Article Type: News

The economy behind large batteries in electric vehicles – is bigger better?

As carmakers chase greater electric vehicle (EV) ranges, batteries keep getting bigger. But do these larger energy-storage units pay off? Autovista Group experts explore the economies of large batteries with Autovista24 editor Tom Geggus.

As EVs transition into the mass market, the economies of bigger batteries need to be considered. When does the size of the energy-storage unit affect performance and pricing? What is the role of plug-in hybrids (PHEVs) in the transition to battery-electric vehicles (BEVs)? Are carmakers on the right track to push EVs into the mass market?

Autovista Group experts set out to answer these questions in a new webinar. The panel included Dr Christof Engelskirchen, chief economist at Autovista Group, Dr Anne Lange, director of research and innovation at Autovista Group, Christoph Ruhland, director of business development at Autovista Group, and Christian Schneider, director of content at EV Volumes.

Are bigger batteries better?

Between 2021 and 2024, Germany saw the average WLTP range of a BEV increase by 28% to 375km. While this meant greater distances without the need to plug in, drivers also benefitted from faster charging. The average DC charging speed increased by 25% over the same period to 131kW.

‘Range anxiety is not a big issue anymore with the current generation of EVs,’ said Schneider. ‘We see a small shift at the moment from range anxiety to charging anxiety. The charging infrastructure across Europe has grown quite a lot in the past, but it is still maybe struggling a little bit in some regions.’

So, while bigger batteries allow drivers to go further between charging stops, infrastructure still needs to be available. On top of this, faster EV charging means less time spent at a public plug-in point on a journey.

The economies of size

Engelskirchen calculated the savings associated with long-range BEVs, by comparing variants of the Tesla Model Y and Volvo EX30. This meant measuring the annual costs associated with all-electric cars on a 20,000km, three-year lease.

In Germany, a new long-range Tesla Model Y currently costs 9% more than the standard-range version. This means an absolute difference of €3,361, but what does that pay for? While the standard model is advertised with a WLTP range of 455km, the long-range version should reach 600km.

The Volvo EX30 is a more affordable BEV, but the price differential is greater between the two versions. The long-range model costs 13% more (€4,370) than the standard EX30. This puts the WLTP range up to 475km from 337km. But is there a financial advantage to paying for more kWh?

‘With a longer-range vehicle, you will be charging less publicly. Public charging is a bit more expensive. This means you are going to save €59 per year,’ Engelskirchen explained. However, this is dependent on the usage scenario. If a person makes more long journeys, they are likely to make more stops at public charging points.

Remarketing bigger batteries

So, how do larger batteries influence pricing in the used-car market? Using portal data of models at 10,000km in Germany, Lange revealed that BEVs with greater energy capacities retained more value.

BEVs with large batteries also sell more quickly. These models spend fewer days in stock compared to those with smaller energy-storage capabilities. For example, all-electric cars with a capacity of up to 50kWh spent 109 days in stock. Meanwhile, those above the 80kWh mark needed 95 days on average to sell.

However, Lange highlighted an important caveat. ‘It is quite hard to isolate the effect of battery size,’ she said. ‘Larger batteries will always be built into larger vehicle segments and will usually have better equipment, better trims, and higher horsepower.’

Plug-in hybrid highs

PHEVs have also seen battery capacities increase, alongside growing global demand. Global sales of the powertrain have accelerated, with EV Volumes forecasting continued growth in the years ahead. This trend is being driven by China, where demand is so great, it is dictating global figures.

However, this demand is not mirrored across the world. France represents a trend occurring in many European markets, with PHEV shares set to decline as more BEVs are adopted. One major exception to this steady descent is Germany, where the plug-in hybrid share dropped rapidly in 2023 after the German government withdrew purchase incentives.

Used PHEVs continue to sit behind internal-combustion engine models, but ahead of BEVs when it comes to value retention. The powertrain can also be expected to retrain a greater level of residual value if they are fitted with larger batteries. However, it is still important to recognise that bigger, more expensive models are likely to feature more energy storage.

Are carmakers on the right track?

So, will batteries continue to increase in size despite the drive towards the mass market? Ruhland pointed out that new and upcoming EVs are continuing the trend towards larger batteries. For example, the VinFast VF9 is expected to arrive in Europe with a battery capacity of 123kWh.

Meanwhile, the Denza D9 DM-i PHEV will feature a 40kWh energy-storage unit. Before long, there will be even more plug-in hybrids with batteries of this size, capable of electric ranges up to 200km.

To illustrate just how far EVs have come, Ruhland highlighted the journey of the Nissan Leaf. The BEV was first mass-produced in 2010 with a 24kWh battery, almost half of what some upcoming PHEVs will feature.

In the last 14 years, the EV landscape has changed almost beyond recognition. Where there was once a handful of plug-in models, a wide range of different BEVs and PHEVs now exist. Behind them stands an array of emerging carmakers.

