Article Type: Insight

UK 2020 new-car registrations show lowest annual volume since 1992

New-car registrations in the UK plummeted by 29.4% in 2020. Autovista Group senior data journalist Neil King explores the latest figures and the market outlook.

The lowest annual volume of new-car registrations since 1992 was recorded in the UK in 2020. The total for the year was 1,631,064 units, according to data released by the Society of Motor Manufacturers and Traders (SMMT). The UK emerged from its second lockdown on 2 December, only to see new regional restrictions imposed from 16 December. These led to a 10.9% year-on-year fall in new-car registrations during the month, with 132,692 new cars joining UK roads. Registrations of petrol cars (including mild-hybrid petrol) declined 32.9% in 2020, but still held a 62.7% share of the market. Demand for diesel cars (including mild-hybrid diesel) plunged 47.6%, accounting for just under a fifth of the market.

Registrations of hybrid cars grew by 12.1%. Following a dry spell as the UK Government removed grants for plug-in hybrids (PHEVs) in 2019, the technology enjoyed a resurgence in 2020, with registrations increasing by over 90%. Moreover, demand for battery-electric vehicles (BEVs) surged by 185.9% and electrically-chargeable vehicles (EVs) accounted for more than 10% of registrations, up from just over 3% in 2019.

New car registrations full year 2020 SMMT graph

Source: SMMT

‘Encouragingly, there is room for further growth as most of these [EV] registrations (68%) were for company cars, indicating that private buyers need stronger incentives to make the switch, as well as more investment in charging infrastructure, especially public on-street charging,’ the SMMT stated.

Mike Hawes, chief executive of the SMMT, added; ‘with manufacturers bringing record numbers of electrified vehicles to market over the coming months, we will work with the government to encourage drivers to make the switch, while promoting investment in our globally-renowned manufacturing base – recharging the market, industry and economy.’

The market contraction in December was in line with Autovista Group’s forecast for the month, and therefore for the year too. There is turbulence ahead as England and Scotland have reintroduced national lockdowns and there are ongoing restrictions across the rest of the UK. These measures will hinder the automotive recovery in the UK, at least in the short term. ‘While click-and-collect can continue to provide a lifeline, it cannot offset the impact of showroom closures. With a vaccine programme now underway, however, in 2021 there is the potential to drive a recovery that would also support the UK’s environmental goals,’ the SMMT commented.

Possible 21-29% improvement

Autovista Group’s latest base-case forecast predicts a 25% improvement in new-car registrations in 2021, to just over two million units, and further growth of 7% in 2022. This is predicated upon vehicle deliveries being largely unimpaired and the car market being able to recover from current lockdowns and restrictions later in 2021.

UK new car registrations forecast graph 2020

In a downside scenario, however, greater disruption to new-car registrations (and supply) is assumed for 2021, leaving limited opportunity for recovery of the losses later in the year. The forecast for this worst-case scenario is for UK new-car registrations to recover by only 21% in 2021, remaining below two million units, with further growth of only 5% in 2022.

In a more positive upside scenario, disruption to the UK automotive sector will be even more short-lived than in the base-case forecast, with dealers quickly overcoming supply shortages and returning to full operational capacity. The less-severe impact on the wider economy would also bolster new-car registrations in 2021 and beyond. In this scenario, the UK new-car market is forecast to grow by 29% in 2021, to over 2.1 million units, and expand by 9% in 2022.

No-deal averted

Furthermore, following a year of unprecedented difficulties, the European Union and the UK reached an agreement on Christmas Eve for a Brexit deal. This has averted the dreaded ‘no-deal’ scenario and accompanying tariffs on car imports and exports. ‘Given seven out of 10 new cars registered in the UK in 2020 were imported from Europe, the continuation of tariff- and quota-free trade is critical to a strong new-car market in the UK,’ the SMMT emphasised.

Nevertheless, as the UK no longer follows the EU’s rules on production standards, checks on goods have been introduced. This, in turn, creates more paperwork and red tape, which may result in delays if goods arrive at ports unprepared. However, the deal does include a 12-month grace period on some elements of the ‘rules-of-origin’ declarations, which require exporters to certify goods qualify as locally-sourced, allowing them to avoid tariffs. Businesses will have a year to obtain supporting documents form third-party suppliers, giving some companies more time to adapt.

European new-car markets contract by more than a quarter in 2020

The new-car markets of France, Italy and Spain all shrunk by more than 25% in 2020. Autovista Group senior data journalist Neil King considers the December and annual figures.

Following the lifting of lockdowns in mid-2020, the new-car markets of France, Italy and Spain had shown signs of recovery. However, the resurgence of coronavirus (COVID-19) cases, restrictions and/or economic repercussions are suppressing demand, albeit inflicting far less damage than in March to May. Registrations declined again year on year in December in all three countries, according to data released by the respective automotive trade associations, and each market contracted by more than a quarter overall in 2020.

New-car registrations, France, Italy and Spain, y-o-y % change, December and 2020

New-car registrations, France, Italy and Spain, y-o-y % change graph, December and 2020

Source: CCFA, ANFIA, ANFAC

New-car registrations were 11.8% lower in France in December 2020 than in the same month of 2019, according to the latest data released by the CCFA, the French automotive industry association.

This is a significant improvement on the 27% contraction in November, the largest monthly decline in France since May, as dealers reopened on 28 November. Prior to this, dealerships were closed during the month and were only allowed to deliver cars that had already been ordered before the second lockdown. In the full calendar year of 2020, new-car registrations in France were 25.5% lower than in 2019

Third consecutive monthly decline in Italy

In Italy, the year-on-year downturn in December reported by the industry association ANFIA was 14.9%, and the result would have been worse (down about 19%) had there not been an extra working day. This is the third consecutive month that the country is back in negative territory following the 9.5% growth in new-car registrations in September due to the new government scrappage incentives that came into effect at the beginning of August as part of the Decreto Rilancio (Relaunch Decree). While the market still contracted in that month, demand improved but delivery times delayed many registrations until September.

New-car registrations, France, Italy and Spain, y-o-y % change, January to December 2020

New-car registrations, France, Italy and Spain, y-o-y % change graph, January to December 2020

Source: CCFA, ANFIA, ANFAC

Aside from restrictions in the country, the decline in December is also due to the exhaustion of the scrappage incentives. The ongoing weakness in December confirmed the gloomy forecasts for the Italian new-car market, which contracted by 27.9% in 2020. ‘We archive 2020 as the most difficult post-war year for our sector,’ commented ANFIA president Paolo Scudieri.

However, the Italian Parliament has approved an amendment to the 2021 Budget Law, which introduces new measures to renew the vehicle fleet with less polluting and safer cars.

‘We look to 2021 with confidence, thanks to the measures that came into force with the start of the new year, on which there was an agreement between all the political forces, and that, in addition to supporting demand, will favour the restart of the industrial production of motor vehicles and components for the benefit of the entire automotive supply chain, with positive repercussions on employment levels and investments for green and digital transition,’ Scudieri said.

Bitter-sweet Spain

In Spain, 105,841 new cars were registered during December, just 13 units fewer than in December 2019, according to ANFAC, the Spanish vehicle manufacturers’ association. Despite this stability in the month, the new-car market contracted by 32.3% in 2020, with 851,211 units registered in the entire year. This is the first time the Spanish market has fallen below one million units since 2014.

The December figures were buoyed by consumers taking advantage of the RENOVE scrappage scheme before it ended on 31 December. Similarly, the increase in vehicle registration taxes from 1 January brought demand forward into the tail end of 2020. However, this is bitter sweet for Spain as the new WLTP-based taxes will reduce demand, especially at the start of the year, and the market is expected to remain below one million units in 2021.

Tania Puche, director of communications of the Spanish dealers’ association GANVAM, commented that ‘the lack of political will to neutralise the impact of the WLTP on the registration tax makes us look sceptically at 2021. In an exceptional situation such as the one that has caused the pandemic, consumers need special incentives to continue with the necessary renewal of the fleet. It is probable that until the second half of the year we will not see a change in trend, when the impact of the vaccine on consumer confidence and the end of mobility restrictions will generate an environment of less uncertainty.’

Monthly Market Dashboard: RVs start to fall in Europe

Autovista Group’s interactive monthly market dashboard (MMD) suggests that pressure is increasing on residual values. Senior data journalist Neil King explores this month’s analytics.

This month’s MMD reveals that the average residual value (RV) of cars aged 36 months and with 60,000km grew year on year in all the Big 5 European markets in December. However, there are early indications that RVs are coming under pressure, with values lower than reported for November in Italy and the UK, and essentially stable in Germany in Spain. France bucked the trend, albeit with month-on-month pricing growth of just 1.3%. The downward trend looks set to continue in 2021.

