How EV and used car prices are impacting Gen Z’s driving aspirations

  • UK used car prices dipped 3.7% in November, driven by a 6% drop in younger car prices, notably EVs.
  • Soaring used car costs, up 37%, led to a 9.2% drop in 17- to 26-year-olds holding driving licenses.
  • Falling EV prices offer a solution, with tools like CarGurus’ aiding young buyers in finding budget-friendly options.

Gen Z is being priced out of learning to drive: Can the emergence of EVs in the used car markets help?

UK automotive trends reveal a complex interplay between the pricing dynamics of electric vehicles (EVs) and traditional used cars. Ultimately, the trends impact the ability of the younger generation to embrace driving. The fusion of insights from Auto Trader‘s Retail Price Index and CarGurus‘ analysis of Driver and Vehicle Licensing Agency (DVLA) data paints a picture of how economic factors are influencing the driving habits of Gen Z.

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Pricing dynamics in the used car market

In November, the UK used car market witnessed a 3.7% year-on-year drop in average prices, yet it remained robust overall. The average price for a used car reached £17,328, representing a substantial 39% increase since November 2019. Notably, cars under five years old experienced a 6% decline in retail prices. This can be attributed to increased supply and heightened competition, particularly within the EV segment. The average retail price of EVs fell by a remarkable 21.1% in November. This drop is contributing significantly to the overall reduction in younger car prices.

While the market exhibited resilience, caution still surrounded pricing strategies. Auto Trader identified a surge in re-pricing activity. 16% of advertised cars priced below market value in November, possibly indicating retailers sacrificing potential profits for increased sales.

Impact on young drivers

CarGurus’ analysis of DVLA data uncovered a 9.2% decline in the number of 17- to 26-year-olds holding a full driving licence compared to five years ago. 

The primary driver behind this decline appears to be the staggering 37% increase in used car prices above pre-COVID levels. The average price of a used vehicle now stands at £19,254. This combines with inflationary impacts on insurance premiums, fuel costs, road tax, and maintenance. The cumulative cost of learning to drive and car maintenance in the first year is estimated to be around £11,000. That makes car ownership financially challenging, if not impossible, for Gen Z.

Navigating financial barriers

To address the financial concerns of young drivers, CarGurus introduced “The First Car Chooser”. This user-friendly tool designed to help first-time car buyers identify budget-friendly options aligned with their preferences. The tool acknowledges the growing importance of affordability for Gen Z, with one in five prioritizing budget considerations in their vehicle purchase decisions.

The role of electric vehicles in the solution

As young drivers grapple with financial barriers to car ownership, the automotive landscape is evolving. Declining EV prices offer a potential solution to mitigate these obstacles. The surge in demand for ‘nearly new’ cars, especially those under 12 months old, signals a willingness among consumers to explore alternative, more cost-effective options. The developing second-hand EV market could provide a huge boost for young drivers. As second-hand EVs become more readily available, the admittedly lucky few with access to home charging facilities will be able to slash the running costs of their first cars. 

The confluence of declining prices in the EV market and the surge in used car costs is reshaping the dynamics of the UK automotive industry. As Gen Z faces financial challenges on the road to obtaining a driving licence, the industry must innovate and provide affordable solutions to ensure the next generation can navigate the path to car ownership successfully.

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