Article Type: Insight

Mercedes-Benz moves to agency model for European sales

Mercedes-Benz has struck an agreement with the European Association of Mercedes-Benz Dealers (FEAC) to introduce an agency model in Europe. In what it says is an effort to transform the relationship with its sales partners, the carmaker aims to introduce the agency model gradually in several core markets.

The agency model is already available in Sweden, Austria, South Africa, and India. The company is expecting to launch it in the UK and its home market Germany in 2023. It said this new sales model will focus on the seamless networking of all contact points, giving Mercedes-Benz the chance to engage in direct-to-consumer sales.

Agency models see dealers evolve from stationary sellers to agents that remain the physical touchpoint with the consumer. Under this model, the OEM becomes the retailer and as such the contractual partner. While dealerships remain central to Mercedes-Benz, the carmaker, and not the dealer, will conclude sales contracts with customers.

Meanwhile, dealerships only act as agents, receiving commission for their services. This in turn makes it easier for the manufacturer to bundle online sales and physical sales, with OEMs also being in a position to better control prices.

Mercedes-Benz told Autovista24 that the agency model would allow its contractual partners to focus on their core businesses, while the sales centre would provide more support in carrying out operational activities, such as distribution, invoicing and marketing.

Half of new cars sold under agency model

‘Our concern is that we achieve even stronger customer loyalty to our Mercedes-Benz brand worldwide. We have now reached an important milestone for us and our partners in Europe. The starting point for changing our sales model is the changed behaviour of our customers in a digital world,’ said Britta Seeger, Daimler (Mercedes-Benz is a business unit of Daimler) board member, responsible for sales.

‘The agency model supports us in seamlessly networking all contact points. We have ambitious goals we want to achieve together with our sales partners: by the end of 2023 more than 50% of new Mercedes-Benz vehicles available in Europe should be sold under the agency model.’

More manufacturers are rolling out agency sales models to their dealer networks, adapting to growing demand by customers switching between online and offline channels during the buying process. Last year, all Volkswagen retail partners agreed on a new sales model for the carmaker’s ID. family of battery-electric vehicles (BEVs). More recently, Stellantis confirmed it would start a restructuring of its European dealers’ network that is due to begin in 2023 and will involve its premium brands Alfa Romeo and Lancia.

A study by management consultancy Roland Berger found that agency models can act as a ‘golden mean’ between direct and indirect sales. This would then allow OEMs and dealers to benefit from a more centralised sales model, which altogether could decrease the cost of distribution for manufacturers by 1-2 percentage points in the short-term and up to 10 percentage points in the long-term.

Predictable framework

Mercedes-Benz said its agency model would give customers more freedom to choose, offering them the option to exchange ideas with product experts in the dealership network, while also allowing them to conclude a purchase-contract online. It also gives consumers the opportunity to easily get in touch with sales partners both digitally and physically. Other advantages for customers include increased price transparency and a larger online selection of vehicles.

‘With this agreement we are creating a clear and predictable framework for European sales and, together with the manufacturer, proactively facing changed market conditions in order to continue to stay clearly ahead of the competition as well as to secure the investments and the company value for the agents in the future,’ said Friedrich Lixl, FEAC president.CompaniesRetail

Renault Zoe scores zero stars in latest Euro NCAP testing

The Renault Zoe has become the third car in history to be awarded a zero-star rating by Euro NCAP, following the latest round of safety testing by the organisation.

Renault Group’s Dacia Spring also scored poorly, achieving just one star out of a possible five. Testing saw other carmakers achieve the industry-leading five-star standard for their latest models.

Autovista24 forecasts that the Spanish new-car market will grow by 9% in 2022, to about 930,000 units.

The Renault Zoe was one of the first mainstream mass-produced battery-electric vehicles (BEVs) launched, having gone on sale in 2013. The carmaker offered an upgraded model in 2017. However, some safety elements were removed and this, coupled with increasing standards for Euro NCAP testing in the intervening years, saw the model achieve the unwanted stain on its reputation.

Zero-star

Only Fiat has ever achieved a zero-star rating for a vehicle, doing so twice with the Punto and Panda in 2017 and 2018, respectively. These models had not been updated in several years as the carmaker failed to invest in them, leading Euro NCAP to retest and ascertain just how safe they were compared to modern standards.

The Renault Zoe saw a facelift launched four years ago. However, according to Euro NCAP, at this time, certain safety equipment was downgraded. Specifically, seat-mounted head and thorax side-protection airbags were removed, and thorax-only units were added.

In the frontal offset crash, the results were rated as ‘poor’, specifically due to weak protection for the chest area of the driver-side dummy. But it was Euro NCAP’s severe side-pole test that revealed the most drastic results, with the driver’s head directly impacting the intruding pole.

Thatcham Research, which undertakes testing for Euro NCAP, highlighted that the red body parts seen on the dummy in the image below show a potential threat of serious injury and threat to life in the event of an accident.

Source: Thatcham Research

The test replicates real-world impacts involving a vehicle travelling sideways into rigid roadside objects such as trees or poles. According to Thatcham Research, 33% of these impact types are classified as fatal or serious accidents. As the forces on the car are so localised, the pole can end up deep inside the passenger compartment.

‘It is a serious concern to see results like this in 2021, especially from a carmaker which has previously performed well in Euro NCAP testing,’ said Matthew Avery, Thatcham Research’s chief research strategy officer and Euro NCAP board member. ‘Renault was the first to achieve the full five-star rating in 2001, in part because it was also the first to include a combined head and thorax airbag in the Laguna 2. Although this was a new and revolutionary safety measure at the time, today this airbag is available on most modern cars.

‘Unfortunately, a conscious decision has been made to remove the head protection from this vital passive-safety feature, by the brand that pioneered the use of it. As a result, the safety of occupants within the vehicle has been severely impacted.’

Safety systems

The Renault Zoe also lacks active-safety technology commonly fitted as standard in most new vehicles, such as lane-departure warnings and standard-fit autonomous emergency braking (AEB). This led to a 14% score in the Safety Assist category, 61% lower than the average (75%) achieved by carmakers in the same category this year.

The Dacia Spring fared slightly better with a one-star rating. In its review, Euro NCAP stated: ‘The Spring’s performance in crash tests is downright problematic, with a high risk of life-threatening injuries for the driver’s chest and rear passenger’s head in frontal crash tests and marginal chest protection in a side impact. The mediocre crash performance and poor crash-avoidance technology result in a one-star rating.’

Unlike the Fiat Punto and Panda, the Zoe is unlikely to be pulled from sale due to the zero-star rating. Indeed, Fiat stopped sales of the Punto prior to the results being made public. The Zoe is an important car for Renault, as its leading BEV model and one which is synonymous with electric technology and pioneering spirit at the carmaker.

The Spring, meanwhile, is poised to lead a low-cost BEV attack on the automotive market for Renault Group. It is heavily based on the Chinese-made Renault City K-ZE, itself a derivative of the Renault Kwid, sold in India and Brazil for several years.

‘Renault was once synonymous with safety. The Laguna was the first car to get five stars, back in 2001,’ commented Michiel van Ratingen, president of Euro NCAP. ‘But these disappointing results for the ZOE and the Dacia Spring show that safety has now become collateral damage in the group’s transition to electric cars. Not only do these cars fail to offer any appreciable active safety as standard, but their occupant protection is also worse than any vehicle we have seen in many years. It is cynical to offer the consumer an affordable green car if it comes at the price of higher injury risk in the event of an accident.’

Renault response

In response to an Autovista24 request, Renault stated: ‘We take note of the results published by Euro NCAP following specific tests on Zoe E-Tech Electric according to its new protocol implemented in 2020.

‘First of all, Renault reaffirms that Zoe E-Tech Electric is a safe vehicle, which complies with all regulatory safety standards. These standards are constantly evolving and are becoming more stringent in all domains, especially in safety. Renault therefore continually improves its offer in order to comply with the regulations applicable where its vehicles are sold. Zoe was launched in 2013 and received five stars with the Euro NCAP protocol at that time. The Euro NCAP protocol has, since 2013, undergone five changes. With the same equipment, a model can lose up to two stars in each protocol change.

‘The evolution of the current Zoe was decided in 2017, adapting the passive safety equipment to real accidentology and updating the car with state-of-the-art ADAS equipment such as advanced emergency braking with pedestrian and cyclist detection, lane-departure alert and lane-keeping assist, using a radar and a camera.’

Subtle deterioration in EU new-car markets in November

Autovista24 senior data journalist Neil King discusses how a new wave of COVID-19 cases, along with the appearance of the new Omicron variant, compounded ongoing supply issues and curtailed new-car registrations in key EU markets in November.

New-car registrations in France, Italy, and Spain declined by about 30% in November, compared to 2019. This initially suggests a modest improvement when reviewed against October but, adjusted for working days, the downturns were slightly more severe. The shortage of semiconductors continues to disconnect orders from registrations, but the resurgence of COVID-19 cases and concerns surrounding the new Omicron variant are impacting underlying demand. Accordingly, Autovista24 has revised its forecast for all three markets further downwards.

As registrations across Europe endured troughs because of COVID-19 lockdowns and peaks as pent-up demand was released, year-on-year comparisons with 2020 are incredibly volatile. Therefore, this article focuses on the latest developments compared to 2019, which better represent the true performance of new-car markets.

France 25% down on November average

According to data released by Plateforme Automobile (PFA), the French automotive-industry body, 121,995 new cars were registered in the country in November. This is 25% lower than the average of 163,000 new cars registered in the month between 2010 and 2019. Compared to two years ago, the market contracted by 29.4%, seemingly healthier than the 37.3% decline in October. However, there was an additional working day in November, and two fewer in October, than in 2019. On an adjusted basis, Autovista24 calculates that the market fell by 32.9% last month, compared to the adjusted 31.3% contraction in October.

In addition to rising COVID-19 cases, concerns about the Omicron variant, and the semiconductor shortages, the reduction in French incentives for electrically-chargeable vehicles (EVs) since 1 July has also impacted demand. Consequently, cumulative registrations in the first 11 months of the year were 25.1% lower than in the same period in 2019, subtly down on the 24.7% contraction in the first 10 months. The reduction of electrically-chargeable vehicle (EV) incentives has stabilised the market shares of both plug-in hybrids (PHEVs) and battery-electric vehicles (BEVs), at 8.4% and 9.3%, respectively. A further planned reduction of the incentives from 1 January 2022 has been scrapped, with the subsidies remaining in place until the end of June 2022. However, a €1,000 reduction in the incentives from 1 July 2022 onwards is being considered by the French parliament.

Given the latest developments, Autovista24 has downgraded its forecast to 0.6% year-on-year growth in 2021, following the 25.5% contraction in 2020, to 1.66 million units. This is 25% lower than the volume of cars registered in pre-crisis 2019, although the market is forecast to expand by 8% year on year in 2022.

Incentives exhauated in Italy

In Italy, industry association ANFIA has reported that 104,478 new cars were registered last month. Compared to November 2019, the market contracted by 30.8%, following a 35.7% fall in October. However, as in France, there were two fewer working days in October, and one more in November, than two years ago. On an adjusted basis, Autovista24 calculates that the market declined by 34.1%, more than the adjusted 29.6% contraction in October.

The Ecobonus incentives were resurrected on on 27 October but funding for BEVs and PHEVs ran out after a single day, and were exhausted for low-emissions vehicles on 3 November.