RV retention, represented as RV%, grew year on year in all markets except Germany. The highest growth in RV% terms was in the UK, where the average RV% was 46%, equating to a 9.2% change compared to December 2019. Nevertheless, even RVs in the UK were lower than in November in terms of both value and retention.

Monthly market dashboard December 2020

The UK enjoyed the strongest rally in used-car prices after Europe emerged from lockdowns. This was driven by the release of pent-up demand, and a starker vehicle-supply challenge than any other market, which translated into higher RVs as used-car demand outstripped supply.

However, as reported in our latest coverage of the ‘three-speed’ development of RVs across Europe, RVs in the UK have been descending from their great height since late October as pent-up demand is broadly satisfied and new-car supply has improved. With the UK under restrictions as it seeks to stem the sharp rise in COVID-19 cases, like most of Europe, and the Brexit transition period ending on 31 December, a further descent is expected going into 2021.

Lockdown slowdown in France and the UK

Despite the pressure on RVs, three-year-old cars are selling quicker than a year ago in all the major European markets, except the UK. However, the average number of stock days over the last month, compared to the November MMD snapshot, rose by 14.9% in France and 16.6% in the UK as both countries have been in strict lockdowns, including the closure of dealerships. Nevertheless, three-year-old cars are still selling the quickest in the UK, moving on after an average of less than 40 days.

The greatest reduction in the average number of days for 36-month-old cars to sell, compared to the December 2019 snapshot, was in Italy. These vehicles now have to wait on average only 45 days to find a new buyer, sitting idle for 13% fewer days than in November 2019.

Two of the three fastest-selling cars in the major markets in December 2020 are Audi models in France. The A6 is taking less than 16 days to find a new home and the A4 sells after about 18 days on average. In second place is the Volvo XC90 in Italy, which needs just under 18 days to be rehomed.

Negative RV outlook

The new MMD also features the latest Autovista Group RV outlook for the major European markets. The new downward trend for RVs is unfortunately forecast to continue in 2021, with prices of used cars in the 36 month/60,000km scenario declining in all the Big 5 European markets.

In the December update, the RV outlook has improved slightly in France and the UK but values are still forecast to decline in 2021, by 0.4% and 1.4% respectively. Used-car prices are forecast to decline by 0.7% in Germany and 1.1% in Spain. The weakest outlook is for Italy, where RVs are forecast to be 3.9% lower than their current level at the end of 2021.

Click here or on the screenshot above to view the monthly market dashboard for December 2020.

Launch Report: Citroën C4 – a crossover pioneer

With the new C4, Citroën has mixed a crossover with a hatchback to deliver a C-segment car with DNA from both camps. It has more of a hatchback silhouette than an SUV, but it still offers high ground clearance and an elevated seating position, as well as an airy internal feel due to the raised roofline.

The new Citroën is equipped with progressive hydraulic shock absorbers, comfortable seats, 18-inch wheels, a digital cockpit, and offers good space between the two seat rows. It also has more than 20 advanced driver-assistance systems (ADAS), a head-up display and a 10-inch central console. Citroën has removed the need to use the touchscreen to access the climate controls, with a row of controls in the lower central dashboard.

The C4 is available with petrol and diesel engines, as well as a fully-electric version, the e-C4, on PSA’s modular, ‘multi-energy’ CMP platform. It is one of the hatchback/crossover pioneers in the C-segment and is offered at a reasonable price point, especially with the good level of equipment. However, some manufacturers are launching similar offerings in the coming months, increasing competition for the model.

Click here or on the image below to read Autovista Group’s benchmarking of the Citroën C4 in France, Germany, Spain and the UK. The interactive launch report presents new prices, forecast residual values and SWOT (strengths, weaknesses, opportunities and threats) analysis.

Launch report Citroen C4 November 2020

Motorcaravan Market Update January 2021

Compared to this time last year, the motorcaravan market is unrecognisable. In January 2020, demand for new units was erratic. Both manufacturers and dealers were carrying an uncomfortable volume of stock, culminating in a quiet week at the February show at Birmingham’s NEC. After a year of personal and professional hardships, it is refreshing to be able to look ahead to 2021 with some positivity. Pfizer’s COVID-19 vaccine is already rolling out, giving us a glimmer of light at the end of the tunnel on our journey back to normality.

Despite national lockdowns and numerous regional restrictions, the market has seen a huge increase in demand for both new and used motorcaravans. The intensity of demand over the summer even enabled many dealers to catch up on sales lost during Lockdown-1. Dealers report that throughout the autumn and leading up to the second English lockdown, strong sales continued. So much so, that some dealer feedback suggests they received more orders for 2021 stock than they would have achieved at the cancelled October NEC show. Incidentally, this show has been rescheduled for October 2021. However, as expected, the second lockdown took the edge off demand, slowing the market down. Even with the second lockdown, demand remains stronger than it usually would be in November and December.

Today, the biggest hindrance to dealer sales is the lack of new and used stock. Stock issues began emerging when it became clear that domestic holiday demand was growing, as restrictions on foreign holidays increased.

Since then, the market has been ‘overwhelmed’ by first-time buyers. Many of these customers included families, attracted to the used market as an introduction to motorcaravaning. Used stock availability had been low before this with the added demand exacerbating the issue. This has affected all types of units, regardless of age, layout type and price point, although, the £20-30,000 price bracket remains the most sought-after by customers.

The following factors contributed to dealer stock sourcing difficulties.

  • An increase in first-time buyers or buyers with no part exchange
    • The lack of part-exchange vehicles drained dealer stock
  • Owners selling privately
    • With increasing demand, many owners took advantage of the strong market and sold their motorcaravans privately

Over the past few years, many dealers have been unable to sell all of their current season models. Consequently, they reduced their 2020 season order commitments with manufacturers.  With hindsight, many dealers have wished they maintained some of their high factory commitments as so many units were soon consumed by the huge wave of demand over the summer. This demand has left dealers short of new stock.

Given the increased demand, dealers have been eager to increase their order commitments for the 2021 season. However, disappointingly, most manufacturers have lower output capacities for this season, due to COVID-19 severely hampering production. Parts and material supply chains have also been heavily affected, with staff availability also contributing to reduced factory outputs.

Despite the delays, dealers have started to receive their first batch of 2021 season units, which has alleviated some pressure on stock issues, although the majority of stock will not arrive until early 2021. Manufacturers look set to be able to return to full capacity for the 2022 season, which will further boost the market when orders start to be taken during the summer.

As demand has completely outweighed supply, it has left many dealers with their lowest levels, underpinning strong used values. During the peak of summer when selling was at its most ferocious, dealers reported that prices had gone ‘crazy’ and at points, they could ‘name their price.’ Used values have stabilised since the market slowed following the second lockdown. The values remain high and are likely to remain at this level until further used stock becomes available.

For the most part, recent feedback from dealers and manufacturers indicates there is positivity going into 2021. This is due to the continued high level of enquires received from potential customers. By summer 2021, the vaccine might allow holidaymakers to travel abroad more freely, however, many people will choose to staycation again while there remains a level of unpredictability. The awareness of domestic holidays and all that the staycation has to offer will be firmly in the consciousness of many more people, giving the market a chance to repeat its success.

There are certain obstacles that the market has to contend with over the next few months, however, there are growing signs that 2021 will deliver positive results.

Holiday Home Market Update January 2021

After a troublesome year for us all, it is positive to see the Pfizer COVID-19 vaccine already rolling out. Hopefully, it will bring much-needed stability to the market. Two national lockdowns and a host of regional restrictions made 2020 feel very stop-start. Government ministers predict that life could feel closer to normal by Easter 2021.  

Figures released by the National Caravan Council (NCC) show the volume of holiday homes produced between January and September this year was down 46.9% compared to 2019, at just 8,266 units. The statistics reveal the extent of how damaging COVID-19 has been to production. It will be interesting to see how production fairs in the final quarter when statistics are released early next year, and to what extent the lockdown in November disrupted manufacturing.

The caravan market has benefitted from the rise in popularity of the ‘staycation’ holiday in recent years. However, this boost has masked issues threatening the industry’s sustainability, such as:

  • Overproduction
  • Regular price increases
  • A lack of desirable used stock

A familiar pattern seemed to be emerging in January 2020. Despite many manufacturers reducing production volumes for 2020 models to limit over-production, demand was still limited. That was until COVID-19 changed the landscape of the market completely. UK staycations became the only viable option for a holiday, as travelling abroad was significantly restricted. Bookings for parks soared, whilst the sale of new and used units increased dramatically. Manufacturers sold out of their remaining 2020 stock quickly. The already small pool of available, attractive used stock dried up quickly, underpinning strong used values.