The defining choice ahead of them is whether to put bigger batteries in their EVs or to optimise performance. By focusing on efficiency, OEMs could reach respectable ranges while also delivering cars with enjoyable driving dynamics. This will also keep costs from climbing further, meaning more EVs make it to the mass market.

If you enjoyed The economy behind large batteries in electric vehicles - is bigger better?, make sure to register for Autovista Group’s next free webinar. Blessing or curse: The impact of EU tariffs on BEVs made in China, will take place on 7 November 2024 at 9.30am BST / 10.30am CET. Find out more and register for your place today.

This content is brought to you by Autovista24.

Market decline ends period of new LCV success in UK

Following 17 consecutive months of growth, registrations of new light-commercial vehicles (LCVs) in the UK fell in June. Andy Picton, chief commercial vehicle editor at Glass’s (part of J.D. Power) analyses the figures with Autovista24 special content editor Phil Curry.

A total of 33,066 new LCVs were delivered in the UK last month, down 4.5% year on year. This comparative decline was the result of some impressive figures recorded in June 2023.

At 2024’s halfway point, a total of 177,620 LCV registrations were recorded, the highest first six-month total since 2021. This equated to a growth of 4.5% compared to the same period in 2023.

Continued declines

June’s decline was caused by varying demand across the different LCV markets. Registrations of pickups dropped 18.1% in the UK.

Deliveries of vans between 2.5 and 3.5 tonnes gross-vehicle weight (GVW) fell 8.2%. However, this sector still represented 65.6% of all LCV registrations, with 21,667 units. Yet it was the second month in a row that this key market recorded a decline in deliveries.

Vans below 2 tonnes GVW recorded a 58.7% increase in registrations with 806 units. Meanwhile, vans between 2 and 2.5 tonnes GVW rose by 14%, with 7,169 deliveries.

Transit leads

Once again, Ford recorded a strong month, taking the top two spots in June’s LCV best-seller table. The Transit Custom claimed top spot with 4,954 deliveries, while the Transit took second place with 2,730 units.

Rounding out the top three was the Mercedes-Benz Sprinter, reaching 1,911 registrations. Then came the Renault Trafic, recording 1,888 registrations.

The Stellantis trinity of Peugeot Partner, Vauxhall Combo (1,580 units) and Vauxhall Vivaro (1,450 units) finished in fifth, seventh and eighth places respectively. They were separated by the Ford Ranger in sixth with 1,686 deliveries. Elsewhere, the Volkswagen (VW) Transporter claimed ninth place registering 1,274 units.

BEV struggle continues

Registrations of LCV battery-electric vehicles (BEVs) fell for the third month this year, dropping by 16.8% compared to June 2023. A total of 1,476 all-electric units were registered in the month. The powertrain accounted for 4.5% of deliveries, down 0.6 percentage points (pp) on the same month last year.

Ford, Maxus and Mercedes-Benz registered an additional 48 BEVs above 3.5 tonnes GVW during the month. This puts June’s overall BEV registration total at 1,524 units.

At the halfway point of 2024, a total of 8,353 all-electric units have been registered, down 5.1% year on year.

The BEV market is also bracing itself for future challenges, which could impact registrations in the coming years. The Mayor of London recently confirmed that the Congestion Charge Exemption for BEVs in the city is to be removed from 25 December 2025.

Planned since 2018, the move ends the exemption for both electric passenger cars and commercial-vehicle models. However, challenges are likely, with suggestions for electric-LCV exemptions to continue, as these vehicles cannot avoid the zone.

In the first half of 2024, all-electric LCVs made up 4.7% of the overall market, down 0.5pp on 12 months ago. This is well below the 10% target set in the UK’s zero-emission vehicle mandate.

While LCV manufacturers continue to produce improved zero-emission vehicles, the run-up to the UK General Election has seen sales stall. In addition, caution and uncertainty are creeping into an already struggling sector.

Vauxhall takes charge

Vauxhall registered 424 BEVs in June, taking a 27.8% share of the EV market. This was a significant distance ahead of Mercedes-Benz in second (160 units and 10.5% market share). Peugeot was third with 146 units (9.6% share), fourth was Ford with 144 units (9.5% share) and fifth was Renault with 140 units (9.2% share).

The Vauxhall Vivaro Electric was the best-selling electric van in June, with 299 deliveries. In second, Renault registered 140 Kangoo E-Tech vans, with the Vauxhall Combo Electric in third with 125 units. The VW ID. Buzz Cargo van placed fourth with 123 new deliveries, whilst fifth was the Ford E-Transit with 117 registrations.

In the year to date, only BYD (100%), Maxus (12.2%), Peugeot (11.8%) and Nissan (10.9%) are currently meeting the minimum 10% zero-emission vehicle (ZEV) mandate sales share target for 2024. Vauxhall’s BEV vans took 8.3% of their LCV sales, and are moving in the right direction alongside the closely grouped VW (6.4%), Toyota (6.3%) and Renault (6%).

With a new UK government now in place, priority must be given to re-energising demand with a sensibly-priced van-specific charging network supported by economic incentives for electric-van growth. At the same time, provisions should be made available to support hydrogen development in larger LCVs and trucks. Only then can the industry make a full and necessary zero-emission transition.