‘In addition to the prolongation of the semiconductor crisis, the total absence, in the current text of the 2022 Budget Law, of measures to address the ecological and energy transition of the sector is of great concern, as no funds have been allocated to support demand or supply,’ commented Paolo Scudieri, president of ANFIA.

The new-car market has further retreated from its cumulative 22.1% decline in the first 10 months of 2021 to a 22.8% contraction through to November. As Italy contends with rising cases of COVID-19 and vehicle supply is not expected to improve, Autovista24 has subtly reduced its forecast for 2021 down to 1.47 million units, equating to year-on-year growth of 6.5%. At this level, the market will be 23% smaller than in 2019. The Italian market is currently forecast to grow 8% year on year in 2022, nudging 1.8 million registrations The pace of the recovery depends on the impact of COVID-19, especially the Omicron variant, and whether purchase incentives are reintroduced.

‘It is essential to provide a structural plan at least over three years and with an adequate budget to avoid that Italy, in this delicate phase in which market policies are fundamental, is the only European country not to support consumers purchasing cars with zero or low emissions,’ Scudieri added. ‘We therefore welcome the presentation by various political forces of amendments to the Budget Law, which propose the refinancing of incentives in support of the demand for cars and light-commercial vehicles with low environmental impact.’

Spain ‘a very depressed market’

A total of 66,399 new cars were registered in Spain during November, according to ANFAC, the Spanish vehicle manufacturers’ association. This is the lowest tally for the month since 2014 and equates to a market contraction of 28.7% compared to two years ago. At first glance, this marks an improvement on the 37.2% downturn in October. However, there was an extra working day in November, and three fewer in October, compared to 2019. On an adjusted basis, the downturn was 32.1% last month, deteriorating from the adjusted 27.7% decline in October.

‘The data for November show that the the trend continues to be downward and even more so when we are comparing it with November of last year, which was a bad month. We do not stop being, therefore, a very depressed market,’ said Raúl Morales, communications director of the Spanish association Faconauto.

The reduction of car-registration taxes in the country since 1 July has been a positive influence for demand, but supply shortages have delayed deliveries. Compared to the first 11 months of 2019, cumulative registrations of new cars are down 32.9% as Spain also contends with rising COVID-19 cases and inflationary pressure.

Year-end positivity

There is some positivity, however, as order intake remains healthy despite the delivery delays and registrations are expected to receive a boost in December because of the planned rise in the vehicle-registration tax from 1 January 2022.

‘What does give rise to hope is that buyers have come to grips with the situation and are going to dealerships to make their purchase, even knowing that it will take longer than usual to receive their new vehicle,’ Morales commented.

Nevertheless, given the limited impact of the July registration-tax cut in Spain and the ongoing economic and supply issues, Autovista24 has revised its forecast for 2021 down to 852,000 units, equating to year-on-year growth of just 0.1%, even after the dramatic 32.4% contraction in 2020.

This aligns with the view of Ganvam's communications director, Tania Puche: ‘The market continues in free fall as a result of the pandemic and the microchip crisis. Everything indicates that it will close the year in the environment of 855,000 units.’

Registrations delayed from this year will naturally bolster the market in 2022, but cars will, rather unfairly, be subject to the higher registration taxes.

‘We estimate that an order book of more than 100,000 units has already been generated and will be converted into registrations next year. These 100,000 clients are going to be harmed by the increase in the registration tax on 1 January, so we insist on the need to extend it, also as a tool to regularise the market situation and move towards a more logical registrations level for our country and to advance the renovation of the parc,’ Morales concluded.

Autovista24 forecasts that the Spanish new-car market will grow by 9% in 2022, to about 930,000 units.

Monthly Market Update: Slowdown in used-car retail activity across Europe in November

The sales-volume index retreated in Europe’s used-car markets in November. However, as demand continues to exceed supply, the usual seasonal downturn in residual values (RVs) of three-year-old models has not materialised. Consequently, Autovista Group has upgraded the RV outlook for European countries, except for a held forecast in France and a modest reduction in Austria.


Autovista Group has recently extended its coverage of used-car markets in the monthly market dashboard to include Austria and Switzerland. It also includes a breakdown of key performance indicators by fuel type, average new-car list prices and sales-volume and active market-volume indices.

The upward trend in the prices of cars with internal-combustion engines (ICE) and hybrid electric vehicles (HEVs) is forecast to continue in 2022, except in the UK. The outlook also points to ongoing RV rises for plug-in hybrid electric vehicles (PHEVs), except in France, Spain, and the UK as they substitute for the lack of ICE cars and HEVs. However, transaction prices of battery-electric vehicles (BEVs) will continue to struggle as the rise in supply, partly because of a high volume of tactical new-car registrations, is not matched by the low demand among private used-car buyers.

Austria supply down 15%, sales up 5%

On average, across all used cars aged two to four years, the supply volume in November was approximately 15% lower than at the beginning of 2020, but sales activity is up 23%, highlights Robert Madas, Eurotax (part of Autovista Group) valuations and insights manager, Austria and Switzerland.

Diesel vehicles are especially missing from the market, with a drop of 25% compared to the start of last year. At the same time, sales activity for diesel cars in September was 5% higher than in January 2020.

Average selling times have increased by 3.6 days compared to October. Petrol cars are selling the fastest, averaging 54.4 days. BEVs are selling the slowest, averaging 75.9 days, and the trend is clearly downward. In addition to the significantly higher supply volumes, the faster technology ageing of BEVs and the attractive subsidies on the new-car market are slowing their sales on the used market.

This market environment has led to a 5.7% year-on-year increase in RVs of 36-month-old cars, to retain 45.4% of their value. HEVs are currently leading with a trade value of 47.6%, followed by petrol cars (46.5%) and plug-in hybrids (46.3%).

Madas assumes that the market parameters will not change in the medium term, so that RVs for three-year-old passenger cars will probably continue to rise this year and next. Only when the new-car market picks up significantly, and thus volumes on the used-car market also increase, are values likely to come under pressure. This will probably not be the case before 2023.

Higher list prices ultimately detrimental to RVs in France

The list-price increases in France in recent months continue to translate into higher RVs in value terms, although value retention as a percentage of list price (RV%) stabilised in November. Because of the semiconductor crisis, OEMs have been regularly increasing list prices on the new-car market, reinforcing the consumer switch from new cars to used cars. Although this is positive from an RV point of view in the short term, it will ultimately be detrimental for RVs, explains Yoann Taitz, Autovista Group’s regional head of valuations and insights, France and Benelux.

The used-car buyer’s budget is not increasing, and because of transaction-price increases, consumers that do not absolutely need to change their car are postponing their purchase. Those that do need a car are looking for older vehicles. The decline in new-car registrations is drying up the used-car market, but when production properly resumes after the end of the semiconductor crisis, OEMs will have to increase discounts to compensate for the higher list prices.

This will have two impacts on RVs, according to Taitz. First, given that a used car cannot be more expensive than a new car, it will lower transaction prices. Second, too high and too frequent discounting is detrimental for RVs and will impact them over a longer period. This vicious circle, stemming from the OEMs’ short-term view of the crisis, is clearly not positive for RVs, and it will be difficult to transform it into a virtuous circle.

Mismatched configurations

There was a subtle increase in stock days in France in November, partly because many configurations offered on the used-car market do not correspond with demand. Some OEMs have stopped selling powerful diesel engines on the new-car market, but they remain sought after on the used market. For example, Peugeot and DS have stopped sales of the 180hp diesel engine and only offer the 130hp unit. This level of output is popular among fleet buyers but less so with private consumers of used cars, who prefer more powerful engines and higher trim lines. This is the premise of the disconnection between the new- and used-car markets, Taitz surmises.

Moreover, because of the semiconductor shortage, OEMs are, in some cases, producing configurations that do not meet with either new- or used-car demand. For example, engines with between 130hp and 160hp coupled with low trims.

High tactical registrations, low BEV demand

The low adoption of BEVs on the used-car market is clear in France, with a 6.3% month-on-month decline in trade RVs in November. Although a few models are bucking this trend, the used BEV market is affected as a whole. Furthermore, tactical registrations of demonstrator models and sales to car-rental companies have reached an average of 23% in 2021, with peaks of 30% in February, June and September. When the tactical share exceeds 10% to 12%, the used-car market is unable to absorb the extra volumes without affecting the RVs of cars aged 12, 18 and 24 months. The greater the impact on these younger cars, the more significant the effect at 36 and 48 months, as a three-year-old car cannot be priced over a two-year-old car.

No supply relief in Germany

More vehicles continue to leave the German used-car market than are replenished by returns. Consequently, the available supply keeps falling and there were 35% fewer used cars available in November than in January 2020. As 2018 was a weak fleet year and the volume of tactical registrations was low in 2020 due to production issues, no relief from increasing inflow is expected for the rest of 2021 and RVs will remain high, which is unusual for the end of a year. Accordingly, stock days are at a historic low, and the gap between the offer prices and sales prices of BEVs, and especially PHEVs, is widening and threatens to collapse in the first quarter of 2022, writes Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

A similar phenomenon can currently be observed for older vehicles. Here, too, the gap between wishful thinking (the offer price) and reality (the transaction price) is widening, but this applies almost exclusively to ICE vehicles. Apart from HEVs, the fastest-selling models in all powertrain types are predominantly from premium brands, presumably due to strong brand loyalty and reduced delivery capacity, Geilenbruegge notes. In fact, the average price increases are somewhat higher than in the market as a whole. The battle for supply will therefore continue, and the trade will be desperately looking for additional sources of used cars in order to participate in the currently highly profitable market. 

Renewed positive momentum in Italy

After a slight slowdown in Italy in October, RVs grew by 3.4% month on month in November and are 8.2% higher than a year ago. This is a sign that the positive momentum in the used-car market has not yet died down, says Marco Pasquetti, forecast and data specialist, Autovista Group Italy.

With an active-market volume index of 105.9 and a sales-volume index of 182.5, compared to January 2020, supply is essentially in line, but demand has almost doubled. It has also increased by 43.6% compared to November 2020. Stock days are also continuing to fall. In November, the average used car sold in less than 52 days, almost five days fewer than last month. The fastest-selling model is the Dacia Sandero, with only three weeks passing between it going on sale and being purchased.

Compared to last month, the average residual value of BEVs is up 5.7%, driven by a sharp increase in sales and reduced supply. The volumes are a long way behind those of traditional ICE models, but this suggests that the second-hand market is starting to follow the growth trend witnessed in the new-car market. However, it still takes 102 days to sell a BEV, about twice as long as a petrol or diesel car. Diesel continues to be the most popular fuel type, with an average RV close to €18,000 for vehicles registered 36 months ago and with 60,000km. PHEVs are essentially stable, with average RV retention of 43.5%. They are moving on from dealerships after about 60 days and are currently the Italian market’s preferred compromise for the transition to BEVs, Pasquetti notes.

Spain running out of steam

The fall in registrations of new cars continues to worsen due to the semiconductor crisis, and it seems unlikely that they will recover until mid-2022. The used-car market, which had been absorbing part of the unfulfilled demand for new cars, is beginning to run out of steam. It has already experienced four months of decline, with increasingly reduced supply, and is very weighted towards old cars (35% are over 15 years old).The level of supply is not forecast to recover until 2023, says Ana Azofra, Autovista Group head of valuations and insights, Spain.

