Manheim research has revealed that the Vehicle Excise Duty (VED) supplement on vehicles costing over £40,000 has caught customers unawares.

In the latest dealer sentiment survey conducted by Manheim, 41% of dealers trading applicable vehicles say they’ve lost a deal due to the £310 supplement, introduced in April 2017, putting customers off.

Manheim’s customer insight and strategy director, Philip Nothard, said: “£310 may sound like an inconsequential sum in comparison to the outright cost of a premium used vehicle but it’s apparently enough to be a barrier for some buyers.

"The impact of this is used dealers are having to review how they price and pitch 12-18 month old vehicles that cost over £40k when new, regardless of their value now.”

Almost one in five surveyed say they’ve had to adjust values downwards to compensate for the additional cost. Just 18% report experiencing no impact.

“The issue is coming to the fore as 17 and 67 plate stock is now reaching the used market in significant volumes and it’s likely being amplified by the rising number of buyers opting to fund their used vehicle with a PCP contract,” said Nothard.

“Monthly payments see many buyers stretch themselves to get into a vehicle they once thought unaffordable without factoring in any additional associated costs – and when they suddenly realise they need to find another £310 a year in tax alone, it can be too much to bear.

“With premium brands now accounting for more than a quarter of all new vehicle registrations in the UK, the number of vehicles falling into this VED category is set to increase, and as PCP takes a hold in the used sector, it represents a good growth opportunity for dealers.

"This sentiment suggests they just need to factor VED into their sales conversations to avoid any unwanted surprises.”