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New car incentives are hurting plug-in residual values, says NADA

Figures from the May 2013 NADA Used Car Guide show average trade-in values for the 2011 Chevrolet Volt and Nissan LEAF were 51% and 58% down on their retail value. By comparison, the Toyota Prius had fallen by 37% while the petrol Chevrolet Cruze had lost 38% of its value in the same period.

Jonathan Banks, executive automotive analyst for the guide, said this was due in part to limited range, but that manufacturer incentives and federal tax credits were also to blame.

He said: ‘Generous tax credits can certainly promote more new sales than would have been achieved otherwise, but they also have a negative impact on future resale values for one basic reason — few consumers are willing to purchase a credit-ineligible, used plug-in electric vehicle for more than they would pay for a new one, less the federal tax credit.

‘So at a minimum, late-model used plug-in electric vehicle prices must logically max out below the manufacturer's suggested retail price minus the credit.’

The May edition of the guide shows But NADA believes this will plateau. Annual rate of depreciation was 31.5% in 2012, but is expected to fall to 29.7%  this year, and 27.4% in2014. By this point, a 2012 model year plug-in vehicle worth $20,000 is predicted to have lost $9,792 of its value, compared to $5,573 and $6,455 for a petrol or hybrid vehicle respectively.

Alex Grant

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