Subdued desire in UK

A seemingly endless supply of used stock is entering auction houses, most of which are ex-fleet, low-spec vans with varying degrees of paint and bodywork damage. As a result, the desire for this quality of stock is subdued, with prices softening as buyers bid more cautiously.

However, ready-to-retail high-spec stock is bucking this trend, especially models with a good service history and under 60,000 miles (96,560km) on the clock. Higher mileage or damaged stock is seen to take longer to prepare for sale. Therefore, these models are not considered as attractive, meaning conversion rates have dipped.

June saw lower overall sales volumes, with figures ending the month down 9.5% on May, and falling by 8.2% compared to 12 months ago.

Euro 6 vehicles made up 80% of all vehicles sold at auction at an average age of 54.7 months. The average mileage stood at 73,708 miles, while the average selling price remained static at £9,022 (€10,711). This was only down by a marginal £3 on May.

A complete lack of enthusiasm for used electric vans saw sales halve to only 0.64% of the overall market. This was down from 1.2% in the previous month. The average age of these vehicles was 85 months, up by 19.3 months.

Meanwhile, average mileage increased by over 13,000 miles to 43,575 miles. The average selling price of these models was down by over £325 compared to May, at nearly £5,050. Euro 5 stock made up the remaining 19.3% of sales, down from 19.6% in the previous period.

Older on average

The average age of sold stock increased to 74 months in June, from 73 months in May. Yet this is 7.9 months younger on average than ages reported in the same period last year.

Average mileage over the month increased by nearly 1.3% to reach 80,576 miles, but this is 2.8% lower than in June 2023. Overall average sale prices fell by just 0.1% during June. This figure is a 5.6% decline since the end of 2023 and a decrease of nearly 14% in the last 12 months.

Medium vans continue to be the most popular vehicle type at auction, accounting for 32.7% of all auction sales in June. Small vans accounted for 28.2% of sales, and large vans took 25.3%.

Volumes of sold 4x4 stock accounted for only 13.8% of all sales, but this was up 2.3%. These vehicles also attracted the strongest average sale price of £12,831, down by £19 when compared to May 2024.

Large vans covered more distance than any other vehicle type at an average of 90,027 miles. This was up over 6,225 miles on the previous month and over 4,200 miles on 12 months ago.

Improving UK van conversions

First-time conversion rates improved by 2.7pp in June, reaching 69.4% overall, yet these figures fell by 2.3pp compared to the same point last year.

The best conversion rates were achieved in the small van sector at 74.6%, up from 72.4% in May. Large vans recorded the lowest conversion rate at 64.6%, down 1.1pp compared to May.

Used vehicles observed for sale in the retail market last month increased by nearly 1% to just under 46,000 units. Of these, 94.4% were diesel models, 1.8% were petrol, 0.4% were plug-in hybrids (PHEVs) and 3.3% were BEVs.

Of all vehicles on sale, 40.2% were valued at £20,000 or more, while 38% were on sale for between £20,000 and £10,000. At the lower end of the market, those vehicles on sale in the £10,000 to £5,000 price bracket made up 17.4% of the overall market, while 4.4% were on sale for less than £5,000. The average age of all vehicles remained steady, falling by only one month from 56 months to 55. The average mileage also fell by 1.5% over the month to just over 58,350 miles.

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BEV residual values suffer in April

Battery-electric vehicle (BEV) residual values (RVs) continued to suffer across Europe’s major used-car markets in April. Autovista Group (part of J.D. Power) experts examine the data with Autovista24 editor Tom Geggus.

Three-year-old BEVs at 60,000km continue to see low RVs presented as a percentage of list price (%RV). Across Austria, Germany, Italy, Spain, Switzerland and the UK, the technology’s value retention is far behind that of the other major powertrains.

Austria saw BEVs achieve one of the highest %RV levels at 45.1%. This was still below the overall market average of 51.8% and even further behind full hybrids (HEVs) which retained 55.8% of their original list price. In Germany, BEV %RVs sat at 40.1%, once again trailing HEVs (54.3%). The all-electric powertrain was also behind the powertrain average of 50.2% in the country.

BEVs saw the lowest %RV result in Italy, with such models only retaining 35.9% of their original list price value after three years and 60,000km. This was far below diesel as the leading powertrain at 57.1%, and the market average of 53.1%.

At 49.4%, BEV %RVs appeared to perform better in Spain. However, there was still a considerable gap between this result and HEVs, which led the market with a value retention rate of 64.7%. The wider market saw %RVs reach 59.3%.

HEVs also led value-retention rates in Switzerland at 51.6%, with the overall market reaching 47.7%. This left BEVs behind, holding onto only 44% of their original list price. Meanwhile, BEVs reached a %RV of only 37.1%, while the powertrain average sat at 51.7% and HEVs led the way with 54.2%.

