- Car Dealership Guy News
- Posts
- Off-lease EVs expected to flood wholesale market in years ahead
Off-lease EVs expected to flood wholesale market in years ahead
Negative equity and higher lease penetration are boosting the number of EVs entering the wholesale market. (4 min. read)
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/d0d8813d-652b-4d94-b56b-def92d38cd84/Edmunds_SNP_1.13.25_-_1.17.25__13_.jpg?t=1737986018)
While used vehicle variables are looking mostly normal as the industry gears up for 2025, leasing trends could drive a significant shift in the wholesale landscape.
Driving the news: The Manheim Used Vehicle Value Index (MUVVI), which studies average car values at auction, is currently up 0.3% from December and 0.7% year-over-year.
Used car values seem to have plateaued in recent months. After the index hit its lowest point of 196.1 in June 2024, MUVVI has remained several points higher, hovering just over 200. It is currently at 205.4.
This suggests values will remain consistent throughout the coming months, although dealers will need to pay close attention to the next few weeks to be sure.
Zooming in: Wholesale values continue to range widely by vehicle type, impacted by shifts in customer demand.
SUVs have helped boost the overall index, rising 0.6% from last year. Meanwhile, sedans and pickups are down 1.6% and 1.7%, respectively.
Electric vehicles are down the most (-4.5%) from last January, continuing to depreciate faster than all other models. However, their downward pace has slowed in recent months, suggesting we may be nearing a minimum in EV values.
As one would expect, excluding EVs from the equation shows a 0.2% increase in the values of all gas-powered segments combined.
Looking ahead: Although wholesale inventory levels are higher than last year, off-lease maturities, a critical supply of used vehicles for dealers, have declined 17% from last year.
ICE and traditional hybrid lease penetration rates have been stagnant over the last year, while lease equity for both segments has declined.
However, traditional hybrids have around $1,000 in positive equity, and most ICE vehicles are either seeing negligible negative equity or breaking even. With these levels, more consumers are buying out their ICE or hybrid lease, reducing the number of these vehicles hitting the wholesale market.
On the other hand, EVs and plug-in hybrids have seen higher lease penetration, due to aggressive discounting from manufacturers.
At the same time, lease equity for both segments has sharply declined, with EVs seeing around -$7,000 in negative equity and plug-ins seeing -$8,000. This is leading to a large number of these vehicles entering the wholesale market.
“Over the next several years, we’ll see lease maturities change quite a bit as the industry has been releasing many more EVs and plugin electric vehicles, but ICE and traditional hybrid lease penetration rates haven’t risen much from the bottom.”
Big picture: Dealers should expect these trends to continue over the next few years. As electric models continue to take a bigger piece of the pie, the volume of off-lease inventory will lean more and more towards EVs, impacting retail and wholesale supply.
Become an automotive insider in just 5 minutes.
Get the weekly email that delivers transparent insights into the car market.
Join 90,000+ others now, it's free:
Courtesy transportation is no longer a nice-to-have.
It’s a need-to-have.
A 2024 Car Dealership Guy poll on X found that 31% of respondents prefer an Uber ride to get home when dropping off a car at the dealership.
With Central from Uber for Business, you can request on-demand courtesy rides for your customers, even if they don’t have the Uber app. Coordinate one-way or round-trip rides, monitor trips in real time, set spend caps, and generate reports in one dashboard.
Uber for Business is an easy way to provide an experience customers love, while reducing the costs associated with maintaining shuttles and limiting the liability of loaner vehicles.
Reply