctions,  where only 15-20% of vehicles are Grade 1 — with the majority, over 50%, falling into Grade 2 or 3.  

As well as creating headaches for buyers who have always turned to this channel for quality stock, this skew in the profile of inventory poses a challenge for valuation commentators who have traditionally benefited from access to higher volumes of wholesale transaction data.  

The Private Market: A Risky Alternative

As their traditional channels are no longer delivering in the same way, many dealers are turning to the private market to find the cars they need. 

On the surface, that makes sense but buying directly from private sellers comes with risks.

Many private sellers don’t disclose damage or hidden issues, meaning buyers could end up with costly surprises down the line if they don’t do their homework. 

Without thorough due diligence and provenance checks, dealers are vulnerable to scams and misleading listings, making it a much riskier route to acquiring stock.

Major car-buying platforms have data-driven checks and processes designed to filter out problem vehicles, or price them accordingly and dealers need to compete on the same level if they are to avoid getting caught out. 

Without the right data — detailed vehicle history, real-time pricing data and accurate condition insights — sourcing from private sellers can be a gamble.

Final Thoughts: Smart Strategies for a Tough Market

Organisations right across the automotive industry are operating in a market that demands smarter, faster decisions.

The new car market is under pressure, EV adoption isn’t taking off as hoped and sourcing quality used stock is becoming a major challenge.

In this environment, waiting for the market to improve isn’t a strategy.

Instead, those who embrace data-driven decision-making will have the edge, using real-time insights to find the best way forward.

It’s a tough market, but not an impossible one.

Here to Help

Whether you need data-driven insights or ways to refine your processes, our tools and expertise can empower you to succeed in 2025 and beyond. If you are curious about how data can help you adapt to this shifting landscape — book a free 30-minute consultation to see how we can work together to keep your business ahead of the curve.