The interactive monthly market dashboard examines passenger-car data by fuel type, for Austria, Germany, Italy, Spain, Switzerland, and the UK. It includes a breakdown of key performance indicators, including RVs, new-car list prices, selling days, sales volume and active-market volume indices.

Electric values suffer

Many European used-car markets saw BEV %RVs fall both month on month and year on year. The reasons behind these falling all-electric values are numerous. First of all, the rapidly advancing technology in new BEVs is aging older models significantly, making their ranges and capabilities look dated.

Secondly, companies like Hertz are reportedly seeing lower demand and higher repair costs for electric vehicles (EVs). This led to large-scale de-fleeting, with the company already planning to sell 30,000 plug-in units this year.

This will not only increase supply into the used market but will dent public confidence in EVs. This could lead to the popularity of stepping-stone technologies like HEVs and plug-in hybrids (PHEVs) increasing. These vehicles benefit from green credentials alongside the security of an internal-combustion engine (ICE).

With incentives ending across many European new-car markets last year, carmakers are also under increasing pressure to adjust BEV prices. With more affordable models arriving from China, a price war will only serve to damage used BEV values as the apparent value of existing models drops.

Stock moving quickly in UK

For the second consecutive month, the average number of days it took a dealer to sell a used car fell by over a week. At just 31.5 days, this is the lowest average seen since the extraordinary results of 2021, when strong demand led values to rise significantly.

‘Dealers have clearly been able to move stock quickly,’ commented Jayson Whittington, Glass’s (part of J.D. Power) chief editor, cars and leisure vehicles. ‘While the sales-volume index reflects a rise in activity, up 1.8% on last month, it is perhaps surprising that there has not been a greater spike in sales.’

The active-market volume index shows an 11.1% month-on-month increase in the number of cars advertised by dealers. So, there does not seem to be a shortage of stock, but perhaps the most in-demand stock is not currently plentiful. Therefore, when these models do hit forecourts they sell very quickly, affecting the overall average days-to-sell figures.

The wholesale market remained reasonably steady in late March and throughout the first half of April. Auction conversion rates have been satisfactory but have now begun to decline. Buyers appear more cautious of late, with some limited to only cherry-picking the best stock.

Cars with condition issues have been particularly difficult to sell, with rising costs of repair and delays in bodyshops deterring dealers. Hammer prices have been described as ‘seasonal’ by some commentators.

The average value of a three-year-old car, presented as a percentage of cost-new price, fell from 52.5% in March to 51.7% in April. Although this is 14.5 percentage points lower than April last year, it remains 4.4 percentage points higher than the equivalent value three years ago.

This content is brought to you by Autovista24.

Launch Report: Volvo EX30 presents premium B-SUV package

The Volvo EX30 is a premium entry to the B-SUV segment. Autovista Group (now part of J.D. Power) experts from Austria, France, Spain and the UK, analyse the model with Autovista24 special content editor Phil Curry.

Volvo has long led the charge for sustainable mobility, through both electric drives and the recycling of plastics. It brings this vision to life in the new EX30, a B-segment SUV with a battery-electric drive.

The model allows Volvo to expand into a new marketplace, meeting a growing demand for small electric SUVs. As a premium vehicle in the segment, it allows the carmaker to appeal to buyers looking to stand out from the crowd.

In Autovista24’s latest Launch Report, the EX30’s strengths, weaknesses, opportunities and threats are benchmarked against its key rivals. New price points are also outlined alongside forecast residual values.

A strong design

The Volvo EX30 is the brand’s smallest SUV. As a battery-electric vehicle (BEV), it enters a market that is becoming increasingly popular and even more congested with models.

So, standing out in the crowd is extremely important, and the Volvo EX30 achieves this. The smooth grille, a feature on BEVs due to the lack of large radiators, allows the brand’s badge to sit prominently.

On each corner, the ‘Thor’s Hammer’ style headlights sweep out and down the sides. This creates a recognisable lighting profile, making the model stand out both during the day and at night.

At 4.23 metres, this is the smallest-ever SUV Volvo has produced but its side profile belies this. The SUV’s tall side panels and doors are lined down toward the front end, providing a feeling of motion even when the vehicle is stationary.

Too minimalistic inside

Inside, the Volvo EX30 sports a minimalistic environment, with few switches and buttons. Instead, most of the auxiliary items are controlled using the 12.9-inch vertically-mounted touchscreen. This also includes the speedometer and driver information.

The EX30 does not have a dedicated driver cluster behind the steering wheel, and there is no heads-up display. This means the driver needs to glance downwards to get any information, and some of this data is buried in a multi-level menu system.

This raises some safety concerns which, for a brand as safety-conscious as Volvo, is a concern. These worries are also noted and addressed by the car itself, which activates audio alerts when it detects the driver’s eyes straying from the road ahead. This forms part of new safety systems designed to monitor driver behaviours.

The seating position is comfortable, and the front of the cabin provides plenty of room. The Geely SEA platform locates batteries beneath the floor, meaning there is no rear tunnel, allowing for more comfort. Yet the position of the front seats does impact legroom for taller passengers in the rear of the car.