Logically, the lack of supply has led to an upward trend in RVs, which has accelerated in recent months. This has had a very positive impact on ICE cars and, to a lesser extent, on HEVs. This positive impact is clear when analysing the evolution of a model, but the general average of the market is not rising at the same speed or with the same intensity. The quality of the cars being transacted is reducing as there are fewer young used cars, with less vehicles coming from companies.

It is foreseeable that the upward trend in the prices of ICE and hybrid vehicles will continue over the next year. On the other hand, the situation and outlook remain negative for electrically-chargeable vehicles (EVs). List prices remain excessively high in relation to purchasing power and, despite promises, the charging infrastructure has not been able to catch up. This is increasing the gap with other European countries and making it impossible to create a used EV market. Moreover, the volume of used stock has continued to increase, and is about double the pre-pandemic level.

Swiss supply volume down 25%

The Swiss used-car market continues to be defined by stable demand and low supply. On average, across all passenger cars aged two to four years, the supply volume in November was 25% below the level at the beginning of 2020, notes Patrick Schneider, Autovista Group market and model analyst, Switzerland.

Diesel cars are particularly missing on the market, with supply approximately 40% down compared to January 2020. For petrol cars, where there are also significantly fewer offers on the market than at the beginning of 2020 (-18%), and hybrids of all types, market activity is particularly high in relation to available supply. The supply of PHEVS, and especially BEVs, has increased significantly since the beginning of 2020, with PHEV demand exceeding supply. For BEVs, on the other hand, supply and demand are more balanced.

This market environment has led to a further increase in the average RV% of 36-month-old passenger cars, to 44.6% (up 11% compared to November 2020). Petrol cars have posted strong year-on-year gains of 11.5%, to 45.8%, and so too have diesel cars (up 10% to 42.8%).

After a decline in recent months, the average days to sell rose slightly for a short time but are now declining again: a passenger car aged two to four years is currently in stock for 64 days. Petrol cars are selling especially quickly, after an average of 62 days, followed by diesel with 66 days. PHEVs are changing hands five days faster than last month, at around 69 days.

Supply will be decisive in the future development of RVs. As cumulative new-car registrations are markedly lower than before the crisis (down 22.7% compared to 2019), Schneider assumes that market parameters will not change in the medium term. RVs for three-year-old used cars are forecast to continue to rise this year and at the beginning of next, before stabilising over the course of 2022.

UK retail activity slowing

The used-car market in the UK performed staggeringly well from the second quarter of 2021 onwards, with Glass’s values rising for eight consecutive months. However, the market began to change in late October, with auction conversion rates falling sharply as dealers became more selective, which points towards a slowing of retail activity. The average number of days it took a dealer to retail a car in November reflected this change, at 34.8 days, which is 1.4 days longer than in October but still 1.3 fewer than last year, highlights Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

Glass’s expects retail activity to continue slowing in December as the attention of the buying public switches to the festive season. This will result in dealers needing to replenish stock from auction less frequently, and Glass’s values will ease back a little. However, with the average trade value growing 3.8% month on month in November and sitting 35.3% up on a year ago, residual values will still end the year on a high.

The outlook for the first quarter of 2022 remains optimistic, with retail demand returning and continued used-car supply issues. It would be surprising to see used-car values rising next year, as the likelihood is they have already reached their peak. However, Glass’s expects cars to suffer less depreciation than in a typical year, Whittington concludes.

View the November 2021 monthly market dashboard for the latest pricing, volume and stock-days data.

This content is brought to you by Autovista24

Supply issues provoke fierce competition in UK’s pressured used-car market

Used cars are in demand in the UK and Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles, considers this dynamic and its effect on residual values.

Whilst the supply of new cars and supply-chain challenges are major issues in most markets and are expected to continue well into 2022, demand remains strong in the UK. Consumers unwilling to wait for the long lead times necessary to take delivery of a new car are turning to the used-car market instead.

Ordinarily demand would focus on younger used cars in this scenario, however, due to the impact of the pandemic last year, the volume of short-cycle business was severely cut and young used vehicles are in very short supply. Consumers are therefore turning to slightly older cars, increasing demand on a supply of used stock already under pressure.

As a result, UK dealers have to replenish stock regularly, which has led to exceptionally strong auction-hammer prices and conversion rates for several months. In September, 92% of auction stock sold on the first time of asking, underlining just how fierce competition is for used stock and perhaps reflects a shortage of used cars entering auction channels.

As a consequence, used-car values in the UK have risen for the past seven consecutive months. Glass’s average residual value (RV) for a 36-month-old car now sits 25.6% higher than in October last year (see chart).

Glass’s average weighted trade RVs as percentages of original cost new price

Source: Autovista Group’s Residual Values Intelligence

Overall, more than 112,000 fewer cars hit UK roads in September compared to 2020 according to data published by the UK’s Society of Motor Manufacturers and Traders (SMMT). Registrations in the first nine months of 2021 were down 5.9% in the country compared to 2020. Disruption caused by COVID-19 means a more representative comparison is with 2019’s pre-pandemic total, and 2021 is 29.3% lower.

With new-car supply issues anticipated to continue for the rest of the year, Glass’s does not expect an increase in the number of part exchanges and contract hire de-fleets entering the used-car market. Therefore, the incredibly buoyant wholesale market is not expected to end any time soon, and RVs could even carry on rising.

As used-car retail prices increase, the gap between the monthly finance payments of new and used cars narrows, with used cars not looking such a good proposition as they were a year ago. In a normal market, this would result in a slowing of used demand as consumers switch to buying new cars instead. However, due to the supply issues affecting new production, used retail demand will likely remain unchanged.

When demand is so strong, it is difficult to pick out individual vehicle segments or body styles for special mention. Almost everything going into the used-car market is snapped up quickly by dealers, even cars with condition issues. There has, however, been a variance in valuation performance by fuel type, with stand-out growth in a fuel type now fading fast from the new-car market, but remains a firm favourite with used-car buyers.

Diesel power

In the UK’s new-car market there has been a rapid move away from diesel-powered cars in recent years due to a combination of unfavourable taxation for company-car drivers, and negative press in the wake of ‘Dieselgate’. Consequently, fewer diesel cars now enter the used-car market, which is highlighted by Autovista Group’s Monthly Market Dashboard (shown below).

Autovista Group’s Active-Market Index, which measures the volume of active adverts in the market compared to a benchmark set in January 2020, shows that less than 45% of January 2020’s diesel volume was advertised for sale in September 2021, at a time when demand remains strong. 

Monthly market dashboard October 2021, diesel passenger cars

Source: Autovista Group

Although the general used-car market is clearly performing well, this month’s dashboard shows that diesel RVs have increased even more, rising 34.9% compared to October 2020. Underlining the continued popularity of diesel is the average number of days it took a dealer to retail a unit in September, which at 33.1 days was 2.4less than a year ago.

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Monthly Market Update: RVs maintain upward trend in October with switch to used cars

The active market-volume index retreated in most of Europe’s used-car markets in October, with demand outstripping constrained supply. Moreover, consumers are switching to the used-car market in droves as they are unwilling to accept the higher prices and long delivery times of new cars. The increased demand for young used cars is cascading down to older used cars and residual values (RVs) of three-year-old models rose yet again in October. Consequently, the 2021 RV outlook has been upgraded in Austria. France, Italy, and Switzerland.

Autovista Group has recently extended its coverage of used-car markets in the dashboard to include Austria and Switzerland. It also includes a breakdown of key performance indicators by fuel type, average new-car list prices and sales-volume and active market-volume indices.

Even RVs of standard, non-plug-in hybrids (HEVs) and plug-in hybrids (PHEVs) are holding up well, despite the arrival of new players on the used market, as they can substitute for the lack of cars with internal-combustion engines (ICE). However, battery-electric vehicles (BEVs) continue to struggle as the rise in supply, partly because of tactical new-car registrations, is not absorbed by used-car buyers.

Austria supplies 10% below pre-pandemic

Since the beginning of the year, the Austrian used-car market has been characterised by stable demand and continued low supply, explains Robert Madas, Eurotax (part of Autovista Group) valuations and insights manager, Austria and Switzerland.

On average across all passenger cars aged two to four years, the supply volume in October was approximately 10% lower than at the beginning of 2020. Diesel vehicles in particular are missing from the market, with a drop of 18.2% compared to the start of last year. At the same time, sales activity for diesel cars in September was 17.5% higher than in January 2020.

Average days to sell have decreased by 2.1 days compared to September. This is way below the figures from last year: on average, a two-to-four-year-old car is on offer for 55.1 days, down from 62 days a year ago. Diesel cars are selling the fastest, averaging 53 days.

This market environment has led to a further increase in RVs of 36-month-old cars, which have risen by 6.5% year on year to retain 45.6% of their value. HEVs are currently leading with a trade value of 47.4%, followed by petrol cars (46.7%) and PHEVs (46.6%). In contrast, RVs of three-year-old BEVs have declined significantly and currently stand at 37.4% (down 5.1% year on year). The reasons for this, apart from the significantly higher supply volumes, are the faster technology ageing of older BEVs as well as the attractive subsidies on the new-car market.

Madas assumes that the market parameters will not change in the medium term, so that RVs for three-year-old passenger cars will probably continue to rise this year and next. Only when the new-car market picks up significantly, and thus volumes on the used-car market also increase, are values likely to come under pressure. This will probably not be the case before 2023.

Used-car switch in France

RVs have been strongly increasing in France for several weeks because of a transfer of consumers from the new-car market to the used-car market due to delivery delays and a lack of used-car stock, writes Yoann Taitz, Autovista Group’s regional head of valuations and insights, France and Benelux.

When looking at the new-car market, two important points explain why consumers are switching to used cars: the semiconductor crisis has led to extended delivery times, and list prices have been steadily increasing for several months. The price rises are related to the chips shortage, but also new safety (NCAP) and emissions standards, Taitz explains.

When considering the used-car market, there are three key points.

  • Used-car stocks have been drying up since July 2020 because of the measures taken by the French government after the first lockdown
  • There has been a halt in sales to the rental channel since mid-2020 because of the COVID-19 crisis, explaining the recent lack of used cars on the market
  • There has been an extension of leasing contracts for fleet customers since 2020 because of the pandemic, but also due to changes to fuel-type choices, explaining a lack of 36/48 month-old cars.

‘To sum up, the demand increase, coupled with a drop in supply, explains the value increases, or at least stability, for all fuel types except BEVs,’ Taitz highlights.

Electrified vehicles under mounting pressure

Toyota, which has a healthy sales strategy in terms of RV management, was leading the used-car market for a long time in terms of HEV volumes. However, new competitors have arrived on the market in recent months, such as Renault and Hyundai, while Toyota’s volumes have increased too. Hence, the increased supply is leading to lower RVs. Nevertheless, RVs remain high as HEVs are a good alternative to PHEVs in terms of price, especially for consumers who cannot charge their car regularly.

RVs of PHEVs are high too, in line with their list prices. However, PHEVs are sensitive to any increase in volumes. Even if the volumes remain modest, compared to ICE models, they have risen in recent months, explaining the decrease in RVs. There are also many more PHEVs being offered by mainstream brands, explaining the reduction in list prices.

Despite the semiconductor shortages, OEMs are favouring production and sales of BEVs on the new-car market to reduce average fleet emissions. However, the market is still facing difficulties as buyers are not confident in the use of BEVs, which is not helped by their high list prices. Hence lots of BEVs have been sold in tactical channels since the beginning of summer, which is detrimental to RVs. ‘The future level depends on their acceptance in the used-car market and although volumes sold on the new-car market are still very low compared to petrol and diesel cars, they are still far too high given the low used-car demand, explaining the latest monthly decline in values,’ concludes Taitz.

