Quebec used car market hit by electric shock
Faced with the difficulty of getting a new electric vehicle in a reasonable amount of time, a high number of consumers are turning to used models, but with used vehicle prices soaring, it's best to be cautious before making a deal.
It's a bit of a topsy-turvy world in the used car market at the moment. Usually, a vehicle depreciates as soon as it leaves the dealership, but today, used vehicles sometimes look like investments, especially certain electric car models.
For example, last December, the average price of a used Tesla Model S increased by 41 per cent compared to December 2020, according to data from an analysis by vehicle sales platform AutoHebdo.
"The increase in the value of used vehicles is unprecedented," said AutoHebdo's senior marketing manager Benoit Beland. "Dealers are snapping up our used vehicles, and that's especially true for electric vehicles (EVs)."
In Quebec, searches for EVs on AutoHebdo's site increased by 85 per cent in March 2022 compared to the same period last year and the number of consumers considering plugging in and requesting information from dealers via AutoHebdo's platform increased by 1,218 per cent in one year!
In a context where prices are skyrocketing and supply no longer meets demand, it is particularly important to be cautious and analyze prices carefully, Beland said.
"On our platform, we have an algorithm that will compare all the prices of similar models in real-time, so if we refine our search, it's super easy to see if the price that is asked is above average or below average," said Beland, who added that even in this unprecedented context, there are good opportunities for the consumer who takes the trouble to use the right tools and search well.
CAA-Quebec automotive expert Jesse Caron presented a conference on the myths and realities of EVs and another on buying a used electric vehicle at the Montreal Electric Vehicle Show this weekend.
Caron said buying an electric vehicle, new or used, is generally more profitable than buying its gasoline equivalent.
"It's true that the price difference can be quite significant at the time of purchase, it can be a brake, but as soon as you drive an electric vehicle, you start to make it profitable after a few years," he said.
Caron backed up his statements with very recent data analyzed by his team in preparation for the Montreal Electric Vehicle Show regarding used vehicles.
These estimates indicate, for example, that a 2016 electric Kia Soul costs nearly $6,000 more than its gasoline version on the used market, but it avoids spending an average of $2,750 on fuel per year. The electrified version becomes a better deal after just over two years.
Still according to CAA's analysis, a 2018 Mitsubishi Outlander Plug-In Hybrid costs about $3,600 more than its gasoline counterpart.
However, the plug-in hybrid version saves an average of $1,700 in fuel costs per year, so it becomes more cost-effective after two years.
Conventional hybrids are also more advantageous, to a lesser extent, for consumers who want to keep their vehicle for several years. For example, a 2017 Toyota RAV 4 Hybrid has a market value of about $5,000 more than its gas-only counterpart, but saves an average of $770 in fuel costs per year. The hybrid version of this used vehicle, therefore, becomes more economically interesting after about 6 years.
ANALYZE THE BATTERY
Caron strongly advises consumers have the battery of the used vehicle they are considering purchasing tested before making a purchase.
"As they age, there is a natural loss of autonomy, as batteries degrade over time," said Caron, noting that this is particularly true of the first electric vehicles that came on the market about 10 years ago.
It is possible to check the condition of a battery by looking at the display of some electric vehicles, but this method has its limitations.
"Relying on the bars on the screen may be an option, but it's better to find a shop that will do a test with equipment that will accurately measure the percentage of battery degradation," Caron said, adding that simply relying on the information on the vehicle's screen "is like doing a visual inspection of a vehicle without having a mechanic inspect it.
If an electric vehicle's battery needs to be changed, "which is very rare," according to Caron, CAA recommends dealing with the original manufacturer and avoiding using a third-party supplier.
According to AutoHebdo, two-thirds of Quebec consumers think their next vehicle will be an electric vehicle. In order to determine whether a hybrid, plug-in hybrid or fully electric vehicle is the right choice, it is best to carefully consider your real needs in terms of autonomy and the type of trips you plan to make. You should also take the time to analyze the subsidies offered by the various governments. In Quebec, only certain models and years of used vehicles may be eligible for rebates. Subsidies may also differ depending on the value of the vehicle and the capacity of its battery.
-- This report by The Canadian Press was first published in French on April 24, 2022.