Materials are not only of good quality but also contain recycled materials in-line with Volvo’s sustainable attitude. The carmaker states that 17% of the plastics inside the model are recycled, the highest percentage of any Volvo model to date.

Safety remains a priority

For its price point, the EX30 has a high power output, with the single-motor version producing 272hp and a 0-100kph time of 5.6 seconds. The model also offers a decent range, with the entry-level version capable of reaching 340km on a single charge. It provides a comfortable drive, although the twin-motor variant is heavier, which increases the body roll when cornering.

Aside from the issues surrounding the vertical touchscreen display, the EX30 builds on Volvo’s reputation as a brand that cares about safety. Most common assistance systems, such as adaptive cruise control and lane-departure warnings are available as standard across all trim levels. Meanwhile, the driver monitoring system is helpful if attention is diverted away from the road, for reasons other than adjusting the wing mirrors.

Overall, the Volvo EX30 is a strong entry into the B-SUV segment, one which will appeal to premium buyers looking for a smaller BEV to get around. Some of its flaws are fixable via over-the-air updates, and as the carmaker ramps up production, it is likely to take over as the brand’s most popular model.

View the Autovista Group dashboard, which benchmarks the Volvo EX30 in Austria, France, Spain, and the UK. The interactive dashboard presents new prices, forecast residual values, and SWOT (strengths, weaknesses, opportunities, and threats) analysis.

This content is brought to you by Autovista24.

What was the most popular EV worldwide in 2023?

The global electric vehicle (EV) market broke records throughout 2023. Leading this charge was the Tesla Model Y. José Pontes, data director at EV-volumes.com, unpacks the year and its most popular performers.

New EVs, consisting of battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs), saw global registrations jump 35% year on year in 2023. This allowed the electric market to end above the 13 million mark for the first time.

Plug-in models made up a record 22% of the entire new-car market in December, with BEVs accounting for 15% alone. This pushed 2023’s total EV share to 16%, a small rise from 14% in 2022. BEVs made up 11% of registrations worldwide last year, up from 10% in the previous year. It is worth considering that the overall global new-car market experienced double-digit growth in 2023.

PHEVs (up 47%) saw registrations grow more quickly across 2023 than BEVs (up 30%). This meant the hybrid powertrain increased its share of the EV market, reaching 31%, up from 28% in 2022. The PHEV share has been fluctuating between 26% and 31% since 2018, supporting the notion that the technology could remain relevant for a while.

Best-selling car in 2023

The Tesla Model Y recorded 1,211,601 registrations across 2023. This made it the best-selling model in both the new EV and the overall new-car market. The BEV saw deliveries grow 57% year on year, up from 771,000 units in 2022. The crossover can be expected to stay a market leader in 2024.

The BYD Song secured second place, as the Chinese SUV ended the year with 636,533 registrations, up 33% on 2022. Meanwhile, the Tesla Model 3 hit a new record of 529,287 registrations, putting it in third.

But despite its recent refresh, the Model 3 has reached full maturity. The sedan has seen its market share erode from 14% in 2019 to 12% in 2020, then 8% in 2021, 4.7% in 2022 and 3.9% last year. Sales have struggled to maintain momentum since hitting over 500,000 units in 2021.

Compared with 2019, last year’s result represents growth of 6% for the Model 3. But in the same period, the EV market more than doubled from 6.6 million units to nearly 13.7 million units, illustrating the BEV’s market limits.

BYD’s block

Below the top three, there was a block of BYD models. This included the Qin Plus in fourth, the Yuan Plus/Atto 3 in fifth, and the Dolphin in sixth. The BYD Seagull ended the year in seventh, profiting from a great performance in December and jumping two places. This meant the top seven places were dominated by just two carmakers.

The BYD Han won another full-size category title, followed by its sibling, the Tang. But both models saw declining sales in 2023, by 17% for the Han and 7% for the Tang. It will likely be much harder for the Chinese brand to retain the full-size category title in 2024.

In the second half of the table, the Volkswagen (VW) ID.3 was up one position to 15^th. Last year was a great one for the hatchback, as its sales jumped 79% year on year to 139,268 units. Thanks primarily to its success in China, this is the first time the BEV crossed the 100,000 mark.

GAC Aion also had a good year with its Y and S BEVs, with sales almost doubling. This put the models in ninth and 11^th respectively. But Li Auto made even greater strides, as the startup placed all three of its full-sized EVs in the top 20.

Four models from legacy OEMs made it to the top 20 in 2022, namely the VW ID.4, the Hyundai Ioniq 5, the Ford Mustang Mach-E, and the Kia EV6. But this count fell to just two in 2023, with the VW ID.4 in 12^th and ID.3 in 15^th. Considering the Audi Q4 e-Tron finished in 21^st, the top three models from a legacy OEM all belonged to VW Group.

Success by segment

Chinese models took the EV A-segment by storm in 2023. Coming seventh in the overall EV ranking, the BYD Seagull took the category title from the eighth-place Wuling Mini EV. The Seagull is a top contender to repeat its success in 2024. The Changan Lumin came third in the category, far from the top two.