The lack of new and used stock has led to a stagnant market. By the start of December low volumes of 2021 season stock has reached parks, with the bulk of orders not predicted to arrive until the spring. Manufacturers are unable to produce to full capacity with the ramifications of COVID-19 hampering production since Lockdown-1 and continued social distancing measures. Supply chain issues are causing the biggest headaches with materials and components in low supply, further extending lead times.

Consequently, dealers report that available used stock is almost non-existent, as parks have de-fleeted fewer units this year. When a unit is available, competition between dealers continues to be extremely strong. High demand has led to units deemed ‘undesirable’ and heading to the scrapyard last year, now finding buyers, providing the units contain a reasonable level of specification. The overall effect of the stock shortage means many dealers have their lowest levels ever. There is little indication that the used stock shortage will be alleviated anytime soon. It is reported that fleet orders for the 2021 season could be down by as much as 50%, suggesting there will be no quick influx of available used stock on the horizon.

With the awareness of staycations growing considerably, the market has a fresh opportunity to attract new customers, and retain customers using staycation as a stop-gap until international travel restrictions are lifted. Parks have confirmed 2021 bookings are already strong, as are the numbers of sales enquiries. This all gives reason for confidence in the market for the year ahead, providing the next few months of baron stock is not too damaging.

Glass’s holiday home retail values have increased by 3% in the January edition of the caravan dataset.

Touring Caravan Market Update December 2020

As 2020 draws to a close,  what has COVID-19 meant for the industry? There was cautious optimism about 2020 this time last year. With BREXIT moving on and a General Election out of the way, it seemed the UK could finally look forward. However, nobody predicted what happened next. With the rapid global spread of COVID-19, the country went into national lockdown on March 23.  Unable to reopen until the beginning of June, dealers feared they had lost a critical part of the season, including the Easter and spring bank holidays. Even more frustrating was the fantastic weather throughout April and May, with wall to wall sunshine, very little rain and almost no sales opportunities for dealers to close.

However, once dealers did reopen, they were inundated with enquiries and a high level of sales followed. Many of these customers were first time buyers including young families, as ‘staycations’ were in high demand due to travel restrictions. This was great news for the industry as a lack of young families buying caravans has been a concern in recent years. Whilst a percentage will choose to return to holidaying abroad once the pandemic is under control, many will have taken to caravanning and continue for years to come. Despite a thoroughly challenging year, the level of demand in the wake of COVID-19 has given the industry a much-needed boost

Unfortunately, COVID-19 continued to make its presence felt, and England went back into lockdown in November, with enhanced restrictions affecting the other UK nations too. Lockdown-2 was less disruptive as it did not coincide with the peak season.

The main bugbear for dealers has been stock shortages, with high levels of first-time buyers, who of course do not have a part exchange. Many dealers have found sourcing stock to be a challenge and are having to pay a premium to secure quality stock. In contrast to recent years, there has been little unsold 2020 stock in the dealer network, with no distress selling this year.

Touring Caravans – New Market

During the last quarter, dealer feedback has suggested enquiry levels and sales have been ahead of last year. As expected, the vast majority of dealers have less stock. Whilst transverse island beds remain a top choice, demand is buoyant across the board.

Market Statistics September 2020 vs 2019

●            Production of units intended for UK distribution was 27.8% down.

●            Moving annual total [M-A-T] for UK Distribution was 48% down.

●            Factory invoiced sales saw a downturn of 36.5%.

●            Moving annual total [M-A-T] was 43.4% down.

Touring caravan market statistics graph September 2020 vs 2019

Key Points

●            Demand is ahead of last year across the board.

●            Majority of dealers are offering fewer discounts.

●            Customer finance penetration is overall similar to last year with increases in some areas

●            Stock levels are down on last year.

Used Market

Used caravan enquiry levels and sales continue to be buoyant and ahead of last year. Whilst fixed island beds remain the preferred choice, everything is selling currently, from older lower-priced models to late year models with high levels of specification.

Key Points versus 2019

●            Demand is stronger across the board

●            Stock levels are lower across

●            Majority of dealers have inadequate levels of stock

Summary

What are the prospects for 2021?

During the last quarter, new and used markets have remained buoyant. The COVID-19 vaccine is rolling out, giving hope for 2021. However, it is going to take months before things return to normal. The state of the economy and the likelihood of a no-deal BREXIT is a concern. Additionally, overseas holidays will likely increase later in the year once the vaccine program takes hold. Despite this, there continues to be optimism for 2021 will be a strong year, and there is, of course, the potential for 2020s newcomers to upgrade their vans to a later model or even a new one. There is also likely to be an influx of vans to the market from newcomers who no longer wish to caravan and will return to holidaying abroad. There is little doubt that dealers will welcome this additional stock and it should help improve used stock availability in 2021. On balance, there are many positives to be taken.

January Edition

For this edition, taking into account continuing stock shortages in the market and the new season approaching, values have been moderately increased across the board, except where trade feedback or evidence from the market has suggested further adjustments where necessary.

EU new-car registrations contracted 12% in November

Autovista Group senior data journalist Neil King explores the latest figures released by the European Automobile Manufacturers’ Association (ACEA) as second-wave lockdowns curtailed new-car registrations again in November.

New-car registrations in the EU declined 12.0% year-on-year in November. Volumes dipped below 900,000 units, down from over a million units in November 2019. This is the first double-digit decline in the market since August, but is an improvement on the dramatic losses suffered in March to June. Moreover, the market is unlikely to recover significantly in December as the region continues to wrestle with a second wave of coronavirus (COVID-19) cases and more lockdowns. For 2020 as a whole, EU new-car registrations will be down by about 24%, which is unprecedented.

EU new-car registrations, year-on-year % change, January to November 2020 and year-to-date

EU new-car registrations, year-on-year % change, January to November 2020 and year-to-date graph

Source: ACEA

This latest EU-wide downturn was to be expected given the year-on-year declines already reported in France, Italy, Spain, and even Germany in November.

Single-digit declines were reported in Germany and Italy, down 3.0% and 8.3% respectively. The 18.7% contraction in Spain was a subtle improvement on the 21.0% year-on-year decline in October, but this was only because of the extra working day in November 2020 compared to November 2019. However, even with the extra working day, new-car registrations were 27.0% lower in France in November 2020 than in the same month of 2019.

‘All the dealers were closed in France in November. They were only allowed to deliver cars that had already been ordered before the second lockdown. They reopened on 28 November,’ clarified Yoann Taitz, Autovista Group head of valuations and insights, France and Benelux.

The decline in Germany was less pronouned than those seen in France, Spain and Italy as the country’s lighter lockdown allowed dealerships to remain open during November.

‘There was no significant impact on dealerships as the “light lockdown” imposed by the government for November was more about contact restrictions in bars, restaurants, and other meeting places like cinemas and theatres,’ commented Andreas Geilenbrügge, head of valuations and insights at Schwacke, the German arm of Autovista Group.

However, the government has now imposed a stricter lockdown, meaning car dealerships have been closed in Germany since yesterday (16 December). This will initially apply until 10 January.

New-car registrations, year-on-year % change, November 2020 and year-to-date

New-car registrations, year-on-year % change, November 2020 and year-to-date graph

Source: ACEA

The majority of EU new-car markets contracted last month, with only some smaller markets posting growth, including Denmark, Greece and Romania. In addition to France, year-on-year contractions of more than 20% were reported in five markets; Bulgaria, Croatia, Estonia, Portugal and Slovenia.

In the first 11 months of 2020, registrations of new cars in the EU fell by 25.5%. Even the market downturn in November continued the improvement in the year-to-date contractions, which bottomed out at 41.5% in the first five months of the year. The greatest loss among the major EU markets was in Spain, which has contracted by 35.3% in the year-to-date, ahead of only Bulgaria and Portugal (both down 36.4%) and Croatia (down 42.4%).

As pent-up demand from earlier in the year has been satisfied, the prevalence of COVID-19 infections, the severity, duration and geographic spread of lockdowns, and the economic fallout, will define how Europe’s new-car markets perform in the remainder of 2020 and beyond.

Manufacturer performance

The majority of the leading European carmakers registered more than 10% fewer new cars in the EU in November 2020 than in November 2019. Mazda and Mitsubishi suffered the greatest losses, with EU registrations down by more than a third year on year. Only Fiat Chrysler Automobiles (FCA) and the BMW Group managed to contain their losses to single-digit declines of 2.6% and 6.4% respectively. However, all manufacturers have endured double-digit declines in the year to November and even a miracle in December will not change this performance for full-year 2020.