Diesel impacted in Germany

For vehicles of all ages, the available supply and stock days on the German used-car market remain far below average. In the case of three-year-old diesels, the decline is particularly pronounced due to the weak fleet year of 2018, with listings almost halving since the start of the pandemic, explains Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

Both BEVs and PHEVs, on the other hand, are experiencing a volume upswing with a 2% to 4% share of used-car transactions for cars registered new in 2020 and 2021. However, this is a long way from the 10%-14% electrically-chargeable vehicle (EV) share of new-car registrations in those years. The downside of this volume development is reflected in their prices and stock days.

Although PHEVs can be used to substitute for unmet customer demand for ICE vehicles, there is an increasing discrepancy between the transacted and offer prices of older used PHEVs. Dealer price optimism seems to be ‘overheating’ a little and runs the risk of overshooting the mark, whereby consumers will no longer follow this price spiral. Three-year-old petrol cars show a similar spread, albeit much less pronounced, and are still within the normal range, but with a tendency to overpricing.

‘Unless there is a sudden and unexpected collapse in customers’ desire to buy, the year is heading for record turnover in the used-car trade,’ Geilenbruegge says. This is despite the relatively low volume of transactions, with changes of ownership of cars aged less than five years 9% down year on year through September.

Seasonal adjustment in Italy

In October, there was a slight drop in RVs in Italy compared to last month, of just 0.4%. ‘However, it would be wrong to interpret this as a drop in interest in the used car-market or the start of a reversal of the trend that has characterised this year, as it is rather a seasonality effect,’ says Marco Pasquetti, forecast and data specialist, Autovista Group Italy.

Comparing the market’s performance against last year, the average RV is 5.1% higher, sales in the used-car market are up 7.3%, and a car is sold on average after 58.8 days, 5.3 fewer days than a year ago. All five of the fastest-selling models were sold in less than 40 days, a clear sign of a very buoyant used-car market that is benefiting from delays in new-vehicle deliveries.

Looking at the different fuel types, petrol and diesel vehicles are still the best performers, with RVs, after 36 months and 60,000km, retaining 41.2% and 44.9% of list price, respectively.

BEVs are increasing in volume but remain on sale for an average of 114 days before being sold. ‘Their market share is still marginal, and RVs are very low in percentage terms (29.8%) due to the pressure stemming from the strong incentive plan on the new-car market, which, although currently exhausted, is likely to be refinanced,’ comments Pasquetti.

Since the end of September, a bonus is also available for the purchase of used cars with low CO2 emissions. Autovista Group therefore expects a slightly positive impact on the RVs of BEVs, although this is likely to be more visible during 2022.

Upward trend in Spain

Used-car transactions in Spain are higher than in 2020 and performing better than new-car registrations. However, the shortage of product continues to suppress growth and volumes are still below the 2019 level, with a diminishing chance of being able to surpass it this year, says Ana Azofra, Autovista Group head of valuations and insights, Spain.

This shortage of supply is speeding up sales of current stock and is sustaining the upward trend in RVs, the pace of which has accelerated in recent months. On average, a three-year-old used car with 60,000km could be sold in October for approximately €275 more than in September.

But this upward trend is not the same for all fuel types. HEVs, which already started in a strong position, show stability in their average transaction prices, albeit slightly underperforming petrol and diesel cars. Their stock days are generally slightly lower than for ICE models.

Petrol cars saw the greatest improvement in their average prices on the used-car market in October, followed by diesels. With a 40% reduction in the number of diesel models in stock compared to last year, their healthy RVs continue to rise.

At the other end of the scale, the supply of BEVs into the used-car market continues to increase, but with insufficient demand to absorb them. The outlook for these models is worsening as their constraints remain unresolved: high new-car prices, incentive pressures on RVs, and a charging infrastructure that is lagging behind other major European markets.

Swiss supply volume 20% lower

For some time now, the Swiss used-car market has been characterised by stable demand and low supply. On average across all two-to-four-year-old passenger cars, the supply volume in October was 21.3% below the level at the beginning of 2020, notes Madas.

Diesel cars are particularly missing on the market, with supply approximately 37% down compared to the beginning of 2020, whereas the sales volume is at a similar level. For petrol cars, where there are also significantly fewer offers on the market than at the beginning of 2020 (down 15%), and hybrids of all types, market activity is particularly high in relation to available supply.

The supply of PHEVs and especially BEVs has increased significantly since the beginning of 2020. Demand for PHEVs exceeds supply but for BEVs, supply and demand remain balanced.

After a decline in recent months, the average days to sell rose slightly for a short time but are now declining again: a passenger car aged two-to-four years is in stock for 65 days. Petrol cars are selling especially quickly, after an average of 61 days, followed by diesel with 67 days and PHEVs with 78 days.

This market environment has led to a further increase in the average RV percentage of 36-month-old passenger cars, to 44% (+10.1% compared to October 2020). Petrol cars posted strong year-on-year gains of 10.6%, to 45.1%, as too did diesel cars (up 9.1% to 42.1%).

Regarding the future development of RVs, supply will be decisive. As cumulative new-car registrations are markedly lower this year than before the crisis (down 20.4% compared to 2019), Madas assumes that market parameters will not change in the medium term. ‘RVs for three-year-old used cars will probably continue to rise this year, and at the beginning of next year, before stabilising over the course of 2022,’ he concludes.

UK consumers impatient

Although new-car registration volumes in the UK have been severely disrupted by supply-chain challenges, demand remains strong. However, consumers who are unwilling to accept the long lead times necessary to take delivery of a new car are switching to the used-car market, says Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

Ordinarily, transactions of younger used cars demand would increase in this scenario but due to the impact of the pandemic last year, the volume of short-cycle business was significantly reduced and used examples are in very short supply. ‘Consumers are therefore turning to slightly older cars, increasing demand on a supply of used stock that is already under pressure,’ Whittington notes.

Consequently, used-car values in the UK have risen for seven consecutive months, with the average RV of a three-year-old car sitting 25.6% higher than in October last year.

Strong used retail demand continues in the UK, as demonstrated in the average time it took a dealer to retail a unit in October. At 33.8 days, this was 3.6 days faster than last year and over three weeks less than in any other country featured in this report. Dealers are, therefore, needing to replenish stock regularly, underpinning exceptionally strong wholesale activity.

‘Over the last month, 92% of auction stock sold on the first time of asking, underlining how strong current demand is and perhaps reflecting the shortage of used cars entering auction channels,’ Whittington adds.

View the October 2021 monthly market dashboard for the latest pricing, volume and stock-days data.

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Buying and charging electric vehicles takes a step forward in the UK

With each new model launch, the UK’s electrically-chargeable vehicle (EV) market is expanding. Alongside this, both private and fleet purchasers are seeing an increased number of services and infrastructure offerings.

One example of how things are changing is the offering of dedicated online sales platforms focusing solely on EV variants of brand lineups. This is a service offered by the new JustGoEV platform. The site offers up both new and used electrified vehicles, as well as charge-point and services mapping.

There is good news too for the UK’s commercial fleets, as an EDF subsidiary and carmaker Nissan launch a new charging service using vehicle-to-grid (V2G) technology. This means businesses can consume low-carbon energy, make progress towards decarbonisation targets and reduce operating costs.

Electric online

UK consumers looking to buy a mild-hybrid (MHEV), plug-in hybrid (PHEV), or battery-electric vehicle (BEV) online can now do so at JustGoEV.co.uk. The site already hosts over 3,000 EVs through a network of over 6,000 dealers.

‘Our research shows us that the UK EV car parc is expected to top nine million vehicles by 2030 and that already 50% of car buyers are considering an EV of some description as their next purchase, so now is the perfect time to introduce the platform,’ co-founder Jack Woodgate said.

With the sale of new cars and vans powered solely by petrol or diesel coming to an end in the UK by 2030, the uptake of zero-emission transportation is set to grow exponentially. So JustGoEV is positioning itself to ride the incoming wave as consumers research and buy electrified models.

‘The EV tipping point is almost here,’ Woodgate said. ‘In the next three years, we are going to see plug-in and hybrid cars outselling petrol and diesel models, so it makes sense to have a marketplace for them and associated services as the EV market continues its rapid evolution.’

The site should benefit from the recent surge in online buying generated by the lockdown of physical dealerships during COVID-19. Networked dealerships should also prosper as JustGoEV behaves like a portal to their stocks of new and used EVs.

‘Almost eight out of 10 car buyers say they do most of their car-buying research online, so if a consumer is looking to make the leap to an EV, we are offering them a platform that filters out everything irrelevant to them and helps with common ownership hurdles, like installing a home-charge point,’ Woodgate added. ‘Respectively, we are also giving dealers and EV manufacturers a direct means of reaching customers who are in the market for an EV as their next car.’

Fleet-to-grid

The UK’s fleet operators also have cause for greater electric confidence as a new commercial V2G service is announced. Dreev, a joint venture between EDF and Nuvve, is partnering with Nissan to launch the offering. V2G technology, also known as bidirectional charging, allows electricity to flow two ways. EVs can charge their batteries when electricity is at its cheapest, and excess power can then also be sold back to the grid when necessary.

EDF’s V2G offering will include the installation of a two-way connected compact 11kW charger. Dependent on battery model, this unit will be capable of fully charging a Nissan Leaf in roughly three hours and 30 minutes. The package will also come with a dedicated Dreev app, which will outline a vehicle’s energy requirements and track and control charging in real-time.

‘Our hope is that forward-thinking businesses across the country will be persuaded to convert their traditional fleets to electric, providing them with both an environmental and economic advantage in an increasingly crowded market,’ said Philip Valarino, interim head of EV projects at EDF.

The offer is open to fleet owners of the Nissan Leaf and e-NV200 models. The companies predict this technology could save customers around £350 (€410) per charger each year, equating to roughly 9,000 miles (14,484km) of electric driving annually.

‘The Nissan Leaf, with more than half a million units already sold worldwide – is the only model today to allow V2G two-way charging,’ said Andrew Humberstone, managing director at Nissan Motor GB. ‘As such, the Nissan Leaf offers new economic opportunities for businesses that no other electric vehicle does today. We are delighted to be working with EDF on the deployment and democratisation of V2G technology, and in providing yet another reason for transport to electrify.’

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UK could lose existing auto industry without more government support

The UK risks pushing vehicle manufacturing out of the country and into mainland Europe if it does not offer more support in the switch to electrification.

This is the findings of a report published by the House of Lords cross-party science and technology select committee.  The UK’s battery strategy does not align with its ambitions for a net zero future, nor does it take advantage of opportunities for the research and manufacturing sectors. The country could also fall further behind global competitors in battery manufacturing. It was also stated that the UK fails to make the most of its expertise in fuel cells.

‘The government must act now to avoid the risk of the UK not only losing its existing automotive industry but also losing the opportunity for global leadership in fuel cells and next-generation batteries. The government must develop a coherent successor to the industrial strategy and promote its objectives clearly, both domestically and internationally, supported by investments commensurate with those of the UK’s international competitors,’ the report found.

