Electric, Petrol or Hybrid; Which Have The Better Residual Values?

Following our articles over the past few months on the slowest depreciating cars so far in 2024, the slowest depreciating fully electric cars of the year so far, and whether depreciation can ever be considered a good thing, it is interesting to see how the impending combustion engine ban is potentially affecting residual values and the performance of the used car market. But perhaps more interesting is how each form of how a car is powered is performing against one another.

If you are looking at changing your car and are undecided as to whether you would like a combustion engine, a fully electric vehicle or a combination of the two in the form of a hybrid, how the demand is currently affecting residual values might be enough to sway your decision. Also, with the used car market slowly adjusting to the fall in demand and the return to normal supply following the pandemic, which markets are adjusting quicker than others.

Whilst many reports highlight a stall in the demand for fully electric car adoption, and in many cases a potential retraction, the price reductions on offer from almost all manufacturers for brand new electric cars means that they are at least more tempting than they once were. This in turn means that the residual values for many electric cars suffer more than comparable hybrid or combustion engine models, especially if the list price is far more than the equivalent vehicles.

Are People Beginning To Be Tempted?

According to popular car selling marketplace Auto Trader the temptation for those to make the change to fully electric motoring is growing, but not as quickly as many would expect it to. A large majority of combustion engine car drivers who haven’t yet made the switch remain adamant that they are unlikely to buy a fully electric car either anytime soon or at least until they have no choice in the matter. With many reluctant to change even after the combustion engine ban.

However, for those still making their mind up or willing to at least see how the potential for electric motoring fits into their lifestyle, a hybrid powertrain seems to fit the bill in a lot of areas. Many modern hybrids allow a reasonable amount of fully electric range yet offer the back up and reassurance that the car has a combustion engine should your battery charge get low or you need to make a longer trip. With the average daily commute being just under 20 miles, a hybrid car certainly offers the best of both worlds in that respect.

What Are The Facts?

The car market as a whole in the month of May, according to automotive industry intelligence and statistics website Autovista24, saw the average residual value (the percentage of the list price retained after 3 years and 36,000 miles) was 51.9%, a decrease of 21.2% over the previous year, highlighting the further price adjustment currently happening in the used car market since the pandemic.

To compare that to what each vehicle is powered by gives us an idea of how different types of vehicles, and the demand for each one, compares to the average across all cars and fuel types for the month. The residual values for the same 3 years and 36,000 miles for petrol cars stood at 53.4%, diesel was 52.8%, hybrids were 55.1% and EV’s just 37.6%. The hybrid powered cars may have fallen the most over the past 12 months (22.2% reduction in residual value price compared to the average of 21.2%), however they still remain the best performing fuel type out of all vehicles in May.

Undoubtedly this will be down to demand for the hybrid powertrain as a way to power your vehicle, but why are hybrids more popular than any other type of vehicle right now. Whether this is down to a reluctance to switch to fully electric power, an unknown as to how making the switch will affect your daily life and circumstances, or merely the fact that there are more hybrid options on the market right now remains to be seen.

One thing is for sure however, if you are looking for the way to power a car that will offer the best residual value when it comes time to sell or part exchange your vehicle, a hybrid is certainly the most popular way to go right now. With more choice than ever before too, and with many performance brands seeing this as the way to go before committing to fully electric power, it seems like for now at least the hybrid may be the perfect choice in many ways.

Funding With Oracle Car Finance

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