Leading car rental firm casts doubt on demand for electric vehicles

A leading European car retail brand has questioned the demand for electric vehicles as consumer appetite fails to match the green driving ambitions of governments.

German firm Sixt reported a “severely worsened” environment for the sale of used EVs over the course of 2023.

Falling residual values for EVs led to increased depreciation and losses from vehicle sales and to a negative impact on earnings in the range of around €40 million last year, according to the company.

The annual pre-tax profit fell by almost 16% over 2022 to €464 million despite a rise in revenue to €3.62 billion from €3.07 billion.

“In Germany, for example, prices for such vehicles fell by more than 20% during the past year,” Sixt said. 

“At the same time, demand for e-mobility as a whole has not yet developed the momentum desired by politics in many places, as evidenced not least by the latest registration figures. 

“Sixt has also felt the effects of this, despite investing a sum in the millions in high-profile electric car marketing campaigns and investments into charging infrastructure.” 

The lower demand compared to combustion engines resulted in a “substantial loss” of revenue. 

Sixt assumes that without these two effects relating to e-mobility, the last financial year would have closed with pre-tax profits above the record year 2022.

The firm reacted by bringing forward the phasing out of what it described as “electric risk vehicles” – for which there are no buyback or leasing agreements and for which Sixt bears the residual value risk itself.

The percentage of such vehicles in the electric fleet by the end of February was only around half as high as on March 31 last year. 

The company added: “Electric vehicles will continue to make up part of the Sixt fleet in the future. 

“However, further developments require a high degree of flexibility. 

“The key factor is what customers demand from us. The cost situation also plays a role, as do the changing long-term strategies of car manufacturers, to which Sixt as a car rental company is ultimately a subsequent party.”

The overall fleet expanded to a record size of 169,100 rental vehicles on average, compared to 138,400 in the previous year.

Co-chief executive Alexander Sixt said: “Thanks to our customers’ trust in us and our employees’ excellent work, we were able to once more achieve a record revenue and have obtained the second-best yearly result in our company’s history. We reached our ambitious goals in 2023, both in terms of our business figures and implementation of our strategy. 

“Our earnings are all the more remarkable considering the significant deterioration in market conditions for e-mobility over the course of the year, rising interest rates and continued high levels of investment.”

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