Across Europe, manufacturers with a strong electric-vehicle portfolio are expected to perform better than those without as electrically-chargeable vehicle (EV) consumers are less likely to be tempted by used examples. This is because they tend to be less price-sensitive buyers, but there is also limited availability of the latest electric models on the used-car market. In the year-to-date, Toyota is the best-performing manufacturer in the EU new-car market, albeit with registrations down 15.6%, supporting this hypothesis.

Used Car Market November 2020

Used Car Auction Wholesale Market

With the UK once again in lockdown throughout November – to varying degrees and duration depending on where you live – it was inevitable that the used car market would be affected. Fortunately, businesses and the buying public were better prepared this time around with the impact not as severe as it could have been. However, all three of the key measures – first-time conversion rate, percentage of original cost new, and sales volume index – were lower than in October. At 68.8% the first time conversion rate was 14.1% lower than in October and 16.4% lower than November 2019, whilst sales volume was also significantly reduced. The average percentage of original cost new achieved was less affected, down only 3.6% month-on-month and 1% higher year-on-year. This suggests that whilst fewer cars were selling, they were still achieving similar values.

first time conversion rate graph November 2020
Used car market % original cost new graph November 2020
Used car market sales volume index graph November 2020

Whilst auctions were not quite as busy during Lockdown-2, our Editorial team noted that buyer behaviour was generally the same as the month before. Cars that had condition grades towards the upper end of the scale and requiring work were out of favour, only selling if they represented a real bargain, often struggling to attract any bids at all. Desirable stock remains popular, and feedback suggested that late plate cars performed better than would usually be expected. This is likely to be, at least in part, due to this year’s much lower new car registrations and the extended lead times for new car supply – both factors that make an “almost new” car a more appealing prospect than it may have been in more “normal” times.

Despite the substantial growth in registrations of alternative fuelled cars in the new market, it appears that the used market is yet to catch up. As the chart below shows, the first-time conversion rates for hybrids and BEVs continue to lag behind those of ICE cars, and it is particularly surprising for BEVs due to their relatively low volumes in the auction environment. This may be due to the buyers of used cars tending to be warier of change, preferring to spend their hard-earned money on a car with a more familiar propulsion system, but it could also be due to the types of BEVs that are available on the second-hand market.

Most feature older generation technology, with real-world ranges of less than 120 miles, and whilst in reality that would be suitable for many (assuming they can charge it at home), it requires a leap of faith to move away from a petrol or diesel car that will comfortably travel 500 miles or more on a tank of fuel. It is not helped by the fact that their new contemporaries often have two to three times the range, and so many may well be adopting a “wait and see” approach to the purchase of their first second-hand battery electric vehicle.

first time conversion rate fuel split graph November 2020

Used Car Retail Market

It should come as no surprise that used car retail sales were down markedly in November – 32.7% less than the preceding month and 34.0% lower than November 2019. This is undoubtedly a result of the travel and contact restrictions resulting from the second lockdown, although the average value of those completed sales was 0.1% higher than that recorded for October and 4.7% higher than the same month last year. Impressively, whilst their average value increased, the average age of the cars sold also continued to increase, up to 51.3 months from the 48.6 months recorded for the previous month and 40.5 months for November 2019.

Used car market retail observations November 2020
Used car market average sale price graph November 2020

Glass’s Live Retail pricing tool shows that, despite the challenges faced by the used car retail market in November, the average time a car spent on the retail forecourt was 38 days, only 2.5 days longer than in October but 4.4 days less than the 42.4 recorded for November 2019. The average discount required for the sale continued to be less than for the same month last year, down to 2.5% from 3.4%. This did represent an increase over the 1.8% recorded for October, but given the circumstances, it is still impressive.

Used car market average days to sell graph November 2020

Next Month

December is usually a “challenging” month for the UK used car markets, with Christmas somewhat of a distraction and effectively making it a three-week month. For 2020 we have the added complexities of the Coronavirus-related restrictions so it is reasonable to expect a continuation of the trends seen in November. The looming spectre of Brexit and the possibility of a tariff-driven increase in the cost of new cars may help to promote the sale of younger used cars, but as that is still an unknown at the time of writing it must be added to the list of possible factors. Some buyers may well hold off on a used car purchase until the New Year, but the one thing we have learnt from 2020 is that it is anything but predictable!

Podcast: How might self-driving cars change us?

From challenges to breakthroughs and new applications, 2020 has been an important year for autonomous technology. But how might these advances change the relationship between vehicles and people?

Autovista Group Daily Brief journalist Tom Geggus speaks with Shaun Helman, chief scientist for behavioural and data sciences, and Camilla Fowler, head of automated transport, from the UK Transport Research Laboratory to find out.

https://soundcloud.com/autovistagroup/how-might-self-driving-cars-change-us

Catch up with Autovista Group’s other autonomous-vehicle insights from 2020, including the long road to autonomy, facing autonomous disillusionment, and keeping up with autonomous cars.

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.

Positive outlook for used car sales in 2021

With Brexit trade deal negotiations still unresolved at the time of writing, and COVID-19 an ever-present danger, the outlook for the new car market in 2021 looks gloomy. The prospect of an import tariff on new cars coming from the European Union, could have a severe impact on sales rate. Enhanced Customs processes and other red tape will also hamper stock availability. Stock issues could be exacerbated should European manufacturers lower their UK sales expectations and reduce the production of right-hand-drive cars.

The challenges for the new car market do not end there, with the prospect of further lockdowns a possibility as COVID-19 continues to make its presence felt. There is hope on the horizon now that a vaccine is beginning to be rolled-out, however, it will take several months to administer. Consumer confidence has taken a knock this year and the threat of more redundancies could also negatively impact new car sales.

On a more positive note, regardless of the outcome of free-trade talks and the fight against COVID-19, Glass’s expects registrations in 2021 to be higher than this year, now that dealers have developed ‘click and collect’ and other delivery strategies. During the latest lockdown, in November, registrations fell by 27.4% compared to last year, which whilst severe, was a vast improvement on the 97.3% and 89% drops in April and May during Lockdown-1.

The outlook for the used car market is not gloomy at all. In fact, Glass’s is reasonably optimistic that 2021 will be strong. This year has not been without its challenges but the used car market has proven to be very resilient, helped by the British public’s desire to change their cars, no matter what, so a level of demand remains throughout the toughest of times.

Add to that the prospect of new car price increases coupled to the potential for new car supply constraints and used car demand could rise further, further underpinning residual values. Glass’s expects the used car supply and demand dynamic to be reasonably balanced. There is the prospect that a volume of lease cars that were previously extended will come back into the market next year, which could put extra pressure on remarketing channels, however fresh extensions caused by new car supply issues and economic uncertainty will likely balance that. Consequently, Glass’s expects no crash in used car values in 2021.

New Car Market Update December 2020

As expected ‘Lockdown-2’ in England and similar restrictions across the rest of the UK hurt the new car market in November. Total registrations fell by 27.4% or 42,840 units compared to November last year, according to figures published by the Society of Motor Manufacturers and Traders (SMMT). This equates to a year-to-date drop of 663,761 units or 30.7%.

This hit was not as bad as in ‘Lockdown-1’ where restrictions decimated registrations, as the industry has had time to implement ‘Click and Collect’ and other socially distanced delivery options, to keep the sales cogs turning.

Diesel sales continue to dissolve, down 56.2% to just 15,925, while mild-hybrid diesel registrations only increased by 7.9%, to 4,719 units. The two totals combined mean diesel cars achieved only 18.1% market share, down from 26% in November last year. The figures for pure diesel engines are a long way from their peak of 52% in 2012, as shown in the chart below.

Diesel car market share graph November 2020
Data courtesy of SMMT

The results were far more positive for alternative fuel cars, with battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) increasing their volume over last year by 122.4% and 76.9% respectively. BEVs enjoyed their third-highest ever monthly market share at 9.1%, while PHEVs also built their share up to 6.8% for the month. This means zero-emission capable cars almost outnumbered diesel and mild-hybrid diesel.

Looking forward to December, the relaxation of lockdown rules with the potential of three COVID-19 vaccines may boost consumer confidence. Add to that a positive resolution to Brexit negotiations (still not concluded at the time of writing) and some end of year sales and marketing drives, and the year may end on a high, giving hope that 2021 will be positive for the automotive industry in the UK. If the Government does not secure a free-trade agreement, we may be in for a bumpy ride.

New Light Commercial Vehicle (LCV) Market November 2020

The light commercial vehicle (LCV) market grew for the third consecutive month in November, with the 28,541 registrations reducing the deficit to 2019 to a smaller 21.5%. The 8.8% increase in registrations versus 2019 was driven by increases in all sectors apart from the 4×4 sector, ahead of an expected busy run up to Christmas.

The second countrywide lockdown, social distancing measures, redundancies, Brexit and possible vehicle tariffs will continue to affect LCV demand for the remainder of this year and well into 2021.

