A report from CAP Consulting has suggested that the Plug-in Car Grant (which offers buyers of ultra-low emission vehicles a subsidy of £5,000) will eventually do more harm than good. Why? Because it risks depressing the used car values of the type of vehicle it is trying to promote and hence makes the purchase potentially less attractive to those hoping to benefit from the low running costs associated with these products.
But is CAP correct? My initial reaction was to question what data there was for such an assertion. Indeed, is there actually a second-hand market for these cars at all given that they are so new and relatively few have been sold? To my slight surprise, a quick look at the Parkers website suggests there is. On it 117 Nissan Leafs are listed for sale. The Leafs first appeared in the showrooms in 2011, when they would have cost – after allowing for the £5,000 grant – about £24,000.
Today you can pick up used versions for anything from about £12,500 (this for a 2011 model with 12,000 miles on the clock) through to around £17-18,000. There are some outliers at the upper end of the price range but the vast majority sit in this band.
(My favourite is a 2013 Leaf which has done a mere 16 miles – surely a snip at £14,995? – though, ominously, there is no photo available; perhaps it is decked out in green with yellow spots…)
At first glance all of these cars seem to be dealer sales so maybe they are display models or trade-ins looking for good homes.
But how do these prices compare with what is happening in Europe? In Germany for example, where there is no upfront subsidy? A visit to www.mobile.de shows that the cheapest Leaf available there is 22,690 Euros which is about £19,000.
The CAP analysis goes on to argue that things will be no better when the subsidies come to an end:
“Our analysis of used market values across markets with and without a subsidy clearly shows that grants are ineffective as a means of reducing ownership costs and, worse still, their inevitable eventual removal will cost new EV owners thousands in additional depreciation.
“This is because the used value is now established in each market and when the subsidy is removed in the UK and France, the additional cost of a new vehicle will never be retained by a higher residual value.”
Unfortunately this won’t make happy reading either in Westminster or for those weighing up the financial considerations associated with going green. On a positive note at least there is a second-hand market for this brand new technology.