A distressed mother of three recently reached out to me, facing the prospect of a €22,000 loss on her electric car. The unfortunate situation is indirectly linked, though not entirely, to Volkswagen’s recent decision to reduce prices on some of its electric models as part of a broader market realignment.
The crux of the matter lies in her unease with the ID.5 she purchased from a reputable dealer. Traditionally changing her car every 12 to 18 months, she paid €62,000 for the ID.5, utilizing a €13,500 PCP equity from her traded Tiguan.
Last March, she was assured that the electric vehicle market was not expected to experience a decline in prices. However, by July, she returned to the dealer, realizing that the EV was not the right fit for her. To her dismay, the car’s value was appraised at €50,000, a significant drop from the purchase price.
In the following month, the situation worsened as she learned that her ID.5 was now valued at just €40,000, leaving her with a staggering negative equity of €22,000. Consequently, trading in the vehicle would require clearing the negative equity and finding a new deposit to initiate a new PCP plan.
Volkswagen headquarters are currently addressing the issue, aiming for a resolution. This distressing story offers two valuable lessons: Trust your instincts and reservations about a car, as they often prove to be correct, and if you opt to trade in your vehicle frequently, be aware that the depreciation hit is more significant compared to trading in every three years, where the decline in value occurs more gradually over an extended period.