New registrations LCV market graph November 2020

Year-to-date registrations to the end of November stand at 265,374 units compared to 338,227 units in 2019. Breaking the month down by sectors reveals that registrations for vans under 2.0 tonnes, vans between 2.0-2.5 tonnes and vans between 2.5-3.5 tonnes increased by 13.7%, 13.6% and 25.2% respectively. Turbulent times for the Pickup sector continue as registrations declined again, this time by an alarming 56.2%.

Top five LCV registrations

Top five LCV registrations November 2020

The quarter four SMMT LCV registration forecast for 2020 has been issued, revealing an increase of 6.6% to 288,000 units. With a current shortfall of just over 22,600 units, the new prediction would seem achieveable with one months registrations to account for. Historically, December would be recognised as a quieter month, but with many operators eager to purchase new stock before any further lockdowns or potential Brexit tariffs are imposed, it is likely to be a busy month.

At the end of November, UK registrations remained 72,853 units down on the same point last year. The stop start nature of the pandemic restrictions has, and continues to affect many businesses. Although the rise in registrations over the last three months has been a welcome boost to the economy, the final registration total is still likely to be in the region of 45,000-50,000 units short of last year.

The interconnected nature of the UK economy means that there should be caution as the country emerges from the latest lockdown. With Brexit still undecided, the strong performance of the last three months should not be taken as an improving trend. The coming months will bring opportunities and challenges in equal measure.

November Used Light Commercial Vehicle (LCV) Overview

Performance in the LCV auction market remained strong in November despite the second lockdown in England. High bids continued for retail-ready stock with a lack of quality fuelling demand in the busy home delivery run up to Christmas. Traders and dealers are now adept at utilising online tools proactively, changing the emphasis between physical and digital activity at regular intervals. Traders are now offering ‘flexi-deals’ on their stock in an effort to attract new business and to maximise profit opportunities.

The limited volumes of new stock available, leasing companies have also been looking at alternative revenue streams, with many now incentivising existing customers to extend their current contract on much cheaper rentals.

The sustained appetite for retail-ready stock shows no sign of fading. Auction houses reported that Euro 6 stock made up over 35% of all LCVs sold at auction during the disrupted month of November, with an 88.0% first-time conversion rate. Many of these units supported the move to home shopping during the pandemic together with the increase in deliveries in the run-up towards Christmas.

The outlook is for prices to remain high as demand for essential services such as food; medicines, courier and construction remain strong.

November in detail

Glass’s auction data results show the overall number of LCV sales in November declined by 17.9% versus October 2020 and 10.0% over the last twelve-months. First-time conversion decreased 1.2% overall, with the 4×4 sector most heavily affected. Nevertheless, a healthy 88.7% first time conversion rate was up 4.0% versus November 2019.

The lockdown month of November saw average sales prices decline by 9.5% versus October, but were still 30.4% higher than the same point last year – the third highest in the last twelve months. The average age of sold stock rose from 72.4 months in October to 73.5 months in November, but was still 3.7 months younger than the same point last year.

In line with this older vehicle age profile, average mileages for sold vehicles increased from 73,438 miles in October to 78,205 miles in November. The November average mileage is still 4,674 miles lower than at the same point last year.

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 market place.

Launch Report: Hyundai i20 – sportier and more attractive

The third-generation Hyundai i20 has a stronger, sportier, and more attractive design, with tight lines and a prominent rear-quarter window, reveals the latest model launch report from Autovista Group. The model is longer and wider, which translates into more interior roominess and a 352-litre boot, which is among the largest in the B-segment.

The level of standard equipment is high and so the i20 has a very limited number of individual options available. This makes it easy for customers to configure vehicles and leads to many well-equipped used cars. The digital instrument cluster and central touchscreen in particular support the attractiveness of the interior, and strike a good balance between too many buttons and too few.

The report notes that the engine offer is rather limited, with only two petrol engines and no diesel, electric or full-hybrid versions. There is a mild-hybrid (MHEV) version but this has a battery in the spare-wheel well, reducing the boot volume to 262 litres.

The B-segment is very competitive and the i20 faces strong rivals, such as the Opel/Vauxhall Corsa, Renault Clio, SEAT Ibiza and VW Polo. Given that the segment is mainly driven by price considerations, the list prices of the i20 are rather high. In Spain for example, the price of the i20 version under review is in line with the Corsa and Polo, but it is more expensive than the best-selling SEAT Ibiza.

Nevertheless, in Germany, the i20 has recently won AutoBild magazine’s ‘Goldenes Lenkrad 2020’ – a popular reader’s choice award – in the category for cars with a list price below €25,000.

Click here or on the image below to read Autovista Group’s benchmarking of the Hyundai i20 in France, Germany and Spain. The interactive launch report presents new prices, forecast residual values and SWOT (strengths, weaknesses, opportunities and threats) analysis.

Launch Report Hyundai i20 November 2020

Brexit survey: Lack of preparedness as no-deal likelihood grows

As the UK government and the EU struggle to find common ground on which to establish some kind of trade agreement, UK respondents were hopeful of a free-trade deal. However, they are less likely than their European counterparts to feel prepared for a no-deal scenario. This was one of the key findings of the Autovista Group Brexit survey.

The COVID-19 pandemic distracted the automotive industry from trade-deal negotiations but as a no-deal scenario looks more likely than ever, concerns over the impact of Brexit once again loom large. Autovista Group surveyed a range of automotive industry firms to explore the latest predictions for the likely outcome of EU-UK talks and what they mean for our sector in 2021. The online survey was conducted throughout November 2020 as the two parties upped the pace of negotiations. A selection of individuals was invited to take part, with respondents across 12 European countries participating, in addition to those from the UK.

When asked how ready they are for a no-deal Brexit, only 13% of UK respondents said they felt completely prepared while three-quarters of European respondents claim to be prepared. This could partly be a consequence of poor communication, which has been a contentious issue throughout the whole Brexit period. This has been a perception both in the UK and in the EU. One respondent commented: ‘[We want] some better direction on what [Brexit] means and what needs to be done around import and export, our main concern being delays in parts supply for vehicles.’

Lack of clarity

In the UK, respondents called for clarity on the specifics of changes to imports, exports and travel, as well as for more time to adjust to any changes and clarification on what Brexit will mean for the automotive industry in particular.

Clearly, an unforeseen issue that has had an impact this year is COVID-19. This has hindered talks and among European respondents, the concern most commonly expressed was that Brexit seemed to have been forgotten in light of the Covid-19 pandemic.

A telling finding of the survey was that when asked what information their government had provided that had been helpful, no respondent was able to give an example.

The full survey: Brexit predictions – an analysis of responses to a Europe-wide survey of automotive industry firms on their predictions for the impact of Brexit is available here.

Remarketing: reaping the rewards of fleet planning

Each month auction houses send the same message: ready to retail vans find eager buyers willing to pay premium prices while those in poor condition struggle to sell. The majority of light commercial vehicles (LCVs) are not refurbished, but ‘sold as seen’ with many requiring significant refurbishment prior to sale.

The majority of buyers at auction are traders. They are experts at moving vehicles quickly to new owners. They supplement their price knowledge using Glass’s values, adjusting these values to take account of vehicle age, mileage and condition. They know exactly how much each damage repair costs. If there is too much damage, they bid low to cover the cost of the repairs. However, as vehicles age, not all dents and nicks are cost effective to repair.

Maximising resale price

Fleet managers can take specific actions to guarantee the best prices for vehicles in the wholesale market. Vehicle presentation coupled to the availability of all documents and keys is vital to achieving this.

The initial life of an LCV is usually determined by operational requirements. Effectively the fleet manager asks whether the vehicle is fit for purpose. This requirement is closely followed by:

  • Low vehicle price
  • Manufacturer support
  • Vehicle warranty
  • Dealer network coverage

In the LCV market, vehicle choice is usually taken by a fleet manager who will not be getting behind the wheel. Driven by budgets, the vehicle selection is often based on initial cost rather than specific thoughts on how the vehicle could be remarketed.

Second life

Taking into account the second life of a vehicle could significantly benefit residual values (RV). Here the fleet manager can carefully consider different trim levels that offer additional safety and comfort features that may maintain the look of the vehicle. Not only can they offer a greater duty of care to drivers, they can also strengthen RVs. At the same time, there is the potential of reducing monthly rental payments if the vehicle is purchased on contract hire.

Higher trim levels, such as the Citroen Berlingo Enterprise, Peugeot Partner Professional, Ford Transit Custom Limited and Volkswagen Transporter Highline are more desirable to second hand buyers. Of course, ensuring they arrive in the second hand market with as little damage as possible will help it sell for a better price.