The B-segment also saw many Chinese models succeed. The category was led by the BYD Dolphin which came sixth overall, followed by the Wuling Bingo in 13^th. The Peugeot e-208 came next but at a great distance from the top two with some 51,000 registrations. This was more than 100,000 units below the Bingo and some 300,000 units behind the Dolphin.

The C-segment was led by the BYD Yuan Plus/Atto 3. The crossover ended 2023 at 418,994 units, double its 2022 result. The GAC Aion Y came next with 235,861 deliveries, followed by the VW ID.4 with 192,686 registrations. Expect an exciting competition between the top two this year. However, the BYD Yuan Up, a smaller and cheaper sibling of the Yuan Plus, could provide a surprise.

Tesla’s D-segment

Tesla ruled over the D-segment in 2023. The Model Y was the clear leader, while the Model 3 came third. Between the two was the BYD Song. However, the Model Y already looks set to secure the category win again in 2024.

Three Chinese models commanded the E and F-segments. The BYD Han recorded 228,007 registrations, the BYD Tang 141,581 registrations, and the Li Auto L7 134,089 registrations. Should Li Auto or Aito want to compete for a top spot this year, a minimum production capacity of 150,000 units a year will be the bare minimum. Even so, the category leader will likely end up past the 300,000-unit mark.

Pickup trucks saw a second year of relevance in 2023 with around 52,000 deliveries, up 44% year on year. The Ford F-150 Lightening posted roughly 25,000 deliveries while the Rivian R1T managed some 15,000. Geely’s Radar RD6 took third with 4,736 units. In 2024, the Tesla Cybertruck is likely to disrupt this trio.

A total of 9,511 fuel-cell electric vehicles were registered in 2023, down 38% on 2022. This followed a drop from 2021, the year FCEVs reached a peak of 15,434 registrations. In 2023, the Hyundai Nexo (5,000 units) beat the Toyota Mirai (4,000 units).

Best-selling brands in 2023

In terms of brand volumes, BYD beat Tesla by a significant margin in 2023. With a 56% year-on-year growth rate, the Chinese company was the fastest-growing marque in the top three, allowing it to increase its lead to over one million units.

However, this trend is unlikely to continue into 2024. BYD is running out of room to grow in its domestic market, meaning the demand ceiling is closing in. Yet this supports the company’s overseas strategies, plans which could come to define the EV market in 2024.

In 2023, the Chinese brand started to export its EVs in significant volumes. Israel saw 15,000 units, Brazil 18,000 units, and Thailand 30,000 units.

In second place, Tesla’s market share continued to suffer erosion. This sat at 17% in 2019, 16% in 2020, 14% in 2021, and then 13% in 2022 and 2023. This could potentially stabilise around 10% in the future. The US carmaker will need to diversify its line-up if it wants to retake the brand title.

Due to a slow first half of the year, SGMW ended in sixth allowing BMW to take third. It may be difficult for the German carmaker to hold on to this position in 2024, considering the pack of fast-growing Chinese brands behind it.

In fourth, GAC Aion grew 78% to some 484,000 units, however, this growth will be difficult to sustain. So far, the brand has not found a way to replicate the success of its S and Y models.

This puts the carmaker in the sights of the rapidly-growing Li Auto in seventh. Its three current models will reach maturity in 2024. Then there are the upcoming launches of the Mega and the L6, which could mean the brand will deliver up to 700,000 units next year.

Benefitting from a slow December for Toyota, Nio was also able to climb up the ranking in the last month of 2023. The carmaker ended the year in 16^th, a five-position jump from its previous year’s standing. However, it could be difficult for the startup to remain in this spot given a lack of new models for 2024 and a sluggish export performance.

The other two brands to benefit from Toyota’s downfall were Ford, climbing one position to 17^th, and Jeep, up to 18^th. Out of all the legacy marques on the table, Jeep was the fastest growing, having seen its sales jump 53% compared to 2022. It ended the year as Stellantis’ best-selling brand, 23,000 units ahead of Peugeot in 22^nd.

Outstanding OEMs in 2023

Gathering EV sales by automotive group, BYD claimed a 22% market share, with 3,012,070 registrations. Tesla came second with an 13.2% share and 1,808,652 deliveries. This puts the two OEMs in a league of their own, controlling over a third of the market together.

VW Group remained in third, with a 7.3% market share, making it the leading legacy OEM. Meanwhile, Geely–Volvo (6.8% share) took fourth from SAIC (5.8% share) towards the end of the year. This means the fight for third in 2024 will be one to watch.

Stellantis (4.2% share) stayed in sixth but has lost half a percentage point compared to the end of 2022. However, the OEM delivered nearly 600,000 units last year. This means it should reach the one-million-unit scale for EV profitability by 2025, or possibly 2026.

BMW Group (4.1%) rose to seventh place and the German OEM should be competing for sixth throughout 2024. Hyundai Motor Group (3.7% share) dropped from seventh in 2022 to ninth in 2023, losing almost a full percentage point from 4.6%. The Korean OEM was also surpassed by GAC, which ended the year with a 3.8% share.

