Bluestone explains how Automotive Collections Companies can help lenders reduce short-term pain and create new pathways for customer retention.
The electric vehicle (EV) revolution has promised a future of clean air and cutting-edge technology. For lease and financial providers, it also promised a lucrative new revenue stream. However, once the next wave of EVs reached the end of the terms of the contract, reality hit hard, failing to realize the expected revenue stream that many had expected.
High Yield Saving Offers
Powered by Money.com – Yahoo may earn fees through the links above.
All over the UK, leasing and auto finance companies are facing unprecedented losses as the value of used electric vehicles is rising soaring, far below the remaining or guaranteed future value (GFV) projected several years ago.
The UK Vehicle Rental and Lease Association (BVRLA) says that auto finance companies are currently losing A few million Due to unexpected EV depreciation, one executive urged the situation to be described as “extreme.”
Just a few years ago, used EVs enjoyed strong value driven by lower supply and increased demand. In 2021 and 2022, when the market rode the post-Covid supply crunch, the residual value model showed bullish predictions for common EVs. The leasing company set the price of the contract accordingly.
However, evaluation experts like Cap HPI have begun to ring alarm bells. Their analysts flagged the EV value not unsustainable and revised the prediction model downwards. Nevertheless, many vehicles on the road were already funded based on legacy assumptions. These are vehicles currently being returned at values well below the original forecast.
Simon Frost, head of business development at Bluestone Credit Management, says his current playing situation is causing an unwelcome headache for lenders.
He tells of a recent case. “My colleague returned the 3-year-old Tesla Model 3 with a GFV of £25,000. It was worth £18,000. They were willing to buy it for £20,000 and raised funds again, but that option was never on the table.
Frost said that automotive finance companies “are looking for government support in the future, but today’s reality is that many people have been raising funds from PCPs and lease agreements over the past three years, so they often can’t meet the value of termination.
A balanced market
Oxford Economics: Assessing the impact of supporting the second-hand BEV market (September 2024)
Bvrla-oe-euse-bev-market-forecast-sept-2024download
However, demand has not kept pace.
“The second-hand car market is almost four times the size of the new car market,” says Toby Poston, CEO of BVRLA. “If we don’t stabilize the demand and value of used EVs, the entire transition to net zero could be at risk.”
In May 2025, Cox Automotive’s analysis shed light on how aggressive discounts on new electric vehicles (EVs) sent shockwaves through the second-hand market.
According to the data, EVS held an average of 83% (OCN) of the original cost when sold to trade in 2022. Fast forward to April 2025 and the photos have changed dramatically. Currently, the comparable vehicle holds only 47% of its original value. In contrast, diesel vehicles of the same age were much better, retaining around 70% of their OCN.
As losses increase, many people in the industry are asking: What’s next? Motor Finance Online Editor Alejandro Gonzalez (AG) spoke to the head of business development at Bluestone Credit Management (SF) at Simon Frost (SF).
SF: There has been a consistent trend in increasing consumer demand for battery-electric vehicles (BEVs) in recent months, with SMMT showing BEVs’ highest growth in the first quarter, with a record 3.3% increase to 58.5%, with 65,850 units. They created this growth, causing increased supply and affordability. “A new stage in which electricity becomes a realistic and attractive option for more buyers.”
SF: Cannot guess how quickly a lender responds to adjust future values. But regardless of this speed, what is clear is that the historic high future value has already been “burned” into the lender’s EV portfolio, which we believe can help them manage. ”
SF: Both the digitization of processes and the use of AI help to streamline operations, but there are still areas where personal interventions can help customize the customer’s journey. We see this every day to help people deal with historic debt issues. Termination of the contract guarantees a future value hurdle. This hurdle is similar to the position where the hurdle is too high for consumers to travel to buy an EV. One-on-one discretion to reduce the height helps more customers clear the hurdles and provide a position that is advantageous for both parties.
SF: Lenders have made individual decisions on this question and if the decision includes an OEM who is enthusiastic about selling a new vehicle, a joint decision is required. By highlighting opportunities for customized risk mitigation options, we have given lenders another option.
SF: I will never rule out repeated situations like this, but I think it’s fair to say that the very unusual post-Covid car market boom and the new shortage of cars reflect the unique situation in which the emergence of EVs that could help support the government create unprecedented value for used cars and help with the government. The pain is now felt when the contract matures, but it is safe to say that the lender has adapted to future value adjustments.
SF: Although today’s residual values can be alleviated to some extent, lenders often lack the process and resources needed to implement what could be a window of 2 or 3 years of pain. This is an area where car collections are experts BluestoneOutbound customer contact expertise helps pivot the model and lenders actively contact customers and coordinate new funding solutions.
“Q&A with Bluestone: What’s next in the EV leasing market from overheating to undervaluation?” was originally created and published Online Motor Financea brand owned by GlobalData.
The information on this site is contained in good faith for general information purposes only. It is not intended to be the advice you should resort to, and we will not give any representations, warranties or warranties, whether express or implied regarding its accuracy or completeness. You should seek expert or expert advice before taking or refraining from taking any medication based on the content on our site.