Planning to boost second hand values by opting for higher trim levels with specific options can pay dividends. The following list includes some features that can add to a vehicle’s desirability in the used market.

  • Comfort features promoting a relaxed driving environment
    • Bluetooth (now offered by most manufacturers as a standard feature)
    • Air conditioning
    • Heated seats
    • Automatic gearbox
    • Additional seats
  • Damage limitation features
    • Rear parking sensors
    • Ply-lining
  • Exterior style
    • Metallic paint

Previously, a satellite navigation system would have been in this list, however, with changes in technology, most drivers prefer to use a smart phone navigation app. That said, the older the vehicle is and the more miles it has covered, the less desirable these added extras are. Specification becomes less of a concern and condition becomes vitally important.

White van versus metallic van

White vans are still the most common in the used market and the easiest to repair. Metallic paint is growing in popularity and often sells at a premium if the vehicle is in good condition. However, metallic paint has a downside; depreciation is faster if the bodywork is damaged. Panels can be expensive to repair, often with the need of a paint oven to match the colour properly over multiple panels. The older the van is, the more difficult it is to match the original faded colour correctly.

Metallic caddy van side view

Selecting higher horsepower vans can also deliver strong used performance, especially when these are selected as a small proportion of a fleet. Vans with larger horse power offer used van buyers something different. However, fleet managers should balance this against likely higher fuel consumption and higher initial purchase price.

Small vans with a third seat or medium sized vans with a second row of seats are extremely popular for customers who want to use vehicles for personal and business travel. These can make premiums over the standard vans if offered combined with features such as air conditioning and metallic paint.

On medium sized vans, tailgates, instead of standard twin rear doors that are paired with an automatic gearbox can gain desirability and stronger RVs for buyers considering converting to camper vans.

Age, condition and service

As vehicles age, vehicle condition plays an increasingly important part in the RV. Damage and excessive wear and tear due to driver misuse can significantly affect RVs. To minimise this, fleet managers should monitor the vehicles whilst in service through telematics systems. These systems appear to ensure driver behaviour is corrected using driver incentive schemes to reward driver performance.

Lastly, a full service history (FSH) is highly important in the used market. The ability to provide a detailed rundown of all maintenance work undertaken throughout a vehicles life and confirm it has received all of its necessary service checks to either address problems or prevent them, gives prospective buyers confidence in the product and sellers, an additional bargaining chip. Vehicles with a FSH can be worth upwards of £500 more than vehicles without.

Rows of used white LCVs

Summary

Planning a fleet is not an easy task. However, just minor considerations in how vehicles could be used in a second life will increase RVs significantly. Additionally, through the life of the vehicle, ensuring drivers maintain and reduce vehicle damage will deliver vehicles at the time of remarketing requiring only small amounts of refurbishment. Supplying your LCVs in a ready to retail condition to the wholesale market will find eager buyers willing to pay premium prices.

Is the automotive industry heading for PHEVgate?

As the automotive industry continues to deal with the damage dealt by Dieselgate, environmental campaign group Transport and Environment (T&E) is asking whether another perfect storm is forming around plug-in hybrids (PHEVs).

With manufacturers aiming for emissions regulations targets, low-emission vehicles are essential. So in a period of electrification, PHEVs are bridging the gap between internal combustion engines (ICEs) and battery-electric vehicles (BEVs), for carmakers and consumers alike. Demand for PHEVs in the EU increased by 368.1% in Q3 2020, when compared with the same period last year. But results of a recent T&E study point to PHEVs as a bridge waiting to collapse.

‘Fake electric cars’

T&E commissioned testing of three of the most popular PHEVs sold in 2019; the BMW X5, Volvo XC60 and the Mitsubishi Outlander. The results revealed that in the real world, even when under the mildest testing conditions with a full battery, the cars’ emissions were higher than advertised. The Outlander emitted 86g/km of CO2, overshooting official WLTP values by 89%. The XC60 produced 115g/km, exceeding its official values by 62%. Meanwhile, the X5, surpassed its CO2 values by 28%, releasing 41g/km.

‘Plug-in hybrids are fake electric cars, built for lab tests and tax breaks, not real driving,’ said Julia Poliscanova, senior director for clean vehicles at T&E. ‘Our tests show that even in optimal conditions, with a full battery, the cars pollute more than advertised. Unless you drive them softly, carbon emissions can go off the charts.’

Offical vs real-world emissions of PHEVs T&E graph

Source: Transport and Environment

T&E estimates that once their batteries are depleted, the X5, the Outlander and the XC50 can only drive in engine mode for 11km, 19km and 23km respectively, before overshooting their official CO2 emissions per kilometre. The group argues, therefore, that PHEVs are not suited to long-distance journeys, and would require much more frequent charging than BEVs to keep their low-emissions label. 

‘Carmakers blame drivers for plug-in hybrids’ high emissions. But the truth is that most PHEVs are just not well made. They have weak electric motors, big, polluting engines, and usually can’t fast charge. The only way plug-ins are going to have a future is if we completely overhaul how we reward them in EU car CO2 tests and regulations. Otherwise, PHEVs will soon join diesel in the dustbin of history,’ she said.

Poliscanova called for governments to stop subsidising the purchasing of these cars with taxpayer money. T&E added that the EU’s current practice of handing out additional emissions credits for PHEVs needs to end when it reviews the CO2 targets for 2025 and 2030.

In defence of PHEVs

When approached by Autovista Group, the manufacturers of the XC60, X5, and Outlander came to the defence of their respective PHEVs and their emissions testing. Volvo insisted that all of its cars are certified and fully compliant with emissions legislation, but do come with a real-world caveat. ‘The existing emissions-testing regime provides a useful industry standard that allows customers to make comparisons between cars, but real-world variations will apply,’ the carmaker said.

The manufacturer said that PHEVs have close-to-zero tailpipe emissions when driven in pure electric mode and its customer field data shows that its cars are driven in pure electric mode 40% of the time on average. ‘Plug-in Hybrids are an important transitional technology on the journey towards zero-emission mobility, and an important part of the mobility portfolio of the near future,’ Volvo stated.

BMW claimed that if a customer followed the exact WLTP and NEDC legislative test profile and conditions, the published fuel economy figures would be achieved. ‘The aim of the legislative test profile, however, is not the promise of a particular fuel economy figure in real customer life, but rather a basis to make vehicles of different brands, sizes and technologies comparable,’ the carmaker said. ‘A car with a good WLTP/NEDC figure will also convince in comparison with others in real customer life.’

BMW pointed to the potential for PHEV figures to also include a number to represent when a consumer does not charge the vehicle’s battery. ‘This might be a suitable step to increase the credibility around WLTP/NEDC and PHEV because the real-world fuel economy of a PHEV is heavily dependent on the charging state of the battery,’ BMW concluded.

Mitsubishi highlighted that their published MPG and CO2 figures are produced via standardised WLTP testing that was designed for PHEVs. ‘Independent tests can produce unreliable/variable figures depending on conditions and a variety of other factors and we naturally contest any findings where we have no oversight of the testing or methodology,’ the carmaker said. ‘Disregarding a PHEV’s electrical powertrain during testing, for example, is like testing a petrol or diesel car and only using three of its gears.’

Transitional technology

Mitsubishi pointed to a presumption that PHEV drivers do not plug in, so it shared the results of two surveys it commissioned which investigated Mitsubishi owner usage and attitudes. The data showed that 92% of Outlander owners charge up multiple times per week (at least two to three times) and that PHEV owners drive in electric mode (using no petrol) during 72.2% of their commute and 84.3% of errand and school runs. Even on long leisure runs, 32.8% of the journey was conducted in EV mode. What is more, 70% of Outlander owners surveyed would consider a fully electric vehicle as their next purchase, compared to just 27% of ICE drivers. Mitsubishi said this was indicative of the important role that PHEVs play as a transitional technology.

‘They [PHEVs] ease people into electrification, helping them to realise they actually could live with an EV day-to-day, while they also produce lower emissions overall than traditional ICE vehicles,’ the Mitsubishi said. The manufacturer explained that EVs are still too expensive for most people, with the range at the more affordable end of the model spectrum not enough for what consumers feel comfortable with.  It went on to add, ‘that’s before you factor in the charging infrastructure which is still hopelessly inadequate even for what’s on the road now, let alone mass adoption over the next decade.’

‘We are completely on board with the need to decarbonise as soon as possible, but it needs to happen in stages and plug-in hybrids can be a very useful tool in accelerating and supporting that transition, especially if incentivised and encouraged properly by the government,’ Mitsubishi concluded.