Battle of the BEVs

Looking only at BEVs, Tesla took the 2023 OEM title with 19.1% of the global market. This was up from 18.2% in 2022 but was down from the 23% it commanded at the end of 2020. Second went to BYD with a 16.5% share of the BEV market.

While Tesla’s market is likely to erode slightly in 2024, BYD will keep gaining share. This will be thanks to a larger number of BEVs in BYD’s line-up, including the Yuan Up and Sea Lion. Additionally, exports will be more focused on BEVs, with PHEVs only being used in select markets.

VW Group took third with an 8% share, while SAIC took fourth with a 7.9% holding. In fifth, Geely–Volvo claimed 6.2% of the market. Sixth-place GAC was a sizable distance behind, with a 5.3% share. Nevertheless, the OEM had a positive 2023, up from 4% in 2022.

BYD nears local limit

There are a number of trends already emerging which provide a good insight into what the automotive market can expect from the EV segment in 2024 and beyond.

The BYD brand is already close to its demand ceiling in China, meaning the OEM is increasingly focused on its premium brands. This includes Yangwang, Fangchengbao and Denza.

With a higher average price, margins are expected to improve. This will give BYD more options when pricing its mainstream models. But with competition heating up in the Chinese EV market, BYD will need to keep its line-up fresh to hold on to its share, while also considering pricing.

As such, growth will have to come from overseas markets which is something BYD has been preparing for. As well as buying and chartering its own vehicle vessel, it is building factories in places such as Thailand, Indonesia, Brazil, and Hungary.

Tesla’s production planning

Tesla delivered 1,808,652 units in 2023, but with little in the way of new offerings, the carmaker is unlikely to see rapid growth in 2024.

Tesla’s current issue is its lack of product planning. The Model S is now 12 years old, making a second generation rather overdue. The Model X is in its ninth year, meaning a new version should have been presented by now.

Meanwhile, the Model Y (2020) has reached maturity as has the Model 3, which launched in 2017 and only saw a refresh in 2023. Their successors should, therefore, be on the drawing board. However, this does not appear to be the case. The carmaker would do well to consider how it manages the lifecycles of its products.

VW Group and Geely

While suffering some management changes in recent years, VW Group is still the best-performing legacy OEM by far. With close to one million EV deliveries in 2023, its long-term survival is well assured.

Moving into 2024, the OEM’s leading models will mature. The only new models will be the VW ID.7, the Cupra Tavascan, the Skoda Elroq, the Porsche Macan, and the Audi Q6/A6 e-Tron.

Meanwhile, Geely has been steadily gaining ground in the EV OEM ranking in the last few years, ending 2023 in fourth with 925,111 registrations. This was only some 69,000 units below VW Group.

SAIC the export expert

While SAIC excels at exporting, it could do better locally. The OEM aims to sell around 1.4 million vehicles abroad this year. However, this does include models powered by internal-combustion engines.

With 14 new EVs expected by 2026, SAIC hopes to replicate the MG4’s success with other launches. This includes venturing into the premium end of export markets with its new IM brand. Therefore, 2024 is likely to see a new MG5 station wagon, a ZS crossover, and a flagship SUV model.

Another monthly title for Tesla

The Tesla Model Y took another best-seller position in December, with 128,410 deliveries. The crossover can be expected to keep racking up monthly titles this year as it has reached full maturity. With a refreshed version coming around April, it is likely to be the best year of the current generation.

In second place, the BYD Song hit a record 76,086 registrations. This could be its peak, with the recently-arrived Song L ready to cannibalise a significant volume of its sales in 2024, as will the upcoming Sea Lion.

Third place in December went to the Tesla Model 3, which posted more than 56,896 deliveries, ending well ahead of the BYD Qin Plus in fourth (44,701 units). Further down the ranking the Wuling Bingo came eighth (27,458 units), thanks to its continuous production ramp-up. The small EV seems ready to compete with BYD’s leading models for a top spot in 2024.

The VW ID.3 finished the month in 15^th. The model recorded 17,861 registrations globally in December, its best score since the end of 2020 when VW delivered units to dealerships to comply with emission requirements.

Thanks to price cuts in China, the ID.3 saw its fortunes change completely in the market. This helped compensate for its milder performance in Europe. Elsewhere in the compact category, SAIC’s MG4 (Mulan in China) scored 12,964 registrations in December, its second record score in a row.

Made in China

Some of December’s most significant figures were recorded in the full-size category. The entire Li Auto line-up reached record heights. The L7 marked 20,428 registrations, the L8 saw 15,013 deliveries, while the L9 marked 14,913 units.

December’s best-selling full-size model was the Aito M7, which took ninth place in the EV market with 25,545 deliveries. With Huawei putting its weight behind the brand, sales increasing rapidly.

Every model in December’s top 20 was made in China. A total of 16 belonged to Chinese carmakers, with seven coming from BYD alone. This illustrates the importance of the Chinese market in the broader EV industry.

