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Used Cars Drop

Posted by Amit Sharma on 19-08-2026

Luxury Cars

Europe’s used-car market is entering the second half of 2026 under renewed pressure. Residual values — the share of a vehicle’s original list price it retains as it ages — are expected to decline in most major markets, although JD Power forecasts relatively modest falls outside Italy.

The broader economy is not helping. The OECD expects euro-area GDP growth of just 0.8% in 2026, before a recovery to 1.2% in 2027. Meanwhile, the European Central Bank projects average euro-area inflation of 3.0% this year, largely because of higher energy costs.

Residual Values Are Still Falling

According to JD Power, residual values continued to normalise during the first half of 2026 after the unusually strong prices created by pandemic-era supply shortages.

Austria, France, Germany, Spain, Switzerland and the UK are generally expected to record year-on-year declines of 2% or less by the end of 2026. Italy is the major exception, with JD Power forecasting a drop of more than 5%.

Italy’s sharper correction reflects the fact that used-car values remained unusually strong there for longer after the pandemic and semiconductor shortage. The market is now catching up with adjustments that occurred earlier elsewhere.

Spain remains comparatively resilient. In June, three-year-old cars with 60,000 km retained an average 54.1% of their original list price, the highest level among the markets analysed by JD Power.

Older Cars Are Losing Ground

An unusual development is emerging in the market for six- to eight-year-old cars.

Normally, older vehicles experience more stable percentage-based residual values because affordability keeps demand relatively strong. In 2026, however, JD Power has observed greater price pressure in this age group than among cars up to three years old.

One explanation is that older cars experienced particularly large price increases during the supply shortage. That left more room for prices to correct once availability improved.

Electric Cars Gain Momentum

The most interesting change is happening between powertrains.

Used battery-electric vehicles are selling faster in several markets, while diesel models are increasingly under pressure. JD Power links part of this shift to higher fuel costs, which have made electric vehicles more attractive to some buyers.

Germany provides one of the clearest examples. The average time a used BEV remained in dealer stock fell by around 20 days year on year. By May, electric cars had moved from being among the slowest-selling powertrains to the fastest-selling.

Dealers were also changing BEV asking prices less frequently, suggesting stronger confidence in demand.

Using February 2026 as the baseline, German used-BEV asking prices had risen by approximately 2.9% by June. Diesel prices, by contrast, were about 3.5% lower. Italy recorded an even sharper diesel decline of roughly 4.1%.

The UK Has a Different EV Problem

The UK illustrates why electric-car residual values cannot be understood through demand alone.

Used BEVs are selling quickly, yet their percentage residual values remain significantly below the overall market because new electric cars have historically carried relatively high list prices.

In June, the average UK residual value after 36 months and 60,000 km was 46.8%, compared with 33.8% for BEVs. In cash terms, however, their remaining values were remarkably similar, showing how high original prices distort percentage comparisons.

JD Power valuation specialists argue that greater parity is likely only if new-BEV list prices move closer to the wider market average. They also warn that a future surge of used electric cars could place renewed pressure on values if demand fails to grow at the same pace.

What This Means for Buyers

For consumers, falling residual values create both opportunities and risks. People shopping for used cars may find increasingly attractive prices, particularly among diesel vehicles and in markets undergoing stronger corrections. But buyers planning to resell after only a few years should pay closer attention to powertrain trends.

Electric cars are showing stronger demand than their historic depreciation figures might suggest. Diesel models, meanwhile, are becoming more vulnerable to fuel costs, changing consumer preferences and country-specific market conditions.

A Market Splitting by Powertrain

JD Power’s overall forecast remains relatively calm: most European markets are expected to see only modest residual-value declines through the end of 2026.

But beneath that stability, the market is becoming increasingly fragmented.

The important question is no longer simply whether European used-car prices are rising or falling. In 2026, the type of powertrain, country and vehicle age increasingly determine which direction values are heading.