AUTOMOTIVE services provider Cox Automotive Australia, parent company of Manheim Australia, has shared details of its plans to prepare for a wave of EVs expected to come onto the used market.

The auction house says it is looking at widening its traditional customer base to those who might be attracted to owning a second-hand EV and is trialling for Australia, battery condition assessment technology which it is using as a service to EV buyers in North America. 

It is also calling for government financial assistance for used EV purchases as a way of stabilising used EV prices. 

Speaking at the Institute of Public Works Engineering Australasia (IPWEA) Fleet Conference in Brisbane, Cox Automotive Australia corporate affairs manager Mike Costello addressed the elephant in the room – residual values of EVs. 

“It goes without saying right now that the fleet market is entering a new era, an era with more electric or electrified vehicles,” Mr Costello said.

“There have been about 160,000 new BEVs sold in Australia since 2019, with 85 per cent of these being sold since the start of 2022, which means the majority are on their first owner.

“But there remain a number of unanswered questions around residual values and repair costs, which in turn impact insurance premiums.

He said that in preparing for an inevitable influx of EVs through its auction channels, Manheim Australia is turning its focus to EV-specific remarketing strategies to target new customers. 

“What we’re really doing is trying to find new buyers outside of our traditional channels,” Mr Costello said.

“Our head of buyer services, one of his focuses now is finding people that are going to want to buy a second-hand EV.

He said that one of the things being considered that could be beneficial are specific auctions and campaigns for EVs or PHEVs along the lines of Manheim’s popular prestige car auctions.

One area of particular interest to Manheim is offering battery health assessments for used vehicles, a service they intend to offer in-house in the future to ease the concerns of potential buyers. We are in a trial phase now,” Mr Costello said.

“The idea is to be able to go to vendors and offer to sell their EV with a battery test that gives a good guide of exactly what the state of health is.”

While its Australian EV focus is just ramping up, Manheim is no stranger to the used EV business overseas where it already has various programs in place to both sell and recondition zero-emission vehicles.   “Manheim sold nearly 48,000 used EVs in the US last year, a 58 per cent year-over-year increase,” Mr Costello said.

“Our Battery Services and Recycling division also reconditioned 36,000 used EVs last year, which is a 43 per cent year-over-year increase and it projects to triple this number in 2024.”

Mr Costello said that Australians need to be incentivised to buy used EVs to achieve stable residual values, citing a successful US scheme where a $4000 federal tax credit (rebate) is applied to the purchase of all second-hand EVs. 

“The four grand on the bonnet in the States led to a 34 per cent spike in used EV sales in the first month,” he said.

We are advocating that the government consider some form of support for second-hand EVs. When you combine reliable state of health tests with some form of purchase relief, even if it’s just you don’t pay stamp duty, if you get those two things combined I think you’ll really stabilise the market.” Mike Costello, Cox Automotive Australia.

“So we’re advocating behind the scenes and we wrote a submission to the parliamentary inquiry really encouraging the government to consider some form of support for second-hand EVs.

“When you combine reliable state of health tests with some form of purchase relief, even if it’s just you don’t pay stamp duty or whatever it is, if you get those two things combined I think you’ll really stabilise the market.”

Mike Costello

While some believe that the current collapse in residual values may improve the affordability of EVs, Mr Costello said that poor resale values will only punish early adopters and hurt the market. 

“That short term thinking is actually counterproductive in the long run because what you really want is a stable market,” he said.

“The worst thing you could do is alienate the early adopters who got on board early and if they find that their assets have plummeted in value, that’s not good for anybody and actually hurts the market,” he said.

Mr Costello cautioned fleet managers against moving too quickly as they transition to EVs, but made it clear Manheim would offer support throughout their electrification journey.

“There have of course been some high-profile early disasters, with companies moving too quickly too early to chase rapid electrification,” he said.

“At this stage EVs are likely to save you money in some ways and cost you money in others. But nobody currently going through their EV programs will be going on this journey without support, certainly from us,” he said.