As electrification surges on, it makes sense that consumers and carmakers alike need a transitional vehicle which can endure the cross over, while initial costs are lowered and charging infrastructure is strengthened. However, it is vital that the low-emission capabilities of these vehicles is as sold, both in terms of trust and climate change. In the wake of COVID-19, the last thing the automotive industry needs is another Dieselgate.

New-car registrations deteriorate across Europe in November

Autovista Group senior data journalist Neil King considers the ongoing downward trend in new-car registrations in France, Italy and Spain in November.

Despite government-backed incentives in France, Italy and Spain, new-car registrations suffered significantly again in November, according to data released by the respective automotive trade associations. As countries battle the second wave of coronavirus (COVID-19) cases, restrictions and/or economic repercussions are impacting registration volumes, albeit inflicting far less damage than in March to May.

Following the lifting of lockdowns earlier in the year, the countries’ automotive markets had shown signs of recovery, but, all three suffered a continuation of the downward trend that commenced in September. The 18.7% contraction in Spain was a subtle improvement on the 21.0% year-on-year decline in October, but this was only because of the extra working day in November 2020 compared to November 2019.

New-car registrations, France, Italy and Spain, year-on-year percentage change, January to November 2020

Autovista Group senior data journalist

New-car registrations graph, France, Italy and Spain, y-o-y percentage change, January to November 2020

Source: CCFA, ANFIA, ANFAC

New-car registrations were 27.0% lower in France in November 2020 than in the same month of 2019, even with one extra working day, according to the latest data released by the CCFA, the French automotive industry association. This is the largest year-on-year decline in a month since May, but compared to the dramatic falls in March and April, ‘the re-confinement had decidedly different consequences for the car market,’ commented the CCFA in a flash statement.

‘All the dealers were closed in France in November. They were only allowed to deliver cars that had already been ordered before the second lockdown. They have reopened since 28 November,’ clarified Yoann Taitz, Autovista Group head of valuations and insights, France and Benelux. As dealers could still honour deliveries of orders, this explains why the downturn in France was far less significant in November than during the first lockdown.

In the first 11 months of 2020, new-car registrations in France were 26.9% lower than in the same period in 2019. With dealers open again, December will invariably be a healthier month for the automotive sector, but new-car registrations will still be about 25% lower in 2020 than in 2019.

Less lockdown, more crisis in Spain

In Spain, 75,708 new cars were registered during November, 18.7% fewer than in November 2019, according to ANFAC, the Spanish vehicle manufacturers’ association. ‘The red numbers remain in all segments and vehicle-sales channels in November 2020, and therefore in the cumulative figures. The second wave of the pandemic, and the associated serious economic and social crisis, is deepening the decline in sales in all markets,’ ANFAC commented.

The MOVES II and RENOVE incentive schemes were introduced in July and the new-car market saw a 1.1% increase that month. Since then, however, the year-on-year results have deteriorated, with the November fall only improving slightly on October because of the extra working day in the month.

Ana Azofra, valuations and insights manager at Autovista Group in Spain, explained that ‘the lockdown had many different scenarios, depending on the region and city, but was less restrictive than during the first wave and dealers – at least most of them – remain open. However, the RENOVE incentives for internal combustion engines (ICE) are exhausted and, moreover, the crisis is already affecting private consumption. The unemployment rate already increased in Spain and now stands at 16.5%, maintaining the negative trend.’

Measures to deal with the second wave of COVID-19 infections and the economic repercussions of the crisis are clearly weakening consumer demand. Furthermore, the calculation of the registration tax based on WLTP emissions figures, from January 2021, will further complicate the recovery.

‘Half of the vehicles sold in 2021 will see their taxation increased at the time of purchase due to the entry into operation of the European WLTP regulation. This average price increase of 5% will mean, in such a bad environment for vehicle sales, a worsening of the sector’s situation, making it even more difficult to get out of the crisis. We need the registration tax increase to be corrected before January 1 so that the [automotive] industry and the sector can be the driver of the Spanish economy that they have always been and will be,’ the three associations, ANFAC, Faconauto and Ganvam, declared in the ANFAC release.

Second consecutive monthly decline in Italy

In Italy, the year-on-year downturn in November reported by the industry association ANFIA was 8.3%, although the result would have been worse (down about 12%) had there not been the extra working day. This is the second consecutive month that the country is back in negative territory following the 9.5% growth in new-car registrations in September due to the new government incentives that came into effect at the beginning of August as part of the Decreto Rilancio (Relaunch Decree). While the market still contracted in that month, demand improved but delivery times delayed many registrations until September.

As in Spain, there was not ‘a full lockdown in Italy like the one we experienced in March and car dealers were – and still are – open. However, depending on the zones, there is a ‘light’ lockdown, with different restrictions that put pressure on sales as a result. Furthermore, the incentive scheme for vehicles with the highest range of CO2 emissions has been exhausted,’ commented Marco Pasquetti, forecast and data specialist of Autovista Group in Italy.

‘Without a new intervention to support the car market, the new drop in sales leaves companies with the need to reactivate layoffs, which, in any case, will not be sufficient to stem the loss of turnover today, compared to 2019, at an average value of -25%. The data on the use of the redundancy fund in the period January to October 2020, compared to the same period in 2019, show an increase of 6,000%. These are striking data that induce reflection on the cost of failure to support the car,’ highlighted Adolfo De Stefani Cosentino, president of FEDERAUTO, in the ANFIA release.

The key to the recovery of new-car markets revolves around countries agreeing on budgets for 2021, and improving economic certainty and consumer confidence to boost spending. However, with COVID-19 not yet under control, and further lockdowns possible, the industry faces a difficult end to 2020 and a challenging 2021.

The Demise of 4×4 Pickup Production in Europe

The Pickup

Created initially as a purely utilitarian vehicle, the pickup has evolved many times over the past 100 years. In the future, an element of electricity could be added if Tesla’s concept goes into production. With the pickup of the future not so distant anymore, pickup enthusiasts have much to be excited about. However, the pickup, long an American and Australian icon (in the form of a “ute”) and a dependable load-carrying force in Europe, will continue for the foreseeable future albeit with production moved away from European factories.

What is a pickup?

A pickup truck or pickup is a light truck with an enclosed cab and an open cargo area with low sides and tailgate. In Australia and New Zealand, both pickups and coupé utilities are called “utes”, an abbreviation for a utility vehicle. With the development of the pickup, there has been the inclusion of several different cab types allowing additional occupants in varying degrees of comfort. It is the double cab that effectively combines SUV space in the cab with a large open cargo area. It is this body style that has become very popular, especially in the UK where double-cab pickups with payloads over a tonne are assessed as light commercial vehicles (LCV) for benefit in kind taxation. This tax advantage continues to make these vehicles attractive for company car drivers creating high levels demand for special edition pickups such as the Volkswagen Amarok Dark Label and the Arctic Truck series.

The demise of 4×4 Pickup Production in Europe

The announcement that Nissan is to close their Barcelona production facility by the end of 2020, arrives with plans to relocate production of the Navara pickup to South Africa, while, according to reports, a replacement for the e-NV200 van, also built at the Barcelona factory, would be built at Renault’s plant in Maubeuge, France. Glass’s Chief Commercial Vehicle Editor, Andy Picton, takes a closer look at the history of the 4×4 pickup and how production has slowly moved away from Europe.

2019 Nissan Navara Double Cab

History

Pickups have been available since the early 1900s. Most were constructed by third parties by adding pickup style bodies to manufacturer-supplied chassis. However, it was the Second World War that became the catalyst for the development of the pickup. The roots of mass-produced four-wheel-drive pickup vehicles can be traced to this period with the Willys CJ-2A Jeep, followed by the Ford F-Series and the Land Rover Series I in 1948.

Jeep Willys CJ side view

However, it was with the launch of the Dodge Power Wagon at the end of the Second World War that the pickup became recognisable to today’s customers with fixed body-coloured side panels. This was the first model where the body style had an integrated appearance.

The appeal of the pickup grew in the 1950s with Chevrolet, GMC, International, Studebaker, Toyota and Hino all launching models in the USA. Foreign competition in the American pickup market effectively stopped in 1963 with the implementation of the ‘Chicken Tax’ in 1963 which directly penalised any country importing light trucks into the USA.

Ten years later, the federal government in the USA introduced the Corporate Average Fuel Economy (CAFE). This policy was designed specifically to improve the fuel economy of cars. Unhindered by the new stringent CAFE controls, pickups started to take the place of muscle cars as the performance vehicle of the time. In 1978, the introduction of the ‘Gas Guzzler Tax’ in the USA again targeted inefficient cars, whilst again exempting pickups.

A further advantage in their production at this time was that pickups were not required to meet the same safety standards as cars until 1999. These rules distorted the American market in favour of the pickup.