The UK government wants the country to achieve net zero by 2050. A core part of these plans is the end to sales of new petrol and diesel models by 2030 and a zero-carbon vehicle only mandate for 2035. Yet to ensure buyers make the switch, the committee also believes more needs to be done to improve charging infrastructure and promote the safety of electrically-chargeable vehicles (EVs) and hydrogen fuel-cell vehicles (FCEVs).

‘The committee found that the government’s ambition to reach net-zero emissions is not matched by its actions,’ said Lord Patel, chair of the Lords science and technology committee. ‘The government must align its actions and rhetoric to take advantage of the great opportunity presented by batteries and fuel cells for UK research and manufacturing.

Gigafactories needed

The committee started its investigation into the government’s battery strategy around six months ago, calling on experts from multiple industries affected.

It found that there was still a hangover from the Brexit process, which caused years of turmoil for the automotive industry. Even now, the situation has the potential to disrupt the sector, especially with the impending 2027 deadline for a new ‘rules of origin’ mandate.

As part of the Brexit deal, carmakers based in the country must ensure that the EV battery and 55% of a vehicle’s components are manufactured in the EU or the UK. Without support, carmakers could move production into Europe to shorten supply chains for critical parts.

‘Brexit has clearly created some extra challenges, both in terms of the 2027 deadline and in finding a skilled workforce,’ said Baroness Brown of Cambridge, select committee member, told Autovista24. ‘We are seeing big companies, such as Nissan, responding to this in their announcements about battery production.

‘I think we do need the government to be supporting the growth, particularly in battery production, and recognising just the scale of which we need to be increasing our capability or capacity. If we are to retain the volume of car manufacturing and the high number of exports to the European Union that we currently have, support will be crucial. We are expressing our concern that there is not enough thinking and planning about that yet.’

While there has been a series of announcements about establishing gigafactories in the UK, the committee believes more needs to be done, and the government needs to tackle the issue sooner rather than later.

‘The committee on climate change suggested that by the 2030s, half of the UK car parc needs to be electric,’ added Baroness Brown. ‘But that suggests we may need 75 to 100 gigawatts of batteries per year, either for our exports or for the whole fleet. At the moment, we have the announcements of two battery gigafactories. Britishvolt is talking about 10 gigawatt-hours by 2023. But we are going to need perhaps seven times that every year between now and 2030. Hearing about two gigafactories is great, but we need more.’

Battery gigafactories will take time to reach the stage of manufacturing. Giving evidence to the committee, David Wong, senior innovation and technology manager, at the Society of Motor Manufacturers and Traders (SMMT), said: ‘It takes something like 30 to 42 months to get everything off the ground, including development, construction, test runs and, finally, the commissioning of a gigafactory.’

Skills shortage

Brexit has also caused an issue in recruiting skilled workers, and carmakers’ transition to electrification means more needs to be done to train the existing workforce.

Alongside vehicle manufacturing, the UK is home to significant engine building, and the development of other key components. In addition, the servicing, maintenance and repair (SMR) sector needs to be brought up to speed on dealing with EVs.

‘One of our major concerns was that more needs to be done to ensure workers can transition from mechanical to electrical skills,’ added Baroness Brown. ‘We would like to see much more support from the government for the retraining, the upskilling, and indeed for SME industry leads to recruit specialist staff from overseas for manufacturing and research. Ensuring that the revenue visa regime will be entirely supportive of this upskilling and training of people in the UK is a high priority.’

Charging infrastructure

While there are concerns about manufacturing moving overseas, the government’s plans to achieve net zero by 2050 will not come to pass if consumers do not take up the option of a zero-carbon vehicle.

However, while the number of models available has multiplied, the same cannot be said about the UK’s charging infrastructure.

‘The charging infrastructure needs to be there,’ said Baroness Brown. ‘It needs to be simple to use, so you do not need multiple cards or apps in order to make a payment. It needs to be simplified, using standard payment cards.’

There are also issues when it comes to the location and rollout of infrastructure. ‘We need to move away from the fact that currently have areas which are “charging deserts”. In areas like central Cambridge or parts of central London, there is plenty of charging. In other areas, you cannot find a charger for miles,’ added Baroness Brown. ‘So, we need a “rights to charge” mandated for everybody, so that everyone can feel confident that an EV can meet their needs.’

Recommendations offered

The committee was alarmed by the contrast and apparent disconnect between the optimism of ministers about the UK’s prospects and the concerns raised by other witnesses, who fear that the UK is lagging behind its competitors and facing significant challenges with innovation, supply chains and skills. 

To this end, the report makes a number of recommendations to the government and research funders, aimed at protecting the UK’s automotive sector and developing a competitive advantage for fuel-cell and next-generation battery development.

For this, it suggests an increase in funding, allowing the country to leapfrog other areas and lead the way in next-generation technologies. By focusing purely on catching up with current methods, it could fall further behind.

Baroness Brown also stated that while the UK has the Faraday Institution for research and development of batteries, there is no equivalent for fuel cells, which could play an essential role in decarbonising transport. 

Alongside further recommendations for skilled workers and manufacturing support, the committee also suggests an urgent acceleration of the expansion of the public-charging network. This needs to deliver 325,000 charging points by 2032, including rapid chargers in towns and across the strategic road network.

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UK government reveals decarbonisation plan for cars, vans and HGVs

The UK government has published its transport-decarbonisation plan. It lays out a more detailed map for the country’s transport sector as it journeys towards net-zero emissions by 2050. Transport Secretary, Grant Shapps, unveiled the plans in the run-up to the United Nations Climate Change Conference, COP26.

‘Transport is not just how you get around. It is something that fundamentally shapes our towns, cities and countryside, our living standards and our health,’ said Shapps. ‘It can shape all those things for good or for bad. Decarbonisation is not just some technocratic process. It’s about how we make sure that transport shapes quality of life and the economy in ways that are good.’

Plotting a roadmap

Earlier this year, the UK government confirmed it would begin a phased approach to zero-carbon-only registrations beginning in 2030. The new transport-decarbonisation plan not only solidifies, but builds on this roadmap.

By 2030, the sale of new cars and vans powered solely by petrol or diesel will end. By 2035, new vehicles must have no tailpipe emissions at all, ruling out all hybrids equipped with an internal-combustion engine (ICE). All new L-category vehicles will need to emit no tailpipe emissions (subject to consultation) by 2035 too. Then, by 2040, the sale of all non-zero-emission heavy-goods vehicles (HGVs) will come to an end, also subject to consultation.

So, by 2035, the UK could see an end to ICE-powered vehicles weighing from 3.5 to 26 tonnes. From 2040, this looks to extend upward beyond 26 tonnes and could be even earlier if deemed feasible.

Hoping to lead by example, the government brought forward its own target date to transfer its central fleet of 40,000 cars and vans over to zero-emission models by 2027, three years ahead of schedule. It also outlined its response to the smart-charging consultation. This will involve laying down legislation later this year to ensure all new private charge points meet smart-charging standards, which can save consumers money on their energy bills.

‘The transition to EVs is central to government’s net-zero commitment but will also increase demand on the electricity system. Smart charging can help mitigate these impacts,’ Shapps wrote in his statement to Parliament. ‘This legislation will play an important role in driving the uptake of smart technology, which can save consumers money on their energy bills.’

‘Accessible and affordable’

‘The automotive sector welcomes the publication of the transport-decarbonisation plan and associated consultations, which are necessary to create a clear and supportive framework to accelerate the transition to net-zero mobility,’ said the Society of Motor Manufacturers and Traders (SMMT).

It went on to explain that the industry is already delivering a continually-expanding range of electrically-chargeable vehicles (EVs), which are being bought in growing numbers. In fact, nearly 50,000 electrified units were registered last month in the UK, over half the amount of petrol-engine vehicles, gaining a market share of 19.6%.

But the society cautioned that achieving the net-zero target cannot be left solely to the automotive sector. Massive investment is still required in infrastructure development, demand for which is only accelerating. The SMMT points out the need for a plan and ambitious targets to deliver this essential component of electrification. Furthermore, this transition must not risk excluding consumers.

‘The electric revolution must be accessible and affordable for all. The right regulatory framework can give drivers the confidence to switch, and manufacturers the clarity they need to invest,’ the SMMT said. ‘However, the ambitions are incredibly high and the timeline tight, so any regulation must be backed by a package of measures that accelerate market uptake through consumer incentives, as well as an irreversible commitment to the expansion of charging infrastructure and rapid energy decarbonisation, so we’re not putting brown energy into green cars and vans.’

Criticism from haulage industry

While the SMMT was mostly positive, the Road Haulage Association (RHA) criticised the plans for decarbonising the UK’s HGV fleet. It pointed out the plans were too speculative, short in detail, and could be potentially damaging to business. ‘This proposal as it stands is unrealistic,’ said RHA chief executive, Richard Burnett. ‘These alternative HGVs do not yet exist – we do not know when they will and what they will cost.’

He went on to explain that for many haulage companies there are fears around the costs of new vehicles, and a collapse in resale values of existing units. The association explained that while it supports the ambition to decarbonise the UK, there is a need for affordable, inclusive and coherent market-driven policies.


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Glass’s One Minute Market Update – May 2021

With dealerships open again for two months following Lockdown-3, new car activity appears to be strengthening. Year-to-date registration volume now sits 42.5% ahead of last year according to data published by the Society of Motor Manufacturers and Traders (SMMT). Of course, April and May 2020 only produced around 24,500 registrations in total, so it is no great surprise to see such an uplift. Compared to this point in 2019 the market is down by almost 31%, so business has definitely not returned to normal yet.

Some of the shortfall will be due to the time it takes between ordering and delivery, for those consumers who waited to benefit from a physical sales process. Due to this time lag, potentially only a small proportion of cars ordered just after lockdown easing will have been delivered, although stock availability will also be having an effect. As we look ahead to quarter three of 2021, Glass’s expects stock supply issues to intensify, with the widely reported shortage of semiconductors adding to COVID-19 related delays and complications. 

Auction hammer prices were strong throughout May but have strengthened further in June. This will likely lead to unprecedented rises in residual values as Glass’s reflects the spike in wholesale activity. In May the volume of cars that sold on the first time of asking at auction was 85.3%, which is the highest first-time conversion rate since July last year, which was at the height of the bounce-back that followed the end of Lockdown-1.

The strength in the UK wholesale market is underpinned by strong and consistent retail demand. Ordinarily, demand begins to slow in the summer months as consumers focus switches towards holidays. However, May and June’s exceptional activity shows little sign of slowing and could intensify as consumers reflect on the prospect of no overseas holidays this summer, with some choosing to use unexpected disposable income to change their car, which will be welcomed by both new and used car dealers.  

Motorcycle Market Overview June 2021

Motorcycle registrations increase 149.2%

Following a significant bounce-back in registrations during April, data published by the Motorcycle Industry Association (MCIA) shows that registrations grew significantly again in May compared to last year, by 149.2%. However, the UK was in full lockdown last year with dealers closed, therefore significant growth was inevitable. Comparing May 2021 registrations with May 2019s pre-pandemic total, there was still impressive growth of 23.1%. It will be interesting to see how June’s registrations compare to last year, bearing in mind that dealers reopening across the UK in June 2020 following Lockdown-1, with the market experiencing an impressive bounce back.

