Cap hpi warns against aggressive discounting strategies

Automotive data experts at cap hpi have warned vehicle manufacturers against destabilising the market by introducing aggressive discount strategies in order to meet ZEV Mandate targets.

It says it is essential to manage supply channels responsibly, avoid oversaturation in certain segments, and use discounting prudently to avoid disrupting residual values of cars.

Derren Martin, director of valuations of cap hpi, said:

“Careful consideration and strategic planning from all industry areas, especially OEMs, is essential to successfully navigating this ever-evolving market. We should recognise that oversupply in certain channels and aggressive discounting strategies can harm residual values, especially for individual models within those segments. OEMs must carefully target discounts to minimise distress and protect overall market stability.”

Cap hpi

However, cap hpi does not expect the introduction of the ZEV Mandate to have a dramatically adverse effect on used EV values. It says good quality used EVs at three years old are already good value and prices have already factored in the pressure that may come from heavy discounting on new EVs. However, it warns there could be more pressure on late-plate EVs if new models are discounted heavily.

Martin said: “OEMs have many routes to market to manage and levers to pull when meeting their ZEV mandate requirements. The headline target of 22% for zero-emission vehicles will be different for each manufacturing group, as they selectively incorporate the various ‘flexibilities’ allowed in the legislation. The savvy use of channels and carbon credits will help smooth the regulations’ impact, particularly in the first year.

“It should be noted that EVs only represent four per cent of cap hpi’s total sold data, and while this number has doubled since last year, it does not shape the whole market. It will be vital to monitor market movements in real-time with Cap Live.”