How Discounting Rewrites Used Car Values, Part-Ex Math, And Residuals

New-car pricing is no longer a fixed anchor. 82% of new-car adverts now show a discount, averaging 10.1%, with EV incentives closer to 11.8%. That’s not noise; that’s a new baseline for how shoppers judge value, and it bleeds straight into used pricing, part-exchange offers, and your residual forecasts.

In this blog, we’ll examine the data and suggest moves that will protect your gross without reducing the speed of sale.

What’s Actually Happening

• Discounting is widespread and bigger than last year. Auto Trader’s September intelligence shows 10.1% average discount (vs 9.1% a year ago) and 82% of adverts carrying a discount; EVs are the most aggressive at 11.8%.

• Discounting has become a demand lever. SMMT and trade press repeatedly link spikes in new-car registrations to heavy incentives, especially on EVs. May and September were textbook examples.

• Used values feel the back-draft fastest where new is cheapest. Analysts estimate EV residuals took the biggest hit as new-car markdowns and tactical support rolled through 2024-25. Some datasets show sub-24-month EVs retaining 46% of the cost new in July 2025 (down from 85% in 2022); other trade reads describe “halved” used EV values versus launch-era expectations. Direction of travel is clear, even if model-by-model results vary.

• Value bands below £15k remain fiercely competitive. Cap HPI’s overview finds sub-£15k stock the busiest battleground, aligning with cost-of-living realities and the tilt to “sensible money” purchases.

Why New-Car Discounting Pushes On Used Prices (And Where It Doesn’t)

Think of discounts as moving the reference point in a shopper’s head. If new now feels 10% cheaper, used pricing has to justify itself more clearly, or adjust.

Where pressure bites:

• Nearly-new (0–24 months): direct substitutes for discounted new. Expect firmer buyer negotiation and tighter Auto Trader Price Indicator outcomes when you sit just above obvious new-car deals.
• Younger EVs: captives and OEM support on new EVs reset the monthly; used EVs must compete on payment, warranty, or unique spec.

Where you can hold the price:

• Three to five year ICE/hybrids: strong mainstream demand and sensible monthlies keep churn healthy when the condition story is tight (service history, consumables, two keys).
• Older value bands (<£15k): demand density cushions prices if the prep is credible and the finance journey is simple.

Part-Exchange: Recalculate Your Ladders Before You Over-Allow

New-car discounting changes the exit price of the car your customer could buy instead. That trickles into what you can safely allow on their part exchange, particularly if they’re moving from a young used into a discounted new.

Three Quick Rules For Appraisals This Quarter:

1. Anchor to live payment, not just live price. If a discounted new PCP is £20–£40/month from your used alternative, your PX gross can evaporate fast.

2. Segment by exposure: lower your appetite for over-allowing on young EVs and nearly new SUVs sitting close to discounted new.

3. Shorten your risk window by reducing the “allowance to retail” time; daily price files can move during OEM bursts.

Residual Forecasting: Avoid Last Year’s Trap

Residuals are most fragile, whereas OEM support is the most volatile. Build that into your GFV thinking and stocking plans.

• Keep GFVs conservative in model lines frequently featured in OEM promos or grant-adjacent messaging; refresh forecasts quarterly, not annually, until pricing stabilises.

• Stress test a 2-3ppt discount swing on new and model the used knock-on for your 6–12-month holding period.

• Weight condition more heavily: documented recent maintenance (tyres/brakes/belts) and two-key cars genuinely desensitise you to nearby new-car offers because they reduce ownership risk and aftersales spend.

Auto Express' tracking of the last 18 months of EV markdowns underlines the lesson: when new is volatile, optimistic residuals hurt.

The Pricing Playbook: Defend Margin Without Slowing Turn

Price to the band, not the penny.

Sit inside common search breaks (£9,995 / £14,995 / £19,995 / £24,995). Micro-moves of £100–£300 weekly beat reactionary cuts that hand back gross.

Win the Price Indicator with the story, not just the sticker. Complete photo sets + reconditioning notes can lift you from “High” to “Fair/Good” without slashing.

Bundle value into the headline. Advertise service + 12-month MOT + basic warranty included. Offer two paid step-ups (extended warranty, service plan). Shoppers comparing a discounted new car need the “peace-of-mind delta” to be obvious.

Finance Is The Pressure Valve

When new car monthly payments drop, your used finance must do heavy lifting.

• On every vehicle listing page, show one representative example above the fold: term, deposit, APR, and total payable.

• Soft search first. Let customers check eligibility without a hard footprint; completion rates rise, and you keep them off a competitor’s site.

• Route by stock age: HP as default on 5-10-year cars; PCP on younger metal where GFVs are predictable.

• Near-prime options keep deals alive where discounted-new is drawing away price-sensitive buyers.

Marsh Finance supports dealers and brokers with soft-search journeys, fast HP & PCP decisions, and near-prime coverage designed to hold price while keeping monthly payments comfortable.

Ops checklist, You Can Ship This Week

• Re-price any 0-24-month listings that sit within 5-7% of discounted new cars.
• Add a “Why this car is priced here” panel to VDPs (recent spend, consumables, two keys, clean MOT trail).
• Tighten appraisal-to-retail lead time on young EVs and promo-heavy segments.
• Put payment + total payable into call scripts and email templates so every lead hears the same story.
• Review GFVs on lines with frequent OEM support; trigger a quarterly review cadence.

What To Tell The Board

• Discounting is systemic: 82% of new car adverts carry a discount; average 10.1%; EVs 11.8%. Expect the anchor to persist into 2026.
• Used exposure concentrates in nearly-new and young EVs; sub-£15k and 3 to 5 year ICE/hybrid remain resilient with the right story.
• Residual vigilance pays third-party sources link OEM support to sharper RV drops on EVs; keep GFVs tight and reviews frequent.

Defend Your Margins And Move Stock Faster With Marsh Finance

Our near-prime PCP and HP solutions help you stay competitive when new-car discounts shift the market, keeping monthly payments attractive without cutting prices. With fast decisions, soft-search journeys, and support across near and non-prime, we help dealers and brokers win more sales and hold more gross, even when the market moves.

👉 Partner with Marsh Finance