Engine band highest registrations – May 2021

Power BandModel
0-50ccVmoto SUPER SOCO CPX
51-125ccYamaha NMAX 125
126-650ccRoyal Enfield INTERCEPTOR INT 650
651-1000ccTriumph TRIDENT
Over 1000ccMultiple items

Data courtesy of the MCIA

New Motorcycle Market

Two months have now passed since dealers began reopening across the UK as Lockdown-3 restrictions eased and demand has remained buoyant with little sign of the market slowing down. However, as in recent months, stock supply of new machine remains an issue for many dealers, with deliveries now expected in July, August and September, following original lead times of March, therefore key periods of the season have been missed.

Since its launch, the Triumph Trident has been in strong demand and the Yamaha Tracer 900 GT also proving to be a popular machine. However, as with recent months, demand remains strong across the board.

What can the industry expect moving forward?

With demand showing little sign of slowing down, the outlook is optimistic. However, stock supply is likely to prevent the 2021 season from being as strong as it could have been. Hopefully, stock issues will ease in time for the 2022 season. However, as has been the case since the start of the COVID-19 pandemic, caution is advised as the near future remains uncertain, with potential economic challenges hindering consumer spending.

Used Motorcycle Feedback

The motorcycle market for used machines is showing little sign of slowing down either. Low availability and long lead times for new machines will likely boost used demand even further throughout the summer. Demand is strong across the board with Triumphs and Japanese brands particularly sought after. As has been the trend in recent years, sports machines are the least popular but a market for them still remains.

Some dealers have reported selling in excess of 60 new and used machines (combined) per month, which underlines just how strong current demand is.

Stock

Stock shortages continue to be the main challenge for the industry with little sign that will improve anytime soon. Long lead times for new machines are delaying part-exchanges and while some dealers took some in early, they have now sold. As a result, competition within auction channels remains very high, with strong hammer prices.

Riding Conditions

May was a cool and wet month, with late spring sunshine in short supply. However, the weather in the early weeks of June has vastly improved with largely warm and sunny days, making for fine riding conditions once again as summer solstice nears.

Taking into consideration ongoing strong market activity and stock shortages, values have been moderately increased across most sectors in Glass’s July edition, except where trade feedback or evidence from the marketplace indicated models required specific adjustments.

New Car Market Update May 2021

Following COVID-19 restriction easing, the recovery of the UK new car market continued in May. Indeed, May was the first full month that dealerships were allowed to open to physical customers this year. This, combined with the release of pent-up demand and improving business confidence boosted by the vaccination rollout, led to the market achieving 156,737 new car registrations in May according to data released by the Society of Motor Manufacturers and Traders (SMMT).

This was nearly eight times greater than May last year when the first lockdown was in full effect. A better comparison is against May 2019s pre-pandemic total, which shows a reduction of 14.7%, which on face value is not so positive but there were two fewer working days this year.

Once again, the Fleet market led the way with stronger growth than Retail. As business confidence returns, lease contracts that had previously been extended are now ending, and company cars are being replaced. Also, the switch to low and zero CO2 emitting company cars continues at pace, as drivers look to benefit from attractive benefit-in-kind taxation by switching to battery electric vehicles (BEVs) and plug-in hybrids (PHEVs).  

New car market sector split YTD graph May 2021

                                                                        Data courtesy of SMMT

As the chart above shows, the fleet market has outperformed the other two sectors year to date.

The BEV market share declined from 12.0% a year ago to 8.4% in May, but this is due to the very low registrations and quirky nature of what was delivered last year. In reality, year-to-date market shares of hybrid and electrically chargeable vehicles continue to rise in the UK. In the first five months of the year, the petrol share of the market, including mild-hybrids was 60.4%, while diesel accounted for just 18% of all registrations so far. The combined share of hybrids and BEVs now exceeds the diesel share at 21.7%.

New car registrations fuel split graph May 2021

                                                                        Data courtesy of SMMT

Outlook

Looking ahead to activity in June, Glass’s expects another positive new car registration total, despite some headwinds in the supply chain.  The further easing of lockdown restrictions will boost business and consumer confidence further. Also, with foreign holidays looking unlikely this summer, some consumers will have accrued extra disposable income over the last year which may filter into new car purchases, especially considering that the used car market has seen unprecedented price rises over the last three months, narrowing the price walk to a new car.

New Light Commercial Vehicle (LCV) Market Update – May 2021

A strong market for both new and used LCVs

May 2021 was another record-setting month for light commercial vehicle registrations with 29,354 new vehicles appearing on UK roads for the first time. This was the best May performance on record.

Registrations were up 289.3% versus the lockdown impacted May 2020 and up 4.7% on pre-pandemic levels. The main drivers for this level of LCV demand are from increasing home delivery vehicles and essential service delivery vehicles.

Breaking down the results highlighted huge increases for all sectors. Demand for vans under 2.0 tonnes rose by 384.2% whilst registrations in the between 2.0-2.5 tonne and 2.5-3.5 tonne sector improved by 294.7% and 263.8% respectively. The Pickup sector also recorded a 381.8% increase.

Ford secured a strong month with four of its product ranges in the top ten. The Ford Transit Custom was crowned best-selling van in the UK in May, with its big brother, the Ford Transit in second place. The Ford Ranger and Ford Transit Connect were in 7th and 8th place respectively. The Stellantis Group also returned a positive month with the Vauxhall Vivaro, Citroen Berlingo and Peugeot Partner all positioned in the top ten.

Year to date growth has witnessed demand across all vehicle sectors, with registrations 99.3% higher than the same point last year. A total of 157,150 registrations reflects a market that is 4.0% up on the pre-pandemic five-year average. Year-to-date, Ford dominates the top ten registration results, with the Transit Custom, Transit, Transit Connect and Ranger making up over 50% of the total registrations.

Top five LCV registrations

Top LCV registrations table may 2021

The effects of the pandemic continue to distress the automotive industry. Further lockdowns and COVID restrictions in many European countries, continue to affect vehicle producing nations and the wider supply chain. Ongoing semi-conductor, steel, rubber and even wood shortages continue to compound the situation. With this fragile supply chain expected to last into 2022, there is still some way to go before the industry returns to normal. The last year has proved that the commercial vehicle sector is resilient to the changing world. However, with the LCV parc now at 4.6 million, the Government needs to incentivise fleets to make the switch away from diesel and into electric and hydrogen vehicles.

May used Light Commercial Vehicle (LCV) overview

Driven by increasing demand for retail-ready LCVs, May has seen the used market remain strong, with first-time conversion rates increasing 1.1% to 87.4%. The limited numbers of sub-2-year old stock in May continues to drive trade buyers and franchised dealer groups to pursue the best examples, ensuring prices have remained strong.

Although remaining strong, the average all-age sales price was down £350 versus April and at its lowest since January this year. With the SMMT reporting another strong new registration month in May, there is hope that vehicle de-fleets will start to find their way into the wholesale market. Although this will improve the supply of stock into the used market, there are still delays for new vehicles entering the UK. As a result, used prices look set to remain high for the remainder of the year.

May in detail

Glass’s auction data shows the overall number of vehicle sales in May decreased by 1.76% versus April 2021, but recorded a 218.2% increase over twelve months ago.

Average sales prices paid in May decreased by 3.77% versus April but remain 23.27% higher than the same point last year. The average age of sold stock increased from 69.0 months in April to 75.3 months in May and is 15.9 months older than the same point last year.

Average mileages have reduced month on month, falling from 81,487 miles in April to 78,819 miles in May (-3.28%). The latest average mileage is 13,061 miles (+16.58%) higher than in May 2020. Glass’s continues to monitor the LCV market closely and has an open dialogue with auction houses, manufacturers, leasing and rental companies, independent traders and dealers as well as the main industry bodies. This information, combined with the wealth of knowledge in our CV team ensures Glass’s valuations remain relevant in the marketplace.

Originally written for Commercial Fleet.

VW Group and JLR face fines for exceeding 2020 EU emissions targets

Autovista Group senior data journalist Neil King investigates the emissions performance of major carmakers in the EU in 2020. Having considered pooling to hit targets, and OEMs that managed without pooling, King focuses on two manufacturers that did not meet their respective targets – Volkswagen Group (VW) and Jaguar Land Rover (JLR).

The subject of CO2 emissions has been a tricky one for carmakers to navigate, especially since the collapse of the diesel market. With consumers starting to mistrust the technology as awareness of nitrogen-oxide (NOx) output became commonplace, many switched to petrol models.

However, this switch intensified the growth in CO2 emissions across carmakers’ fleets. With targets for 2020 and 2021 set by the European Parliament in 2009, manufacturers had relied on diesel to keep levels down. With the switch in market trends, many rushed to develop electrified models to reduce their emissions. Unfortunately, not all were successful, with VW and JLR missing their individual targets last year.

Both carmakers have stepped up their electrified offerings in recent years, but the uptake of these models was not fast-paced enough to offset their CO2 levels. They did, however, see a reduction in their overall emissions in 2020. The OEMs are confident that with continued uptake of low- and zero-emission models throughout 2021, targets will be met by the end of the year.

The EU regulations state that an industry average of 95g/km of CO2 must be met across carmakers’ new-car fleets sold in both 2020 and 2021. Each carmaker has an individual target. Should this be exceeded, fines are issued – €95 per 1g/km over the target, multiplied by the number of cars sold in 2020 and 2021. Last year acted as a transitional period, with the top 5% of polluting cars in the fleet not counting towards the manufacturer’s figures.

Some decided to pool their fleets and spread the average CO2 across a larger vehicle base. Others went alone, preferring to rely on their own methods to reduce emissions.

Just missing out

Autovista Group analysis in February 2020 uncovered that VW faced the largest fine of all carmakers if it did not reduce its fleet-average emissions from new cars. However, the company successfully cut its emissions by about 20% to 99.8g/km in 2020, exceeding its target by just 0.5g/km. The group pooled its emissions with Chinese manufacturer SAIC and its European subsidiary, MG Motor. Based on 2.5 million new-car registrations in the EU in 2020, Autovista Group calculates that the German carmaker faces a fine of about €115 million.

‘We are making good progress on the road to becoming a CO2-neutral company. We significantly reduced the CO2 emissions of our new-vehicle fleet in the EU. The Volkswagen and Audi brands, in particular, have made a major contribution to achieving this with their e-offensive. We narrowly missed the fleet target for 2020, thwarted by the COVID-19 pandemic. Along with Volkswagen Passenger Cars and Audi, Cupra and Škoda are now bringing out further attractive electric models. This will allow us to achieve our fleet target this year,’ commented Herbert Diess, CEO of the Volkswagen Group.

VW launched its first mass-produced battery-electric vehicle (BEV), the ID.3, last year. This has been followed by the ID.4 SUV model, while Audi has the e-Tron and Porsche the Taycan. Skoda and SEAT are also bringing BEVs to market, and this increase in models will likely help offset the small amount that the OEM needs to meet targets.

Plans in place

Despite a 15% improvement in its new-car fleet emissions compared to 2019, to 134g CO2/km, JLR also exceeded its EU target in 2020. ‘Despite the impact of COVID-19, we ended the year only 2g/km (1.5%) above our target,’ the company said in an emailed statement. As the COVID-19 pandemic reduced JLR’s EU new-car registrations tally to below 70,000 units in 2020, Autovista Group calculates the company faces a fine of only €12.6 million.

‘Jaguar Land Rover has a growing portfolio of electrified vehicles, embracing fully electric, plug-in hybrid (PHEV) and mild-hybrid (MHEV) vehicles. Following the significant expansion over the year, electrified options now extend to 12 models across the Jaguar and Land Rover portfolios, with PHEVs available on eight vehicle lines and MHEV on 11, as well as the all-electric Jaguar I-Pace,’ the carmaker added.

