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The automotive industry is gearing up for a tumultuous year ahead, with experts from Autovista Group predicting a continued downward pressure on residual values (RVs) in Europe's used-car market in 2025.
In a recent webinar, a panel of experts, including Dr Christof Engelskirchen, Dr Anne Lange, Ana Azofra, and Robert Madas, discussed the outlook for 2025. Madas highlighted that CO targets are putting pressure on Original Equipment Manufacturers (OEMs), leading to discounting on the new-car market and putting pressure on Residual Values (RVs).
The increased supply of Battery-electric Vehicles (BEVs) in the used-car market, due to their growing share in new-car markets in 2021 and 2022, is meeting with weak demand. BEVs offered for sale have been younger than petrol and diesel-powered models, which has led to a continuation of falling RVs in 2024, although used cars continued to sell at higher prices than in 2019.
Azofra noted that residual values were inflated between 2021 and 2022, but have since started to readjust as the balance between supply and demand improves. The amount of time BEVs spent in stock has been climbing as the used-car market saw the supply of this powertrain increase.
BEVs faced more significant RV challenges compared to Internal Combustion Engine (ICE) vehicles. For example, used prices for EVs like Tesla Model 3 and Model Y in international markets have seen steep depreciation, losing half or more of their initial value within a few years. Similarly, other Chinese EVs (e.g., NIO ET5) also suffered heavy losses in used value.
ICE vehicles showed more stability in RVs partly because of rising new car prices supporting their used values, contrasting with the more volatile BEV market. Brand and segment differences mattered, with Renault Group brands facing a challenging first half of 2025, while premium brands like Porsche showed less severe residual value drops possibly due to brand strength and customer loyalty.
The trend in 2024 showed certain segments and powertrains—especially BEVs—already starting to experience residual value pressure, linked to market oversaturation and price wars. This is continuing into 2025 but with some geographical variance, Spain being an exception with relatively better RV resilience.
Autovista Group expects RVs of three-year-old cars at 60,000km to fall by 2.5% on average across observed European markets in 2025. Engelskirchen identified four key factors that defined Europe's used-car market in 2024: growth in new-car markets, increased volume entering the market via short-cycle channels, subdued consumer confidence, and slow economic growth.
The decline is expected to ease in 2026, with countries like Sweden, Finland, and the Netherlands forecast to record positive figures next year. A webinar titled "Transition to EVs - Has Europe already peaked" is scheduled for 12 March 2025 at 9.30am GMT / 10.30am CET. Registration is available on the Autovista Group website.
Europe's used-car market concluded 2024 with trends established over 12 months. The panel discussed Spain's exceptional automotive performance during the webinar. There was a significant amount of price adjustment for BEVs over the last two years, making it more difficult for them to be sold compared to ICE models.
In summary, the outlook for 2025 in Europe projects that residual values will continue to face downward pressure, especially for BEVs, consistent with the late 2024 trend. ICE vehicles and strong premium brands may experience more stable RVs, but overall market pressures from increased competition and shifting powertrain mixes are reshaping residual value landscapes.
- In the business sector, technology plays a significant role in the automotive industry, as the increased supply of Battery-electric Vehicles (BEVs) in the used-car market is influenced by advancements in battery technology.
- The finance sector is also impacted by the used-car market trends, as the residual values (RVs) of BEVs are experiencing more significant challenges compared to those of Internal Combustion Engine (ICE) vehicles, leading to steep depreciation and losing half or more of their initial value.
- Beyond the automotive industry, the trend of electrifying transportation is affecting various sectors, including transportation, as the shift towards BEVs leads to changes in the used-car market landscape, causing continued downward pressure on RVs in 2025.