During the 1980s compact pickups from Mazda, Mitsubishi and Isuzu went on sale in the USA prompting Ford to launch the Ranger and Chevrolet to launch the S-10 as compact rivals. It was also during this time that pickup sales took off in other international markets such as Australia, South Africa and Asia.

Mitsubishi L200 pickup truck side view yellow

In Europe, the introduction of the pickup was a much slower burn. Early examples were two-wheel-drive car conversions such as the Citroen 2CV pickup, Morris Minor pickup and Fiat Musone pickup. These were followed by the Yugoslavian built Volkswagen Caddy, the Peugeot 504 pickup produced in France and the Ford P100 assembled in Portugal. It was during the Eighties when Asian manufacturers including Mitsubishi, Isuzu, Nissan and Toyota, along with Ford began to launch dedicated 4×4 pickups in Europe.

Citroen 2CV pickup truck side view

For a short period, the Isuzu KB (Isuzu Faster/Chevrolet LUV/Bedford KB in other world markets) and the Mitsubishi L200 were assembled in Europe.

Bedford KB pickup truck blue

Additionally, Volkswagen’s second tentative step in producing pickups took the form of the Taro. This was a joint venture with Toyota where Volkswagen built rebadged versions of the Toyota Hilux in Hannover from 1989. Only the 4×2 single cab variant was assembled there, with the Joint Venture ending in 1997 due to low sales volumes.

Volkswagen taro pickup truck orange

From 1997, Nissan was the only mainstream manufacturer assembling 4×4 pickups in Europe. Their Barcelona plant in Spain assembled the D22 Series and continues to this day with the current Navara range. From 2016, the plant also builds re-engineered versions of the Alaskan for Alliance partner Renault and from 2017 and the Mercedes-Benz X-Class.

In 2012 European production of the Volkswagen Amarok was transferred from the Pacheco plant in Argentina to Hannover in Germany, sharing the facility with the Transporter van.

Ceasing European production

Volkswagen have announced that production of the current Amarok will cease completely at their Hannover plant by May 2020. Sifting through the news stories, many articles suggest that Ford and Volkswagen will co-develop a replacement for the Amarok pick-up truck. The details are currently sketchy, however, it appears that Ford’s mid-size Ranger pickup will form the basis of any future platform cooperation on pickups, helping Volkswagen reduce the costs associated with designing a replacement for the Amarok. Analysts suggest the partnership could create a production model with an on sale in 2022.

Volkswagen will stop selling the Amarok in the UK on the 31st August 2020, just before new emissions regulations come into force in September, obliging LCV manufacturers to lower the average CO2 emissions of their vehicle ranges to below 147g/km. The Amarok’s powerful V6 engine pushes its CO2 to 213g/km in its cleanest guise, lifting Volkswagen’s average significantly.

Production of the next-generation Amarok is thought to be moving to Ford’s Silverton facility near Pretoria, South Africa, with the spare factory capacity at Hannover potentially given over to new electric ranges due for future launches.

Early in 2020, Mercedes-Benz announced the demise of the X-Class pickup connected to the unavailability of Euro 6d-Temp engines. Production of the X-Class pickup at the Nissan factory in Barcelona ceased at the end of May, with the last units for the UK registered by 31st August 2020.

This brings the story up to date, with the announcement in May that Nissan will be closing the Barcelona factory. The production of the Navara will move to Nissan’s newly renovated facilities in Roslyn, near Pretoria in South Africa by the end of 2020. From a business perspective, this decision was made easier by the reduced volume produced in Barcelona of only 53,000 vehicles in 2019, around 25% of the factory capacity of 200,000.

Pickup Production

ModelCurrent ProductionFuture Production
Ford RangerSilverton, South AfricaSilverton, South Africa
Great WallBoading, ChinaBoading, China
Isuzu D-MaxPhrapradaeng, ThailandPhrapradaeng, Thailand
Mercesdes-Benz X-ClassBarcelona, Spain–
Mitsubishi L200Laem Chabang, ThailandLaem Chabang, Thailand
Nissan NavaraBarcelona, SpainRosslyn, South Africa
Renault AlaskanBarcelona, SpainRosslyn, South Africa
SsangYong MussoPveontaek, South KoreaPveontaek, South Korea
Toyota HiluxProspecton, South AfricaProspecton, South Africa
Volkswagen AmarokHannover, GermanySilverton, South Africa

The future of pickups

In an age of alliances and technology sharing, the pickup is leading the industry in how this can be achieved. However, with that sharing and the search for cost-saving has come a time where pickups are no longer built in Europe. With the closure of Nissan’s Barcelona plant, and Volkswagen’s relocation of Amarok production outside Europe, it means that no pickups will be built in Europe by the end of 2020. Although not currently a trend across all LCVs, the Glass’s commercial editorial team will continue to monitor the production of other segment contenders and understand where the next production trends will surface.

VW ID.3 offers TCO and equipment advantage over Golf VIII in Germany

Christoph Ruhland, Autovista Group’s European sales director, has produced analysis that reveals that the Volkswagen ID.3 has a lower total cost of ownership (TCO) and better standard equipment than the Golf VIII.

Volkswagen (VW) commenced order intake for the new ID.3 battery-electric vehicle (BEV) in Germany on 24 November. At face value, VW’s first dedicated BEV model has a higher TCO than the latest generation of the Golf, largely due to the higher acquisition costs of the ID.3 as its list price (about €35,000) is significantly higher than the 1.5-litre petrol Golf VIII.

Depreciation is the largest single factor in calculating acquisition costs and Autovista Group has benchmarked the prices and forecast residual values of both the ID.3 and Golf VIII against key competitors. Acquisition costs also include taxes and finance.

TCO and acquisition costs, VW Golf VIII versus ID.3

TCO and acquisitions

Source: Autovista Group, Car Cost Expert

The higher acquisition costs of the ID.3 are partly compensated by the BEV’s reduced utilisation costs, due to lower spending on fuel, service, wear and insurance. As with all BEVs, service costs are lower than for cars with internal combustion engines due to the lack of oil, and components such as oil filters and spark plugs. In fact, the ID.3 only requires replacement of the brake fluid and pollen filter at regular service intervals.

Service costs, VW Golf VIII versus ID.3

Service costs VW Golf VIII versus ID.3 table

Source: Autovista Group, Car Cost Expert

However, crucially, BEVs in Germany are subsidised with generous purchase incentives. The grant for BEVs costing less than €40,000 previously amounted to €6,000, split equally between the government and the carmaker. Since 1 July, the government has doubled its incentive (from €3,000 to €6,000) and in combination with the additional €3,000 contribution from VW, the acquisition costs of the ID.3 are about €1,400 lower than for the petrol Golf. In combination with the lower utilisation costs, the incentive-adjusted TCO of the ID.3 is about €4,300 less than the petrol Golf.

This aligns with Autovista Group analysis of C-segment models, published in June, which uncovered that BEVs are only TCO-competitive in European markets because of government incentives. In Germany, the additional €3,000 government subsidy since 1 July gives the ID.3 a significant TCO advantage over the Golf VIII.

Discounting and equipment analysis

However, customers may be able to negotiate a healthy discount on the Golf VIII, which OEMs are unlikely to offer on BEVs in addition to their €3,000 incentive contribution. For example, a 20% discount on the petrol Golf would give it a TCO advantage of approximately €2,150 over the ID.3. Nevertheless, a 5% discount on the ID.3, in addition to the €9,000 BEV incentive, would be sufficient to make its TCO competitive with a 20%-discounted Golf.

Furthermore, it must be noted that the ID.3 has 204 horsepower and is therefore more powerful than the 150-horsepower 1.5-litre petrol Golf. The ID.3 also has better standard equipment, which Autovista Group has calculated to be worth about €1,800.

Equipment costs, VW Golf VIII versus ID.3

Equipment costs, VW Golf VIII versus ID.3 table

Source: Autovista Group, Car Cost Expert

When this is factored into the TCO calculation, the ID.3, even without discounting, narrowly beats a Golf with a 20% discount. If the ID.3 gains a 5% discount, the TCO advantage would amount to €2.400.

This would leave enough change for ID.3 buyers to invest in a home charger for the ID.3, which costs about €2,000 in Germany, including installation. Chargers are also entitled to a government incentive in Germany, about €900, and so EV-friendly families could even buy and install two units with the cost saving. Maybe one for themselves to overcome charging anxiety and one as an extra source of income?

Click here to view Autovista Group’s TCO dashboard for C-segment models, published before incentives were increased in Germany in July, and here for the TCO dashboard for B-segment models, published in September.

Autovista Group’s latest TCO dashboard considers D-SUV BEVs, revealing that they struggle to compete with petrol and plug-in hybrid D-SUV models without being eligible for government incentives.