JLR also highlighted that the electrification of both the Land Rover and Jaguar brands is central to the company’s ‘Reimagine’ strategy, launched in February 2021, with all Jaguar and Land Rover nameplates available in pure electric form by 2030. ‘By this time, 100% of Jaguar sales, and around 60% of Land Rovers sold will be equipped with zero-tailpipe powertrains.’ 

‘Jaguar will be reimagined as an all-electric luxury brand from 2025 with all models built exclusively on a pure electric architecture, whilst in the next five years, Land Rover will welcome six pure electric variants, the first of which will arrive in 2024. We have also set a target to become a net-zero carbon business across our supply chain, products and operations by 2039,’ JLR explained. 

JLR’s initiatives are replicated across the automotive industry, with manufacturers striving for a more sustainable future for vehicles and their supply chain, manufacturing, and distribution.

In the first part of this series, King focused on manufacturers that successfully pooled their emissions with smaller manufacturers to meet their respective targets. In a second part, King considered manufacturers that successfully met their respective targets without pooling emissions.

Pent-up demand and improved confidence drive UK’s new-car recovery

New-car registrations in the UK continue to improve when set against pre-COVID levels. Autovista Group senior data journalist Neil King explores the figures and factors in the true values, with working days accounted for.

The recovery of the UK new-car market continued in May, with dealerships allowed to reopen for the whole month for the first time this year, following the easing of COVID-19 restrictions. The release of pent-up demand and improving business confidence, buoyed by the vaccination rollout and a comparatively low infection rate, are driving the market.

In total, 156,737 new cars were registered in the UK in May, according to data released by the Society of Motor Manufacturers and Traders (SMMT). As dealer activity was limited during the month last year, resulting in an almost eightfold increase, a comparison with pre-crisis 2019 provides a clearer picture of the market’s recovery.

At first glance, the 14.7% contraction versus 2019 is greater than the 12.1% decline in April. However, there were two fewer working days in the month than in May 2019. On an adjusted basis, Autovista Group calculates that the market declined by just 5.7% – an improvement on April. Furthermore, even with only 19 working days, the seasonally-adjusted annualised rate (SAAR) increased from 2.04 million units in April to 2.07 million last month – the highest level since August 2020.

‘With dealerships back open and a brighter, sunnier, economic outlook, May’s registrations are as good as could reasonably be expected. Increased business confidence is driving the recovery, something that needs to be maintained and translated in private-consumer demand as the economy emerges from pandemic support measures,’ commented Mike Hawes, SMMT chief executive.

Forecast on track

The May figure aligns with Autovista Group’s expectations for the market and has improved the year-to-date comparison with 2019, albeit down 34.2%. The ongoing release of pent-up demand will continue to support the recovery in the short term – especially in June, as there are two more working days than last year. However, the positive effect of pent-up demand translating into registrations will disappear and there are concerns about the recovery of private demand, as Hawes alluded to.

Autovista Group has maintained its base-case forecast, which was upgraded last month to 1.89 million units, equating to 16% year-on-year growth in new-car registrations in 2021. Similarly, the SMMT noted that ‘uptake was in line with the most recent industry outlook.’

Nevertheless, this is still 18.1% lower than the market achieved in 2019. There are also downside risks such as increased COVID-19 infection rates because of the Delta (formerly Indian) variant, which may yet result in the imposition of further local, if not national, restrictions. Similarly, the base-case forecast assumes deliveries of new cars will not be significantly impaired by semiconductor shortages and/or post-Brexit border delays.

EV encouragement

The market shares of hybrid and electrically-chargeable vehicles (EVs) continue to rise in the UK, to the detriment of internal combustion engines (ICE). In the first five months of the year, the petrol share of the market, including mild-hybrids, was just above 60%, and diesels accounted for only 18% of all registrations.

The combined share of hybrids and EVs, 21.7%, already exceeds the diesel share. So far this year. hybrids accounted for the majority of electrified registrations, with 7.8%, but were surpassed by battery-electric vehicles (BEVs) in May.

With changes to the UK’s plug-in car grant, the SMMT recently lowered its expectations for the adoption of BEVs. They are now projected to make up 8.9% of registrations by the end of the year, down from 9.3% forecast in January. With plug-in hybrids (PHEVs) expected to claim 6.3% of the market, the SMMT expects EVs to comprise 15.2% of all cars registered in 2021.

‘Demand for electrified vehicles is helping encourage people into showrooms, but for these technologies to surpass their fossil-fuelled equivalents, a long-term strategy for market transition and infrastructure investment is required,’ said Hawes.

Podcast: Has the automotive industry become driven by regulations?

Are regulations responsible for the fast pace of changes seen across the automotive market? Join Christof Engelskirchen, Autovista Group’s chief economist, Phil Curry, Daily Brief editor and journalist Tom Geggus in the latest Autovista Group Podcast to find out.

https://soundcloud.com/autovistagroup/has-the-automotive-industry-become-driven-by-regulations

You can listen and subscribe to receive podcasts direct to your mobile device, or browse through previous episodes, on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Show notes

Carmakers successfully pooled emissions to meet 2020 EU targets

Hitting the target: Lone carmakers that successfully reduced their emissions

Swedish ICE ban would not drastically aid climate targets

Is the automotive industry waking up to hydrogen’s potential?

Are EVs as green as they seem?

Germany paves the way for adoption of autonomous vehicles

Podcast: Should Automated Lane-Keeping Systems be labelled ‘self-driving’?

The Strength of the LCV Market

The Strength of the LCV Market

As supply challenges in the new market continue to disrupt the used LCV sector and drive prices up, Chief Commercial Vehicle Editor, Andy Picton reflects on the new and used Light Commercial Vehicle (LCV) market over the last twelve months and forecasts the likely effects on residual values over the next twelve.

New Market

SMMT data revealed that the 30,440 April registration total is 27,053 units more than in April 2020, the first full lockdown month of the COVID-19 pandemic. This growth was largely driven by demand in the 2.5-3.5-tonne sector, where registrations in the first four months have nearly doubled those in the same period in 2020. The current market paints a misleading and overly optimistic picture. Firstly, many of the registrations attributed to the first quarter of this year were orders placed during the second half of last year. Secondly, the latest registration figures were set against a backdrop of the first full month of the pandemic, when most registration activities stopped due to coronavirus lockdowns.

The production lines are now back up and running, but the new vehicle sector continues to face obstacles. Raw material and semi-conductor shortages are leading to production and logistical challenges. Further delays due to COVID compliant working practices have affected both manufacturers and vehicle convertors. Delivery times for many vehicles are already pushing into 2022, making the SMMT’s April revised registration forecast of 369,000 optimistic. As a result of the delayed deliveries, fleet registrations are likely to reduce as operators keep existing vehicles, choosing to run them for longer until these issues are resolved. This inevitably means a reduction in used vehicle supply.

Used Market

April has seen the used market in resilient form with prices remaining strong with high first-time conversion rates for anything that is retail-ready.

With limited volumes of sub-2-year old stock, buyers are continuing to haggle over the best examples. A lack of new stock and manufacturer-supplied late-year stock is forcing franchised dealer groups into the wholesale market in search of retail-ready examples.

It is expected that there will be disruption in the wholesale market for another 12-18 months. The new market challenges continue to have a huge impact on the supply of stock to the used market. De-fleet programmes are being delayed, reducing the level of used stock available and some vendors have already started to cancel regular auction sales due to the stock situation.

During April, only 4% of all stock sold was in the sub-2-year old age bracket, 28% was in the 2 to 4-year-old age bracket, whilst vehicles over six years old contributed to 39% of all sales. Medium-sized vans proved the most popular during April with 38.9% of all sales, small vans followed with 28.8% and large vans were third with 23.4%.

Overall used market strength

A lot has happened in the LCV sector since the beginning of 2020. Looking back to 2019 gives a better indication of how the market as a whole has strengthened. In April 2019, the used LCV market was steady, with Glass’s data revealing that more than 9,000 units had been sold at auction. The average selling price across all sectors and all ages was just over 29.4% of the list price and the average age was 68.6 months. The average mileage was 75,735 and first-time conversion rates stood at a reasonable 78.2%.

Fast forward twelve months to the first full month of lockdown. Less than 600 units sold, at an average of 25.6% of the list price. The average age had increased to 71.1 months and the average mileage had increased to 79,282. First-time conversion rates had understandably crashed to 2.3%.

Now in April 2021, the demand for vans is easily exceeding 2019 levels. The increase in home delivery shopping during the pandemic, along with the supply of essential equipment is resulting in a surge in demand. A lack of new stock availability and increasing buyer engagement in the wholesale market has seen nearly 3,500 more vans sold in April 2021 than in April 2019 as demand spirals. Average sale prices have increased by over £3,000 in this time, now equating to 39.7% of list price. Although the average age has increased to 73.2 months, the average mileage has reduced slightly to 78,782. First-time conversion rates have jumped to 84.6% and the average days on-site for each vehicle has dropped from 41.2 days last year to an impressive 10.1 days now, proving that everything is selling quickly.

Euro 6 and Pre-Euro 6 split

Looking at the same 2019-2021 period but splitting those units sold between Euro 6 and pre-Euro 6, reveals the current strength in the market and the increasing demand for later plate stock. The average Euro 6 sale price has risen from 42.3% to 56.2% of list price, whilst the average age has increased by 1.2 months to 33 months. Average mileage has decreased from 46,716 to 40,425, whilst first-time conversions have gone up from 80.0% to 85.1%.

Pre-Euro 6 stock performance was equally as impressive but is now showing signs of levelling off. Average prices have risen from 22.8% of list price to 33.5% and first-time conversions from 77.3% to 84.3%, although the average age has increased from 86.4 months to 90.9 months and average mileage has increased from 89,796 to 95,311 miles.

By sector

As the April data for 2019 and 2021 demonstrates, every sector has recorded higher volumes of vehicles sold. Alongside this, the average age has increased and except for 4×4 Pick-ups, the average mileage has also increased. The strength of the market and demand for the stock is borne out by the level of the price increase and relative list price percentage and the first time conversion rate across each sector.

April 2019 – April 2021Small VansMedium vansLarge vans4×4 Pick-ups
Approx Sold Volumes2,700 – 3,5003,150 – 5,0002,050 – 2,5001,200 – 1,800
Sale Price Increase£1,700£3,350£3,700£3,500
% of List Price26.0% – 34.8%29.8% – 41.8%23.3% – 34.7%43.2% – 50.7%
Average Age (months)68.3 – 76.867.6 – 73.070.6 – 70.765.8 – 67.6
Average Mileage (miles)70,588 – 73,81177,729 – 81,26886,370 – 91,69663,969 – 63,631
First-Time Conversion78.8% – 88.1%81.0% – 84.4%79.5% – 82.1%69.3% – 81.8%

Residual Values

With lead times for new vans being extended, operators have little choice but to run their current fleets for longer. As a result, fewer Euro 6 vehicles will be entering the wholesale market this year forcing used prices up further.

Where previously, there was a distinct two-tier wholesale market of Euro 6 and pre-Euro 6 stock, these lines are becoming blurred. Throughout 2021, values for pre-Euro 6 stock are expected to rise for certain models as some buyers are priced out of the Euro 6 market, forced to replenish stock with slightly older or cheaper vehicles.

