After several months of intense tension, Europe’s used-car market is showing signs of regained balance. Yet behind this apparent calm lies a market that remains fragile, shaped by contrasting dynamics across vehicle ages and powertrains and increasingly influenced by political decisions that continue to weigh heavily on residual value expectations.

Recent stock remains tight, keeping prices elevated
Supply constraints persist on very young used cars, particularly vehicles under two years old. This does not reflect weak demand, but rather limited availability — a direct consequence of the low new-car registration volumes seen between 2020 and 2022, combined with extended fleet holding periods.

As a result, prices for recent used cars remain high, anchoring the entire depreciation curve. Even where selling times start to lengthen on certain segments, these elevated price benchmarks continue to support values further down the age profile, delaying the market corrections that would normally be expected.

ICE vehicles still set the pace of Europe’s used-car market
Despite the gradual rise of electrified options, Europe’s used-car market remains firmly anchored in petrol and diesel. ICE vehicles continue to post the shortest selling times across most European markets, underlining their role as the backbone of used-car activity.

Non-plug-in hybrids (HEVs) are increasingly acting as a natural extension of the combustion market, benefiting from a clear and reassuring value proposition. By contrast, mild hybrids (MHEVs) often struggle to clearly differentiate themselves in the used-car arena, resulting in longer selling times.

Electrified vehicles face a glass ceiling
Selling-time indicators by powertrain point to a clear hierarchy at European level. Battery-electric vehicles and plug-in hybrids continue to take longer to sell than ICE vehicles and HEVs, highlighting their lower liquidity in the used-car market.

Across Europe, BEVs are no longer the slowest-moving segment, but they remain significantly less fluid than petrol, diesel and full hybrids. This relative improvement is largely driven by successive price corrections rather than by a broad-based recovery in demand.

BEV price indices show signs of a plateau in some countries, but this should not be mistaken for a genuine stabilisation. In most cases, it reflects a digestion phase following sharp downward adjustments. As long as selling times remain elevated, pressure on residual values is likely to persist, even if its impact is delayed.

Regulatory changes
Recent policy developments underline how regulatory changes have become a key driver of residual-value volatility across Europe. In Germany, the return of incentives for new electric vehicles increases the risk of renewed pressure on used-car values over the medium term. In contrast, Norway’s gradual easing ahead of the full removal of tax advantages could divert part of new-car demand towards the used-car market, providing some support to values.

Other initiatives — such as proposed changes to the tax treatment of PHEVs in Portugal or discussions in the UK around usage-based taxation for BEVs — illustrate the diversity of national approaches and the difficulty of anticipating uniform outcomes across Europe.

LCVs moving cautiously under regulatory pressure
In the light commercial vehicle segment, market behaviour remains cautious and conservative. Purchase decisions are primarily driven by total cost of ownership, economic visibility and operational suitability.

This caution is even more pronounced for electric LCVs. High entry prices, limited alignment with real-world use cases and strong sensitivity to TCO continue to curb demand in the used-vehicle market. This mismatch presents a growing challenge for manufacturers, caught between ambitious regulatory targets — including CAFE standards and ZEV mandates — and a used-market reality that is slow to follow.

A readable market, but far from secure
Europe’s used-car market is neither in crisis nor entering a clear recovery phase. It is navigating a narrow path, supported by a resilient ICE core, held back by electrified powertrains still searching for maturity, and exposed to policy decisions that are sometimes contradictory. For industry professionals, the challenge in the months ahead will be less about predicting a sharp turning point and more about reading weak signals accurately, fine-tuning sourcing and pricing strategies, and avoiding the trap of mistaking a temporary plateau for structural stability.

Download the latest Indicata Market Watch reports at https://indicata.co.uk/market-watch/