Used van inflation is now baked into the market with no price realignment expected in the medium term. Until the supply of new LCVs becomes more predictable, the current restrictions linked to fleet renewal and the part-exchange of used vans will continue to cause supply issues in the wholesale market.

Glass’s continues to monitor the LCV market closely and has an open dialogue with auction houses, manufacturers, leasing and rental companies, independent traders and dealers as well as the main industry bodies. This information, combined with the wealth of knowledge in our CV team ensures Glass’s valuations remain relevant in the marketplace in these uncertain times.

Launch Report: Skoda Enyaq offers quality and range at competitive prices

The new Enyaq benefits from Skoda’s well-perceived brand image, representing high quality at competitive prices. As a mixture between a SUV and an estate car, it is an attractive vehicle concept for families, with a comparatively high boot volume of 585 litres and a long range of over 500 kilometres/300 miles with the higher-capacity battery. The Enyaq also has a small turning circle – even better than its Volkswagen ID.4 sibling – meaning it is very well suited for inner-city use.

The interior has a clean and appealing dashboard with a 13-inch touchscreen, and is spacious, with practical storage compartments. Options like rear blinds, electric boot opening, electric seats with massage and memory functions, and a panoramic roof are available on all versions.

The entry-level model is offered at a very competitive price, especially compared to Korean rivals with less powerful engines. An ‘RS’ version is coming later this year, with higher power output and a more dynamic exterior, which will attract sportier drivers. At least for a while, the Enyaq will be in high demand as one of the best-value models in its class.

Click here or on the image above to read Autovista Group’s benchmarking of the Skoda Enyaq in Germany, Spain, and the UK. The interactive launch report presents new prices, forecast RVs and SWOT (strengths, weaknesses, opportunities and threats) analysis.

Hitting the target: Lone carmakers that successfully reduced their emissions

In the second part of a three-part series on meeting CO2 emissions targets, Autovista Group senior data journalist Neil, King considers the manufacturers that successfully met their respective targets without pooling emissions.

Last year was the first step for carmakers to meet strict CO2 emissions targets. Many decided to pool with other carmakers to spread their emissions over a larger fleet size. However, several carmakers chose to go it alone.

While some may have been confident in their own fleet-average emissions, there may have been other reasons behind the decision for a few carmakers. One may have been control, having no external influence on their own numbers. Another may have been down to cost.

Pooling with other manufacturers may ensure meeting the target, but requires a financial contribution to ‘partner’ companies. This financial contribution would be a waste of finances if carmakers believe they can meet their targets alone. Looking back at those who pooled, many who instigated discussions were forced into lowering their potentially fine-inducing emissions. Others were so confident they looked to help those that were struggling.

So, to recap, from 2021, the average emissions target for new cars registered in the EU is set at 95g/km CO2. For every 1g/km of CO2 a manufacturer exceeds its average emissions target by, it is fined €95, multiplied by its volume of new-car registrations in the preceding year. However, the highest-polluting 5% of new cars registered in 2020 are excluded from the 2021 fines calculations, which serves as a transitional phase for carmakers.

While carmakers do not publicise their thoughts about pooling, two that could have considered control and finances would be Daimler and BMW. Both met their respective emissions targets independently, and had financial concerns leading up to the deadline for emissions targets.

BMW beats target

BMW had set aside around €1 billion in 2019 to pay off an expected fine for its alleged part in an emissions cartel. However, the carmaker beat its 104g/km CO2 target by 5g in 2020, reducing its new-vehicle fleet emissions by 22% compared to 2019.

‘Despite the coronavirus pandemic, we delivered about a third more electrified BMW and Mini vehicles to customers than the previous year. Our plug-in hybrids were highly sought-after, as were our new fully-electric models, the BMW iX3 and Mini Cooper SE. Because we started our preparations early, we were able to significantly overfulfil our assigned CO2 limit by about 5g/km. This was never in any doubt for us. Our EU fleet emissions are currently at 99g/km, and we will also meet the 2021 requirements,’ the company stated.

A manufacturer that had a well-documented financial slide throughout 2019 and 2020 was Daimler. Therefore, going it alone made sense, maintaining control of its figures and finances – however, it was also a risk. In 2019, Daimler reported average CO2 emissions of 137g/km, way above its individual target. It reported meeting its fleet-average emissions target of 104g/km, reducing output year-on-year by 24%.

‘On the basis of WLTP, we expect our fleet average in Europe (European Union, Norway and Iceland) to decrease again significantly in 2021 compared with the figures for the previous year. This development will be driven in particular by the rising proportion of battery-electric vehicle models and plug-in hybrids in our new-car fleet,’ the company commented.

The fact that both BMW and Daimler met their targets also shows the level of commitment the carmakers put into reducing their CO2 levels. German manufacturers heavily relied on developing diesel technology in the early part of this century, relying on them to meet CO2 emissions checks. Yet the collapse of the diesel market since 2016 has meant German companies in particular have needed to speed up the rollout of hybrid (HEV), plug-in hybrid (PHEV) and battery-electric vehicles (BEVs).

Stellantis

In the first part of this series, Autovista Group noted that Fiat Chrysler Automobiles (FCA) had pooled with Tesla and successfully reduced its emissions below its individual target. Last year’s figures do not take into account the merger between PSA Group and FCA to create Stellantis. Therefore, the French partner relied solely on figures from its Peugeot, Citroen, Opel/Vauxhall and DS marques.

PSA Group did open a pool, but it only featured those brands owned by the group. Final figures were not available, but the company clarified that it had met its targets for 2020.

‘Groupe PSA remained focused on CO2 performance and met European targets in 2020, in line with prior commitments. It complied with its CO2 objectives both on the optimisation of ranges in terms of internal combustion engine (ICE) emissions and on the growth of LEV [light-electric vehicle] sales volumes (a significant increase with 120,000 registrations in 2020),’ according to the group’s financial report for 2020 (page F-48).

PSA Group’s figures will be reported alongside FCA’s in 2021, as part of the new Stellantis business. This is also likely to affect the pool FCA runs with Tesla and Honda. The Italian side of the new business may not need to rely on the zero-emission specialist carmaker to meet its targets, which would create a dent in Tesla’s finances for this year. CEO of the new manufacturing group, Carlos Tavares, has been reported to have already terminated the agreement with Tesla.

Koreans go it alone

Korean carmakers Hyundai and Kia also managed to meet their respective emissions targets on their own in 2020, with no concern voiced in the lead-up to the deadline. ‘Hyundai’s strategy towards zero-emission mobility and the high proportion of ZEVs [zero-emission vehicles] among its new-car sales were key factors enabling the company to meet its CO2 target,’ the company stated in January.

As for Kia, significant growth in demand for hybrid and electric vehicles helped the brand reduce its emissions. Electrified powertrains accounted for one in four sales in Europe last year.

‘Throughout the pandemic, we were able to continue launching new and upgraded vehicles, and continued to electrify more of our product line-up to meet growing consumer demand for advanced powertrains,’ commented Won-Jeong (Jason) Jeong, president of Kia Europe.

The work for all these carmakers is far from over. Not only do they need to ensure their full fleets meet targets by the end of 2021, but they also need to consider stricter reductions in CO2 emissions for 2025 and 2030. This is one significant reason why the number of electrically-chargeable vehicles (EVs) being manufactured is on the rise. The speed at which they need to roll out these low and zero-emission vehicles will become clearer once the final 2021 numbers are revealed.

In the first part of this series, King focused on manufacturers that successfully pooled their emissions with smaller manufacturers to meet their respective targets. The final part will look at those who missed their targets in 2020 and how they plan to meet them by the end of this year.

Monthly Market Dashboard: RVs fall in France, Germany and Italy in May

Senior data journalist Neil King considers the analytics of Autovista Group’s latest interactive monthly market dashboard (MMD).

Average residual values (RVs), in trade-price terms, fell in France, Germany and Italy in May, compared to April. The figures only rose by a modest 1% in Spain, while average prices were 4.1% higher in the UK than last month. RVs still remain above the levels of a year ago in all markets, as consumers continue to seek out safe alternatives to public transport, and new-car markets are adversely affected by struggling economies and the shortage of semiconductors. The year-on-year increases range from just 0.2% in Spain to 14% in the UK.

The average value retention, represented in RV-percentage (RV%) terms, of cars aged 36 months and with 60,000km, improved month on month in all markets except Italy in May. However, the RV% growth was minimal, with even the UK only increasing by 0.6%, to 47%. Compared to last year, the RV% remains higher in all markets, ranging from 1.1% growth in Germany to 3.9% in Italy.

Slower rehoming in France and Italy

In addition to the RV fall in France and Italy, three-year-old cars have been slower to sell in May than April. The greatest rise in the number of stock days was in France, where used cars are taking 54.1 days on average to find a new home, 3.2% longer than last month. However, stock days fell month on month in the UK and Spain, by 3.5% and 3.8% respectively. Despite the month-on-month decline in trade prices in Germany, used cars are taking on average 53.1 days to sell, 6.3% quicker than in April.

Nevertheless, three-year-old cars are moving on far more quickly than a year ago in all the major European markets, which were only starting to emerge from their lockdowns in May 2020. The weakest improvement is in France, where the average number of days for 36-month-old cars to sell is 9.6% lower than during the same period last year. At the other end of the spectrum, three-year-old cars are selling after an average of 40.2 days in the UK, 47.3% quicker than a year ago, buoyed by the reopening of dealers from 12 April.

The Mercedes-Benz GLA in the UK was the fastest-selling car in the major European markets in May 2021, taking on average just 20.8 days to find a new home. In second place was the Audi Q3 in Italy, which is selling after an average of just 21.2 days. With COVID-19 restrictions easing since 12 April, the third fastest-selling car was in the UK too; the Range Rover Evoque is moving on in under 22 days.

Improved outlook in France

The MMD also features the latest Autovista Group RV outlook. A downward trend is still forecast in most markets in 2021, but the outlook has been revised upwards in France. RVs are now forecast to increase by 0.7% in 2021, compared to the modest decline of 0.4% that was previously anticipated.

‘The government incentive plan since 1 June, coupled with a lack of new-car production and low used-car supply, has impacted RVs positively. Diesel RVs are increasing as used-car demand remains important, accounting for 60% of total used-car sales, while the diesel share of new-car sales is only 30%. Tax changes in 2021 and 2022 – a general malus [tax penalty] increase and a malus on weight – will penalise petrol cars even more. As a result, we expect a decline in petrol sales, which would, in the end, be positive for petrol RVs too,’ explained Yoann Taitz, Autovista Group head of valuations and insights, France and Benelux.

In Spain, the resilient performance of the used-car market will not be enough to compensate for the higher economic pressure the country is facing, especially as the crucial tourism sector struggles to reboot. Nevertheless, RVs are only forecast to end 2021 down 1.1% on December 2020.

The situation is similar in Italy, but is compounded by less resilient demand for used cars, with RVs forecast to retreat 2.3% year on year in 2021. Marco Pasquetti, Autovista Group forecast and data specialist, Italy, points out that ‘even if the impact on residual values is milder in 2021 than in previous outlooks, the economic recovery will take longer than expected.’

RVs are still forecast to decline in Germany in 2021, albeit by only 0.7%, and improve slightly in the UK – aided by healthy used-car demand and even more pronounced constraints on new-car supply than in other markets.

Click here or on the screenshot above to view the monthly market dashboard for May 2021.