Successful SUVs

Outside of December’s top 20, the Geely Panda Mini was close to joining the table, having ended the month fewer than 300 units behind the BYD Tang in 20^th. The compact Audi Q4 e-Tron was also close, with 11,260 registrations.

In the midsize category, SUVs were trending with several record-breakers. After several years on the market, the Volvo XC60 PHEV hit a best-ever global total of 7,868 registrations. Deliveries of the Lynk & Co 08 PHEV reached 10,055 units, while SAIC’s IM LS6 posted 9,878 units, and the Changan’s Deepal S7 11,360 units.

However, the recent Wuling Starlight from SGMW proved that success is not restricted to SUVs, recording 8,050 deliveries in December. In the full-size category, the Jeep Grand Cherokee PHEV reached a record 7,299 registrations.

The BMW i4 achieved another registration record, with 11,203 units delivered in December. This made it the best-selling EV produced outside of China. However, the i4 only posted a fifth of the registrations achieved by its competitor, the Tesla Model 3.

The BMW iX1 also achieved a new best of 8,775 deliveries, its third record in a row. Meanwhile, the iX also shined, with 7,027 registrations.

A record month for brands

BYD managed another record month in December, this time with 320,928 registrations. It once again beat Tesla, which posted 195,265 deliveries.

SGMW came third thanks to a best-ever monthly tally of 69,912 registrations. Its three models (the Mini EV, Bingo, and Starlight) contributed decisively to this performance. In fourth with 59,480 deliveries, BMW had a record month thanks largely to the success of its i4 fastback (11,203 registrations), but also the iX1 (8,775 units) and iX (7,027 units).

VW came fifth with 52,042 registrations, followed closely by Li Auto with a new best of 50,356 units. In the same month last year, it posted 21,233 registrations. In eighth, Changan recorded 43,095 deliveries, its second-best performance in a row, thanks to the Lumin and Deepal S7.

MG4 boosts SAIC

SAIC made it to 11^th with a record 35,334 registrations. This was owing to the performance of its star player, the MG4. Aito rocketed up to 12^th with its M7 SUV and even larger M9. The brand hit a record 30,108 units in December.

In 13^th, Audi also registered its best month with 28,024 deliveries in December, thanks to the Q4 e-Tron. XPeng came 17^th, with 7,673 registrations of its G6 midsize SUV in December. This allowed the carmaker to hit a total of 20,105 units in the month, almost catching Hyundai in 16^th (20,631 units). Chery came 20^th thanks to the positive results of the QQ Ice Cream (7,462 units).

Jeep landed in 21^st, making it the best-selling US legacy brand as well as Stellantis’ best-selling marque. With 17,723 registrations, it achieved a new record. This was down to the continued success of the Wrangler PHEV and Grand Cherokee PHEV.

Lynk & Co came 22^nd with a new best of 17,505 deliveries. The 08 SUV accounted for the bulk of the registrations (10,055 units), allowing the Chinese brand to end close to the table.

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Difficult start to 2024 for used BEVs

Battery-electric vehicles (BEVs) experienced a difficult January across many of Europe’s major used-car markets. Autovista Group experts consider powertrain performances, including residual value (RV) trends and days to sell.

RVs of all-electric models presented as a percentage of the original list price (%RV), experienced a troubled start to 2024. Set against a market average covering all powertrains, BEVs retained considerably less value across a number of European countries.

The biggest gap was recorded in Italy, where all-electric models only retained 37.8% of their new-car value after three years and 60,000km. Meanwhile, the average across all powertrains in the country sat at 55%.

BEVs saw a similar performance in the UK, with value retention levels at 38.4%, while the total market average sat at 53.3%. Used all-electric cars retained 41.7% of their value in Germany while all powertrains averaged 51.6%.

The electric powertrain saw %RVs hit 47.3% in Austria, compared with 53% across the wider market. In Switzerland, BEVs retained 44.9% of their new-car list price. This resulted in a more favourable comparison against the wider market, which recorded an average %RV of 49%.

Of the markets up for review, Spain was the only one to see BEVs retain over half of their original list price in January. But at 50.2%, this did equate to a larger gap in relation to the market average of 60.2%.

Do EVs need a boost?

These latest figures coincide with troubling headlines about electric vehicle (EV) uptake, as demand appears to have dipped across new-car markets. Companies originally keen to electrify their fleets have contributed to this more negative narrative.

Within its fourth quarter results, Hertz confirmed its plan to reduce the presence of EVs in its fleet. ‘We continued to face headwinds related to our electric vehicle fleet and other costs throughout the quarter,’ said Stephen Scherr, Hertz chair and CEO.

‘We have taken steps to address those challenges and heading into 2024, we are confident that our planned reduction in EVs and cost base, along with the ongoing execution of our enhanced profitability plan, will enable us to regain our operational cadence and improve our financial performance with increasing effect into 2025,’ Scherr added.

However, there are some signs of redemption for all-electric cars, as BEVs topped the fastest sellers list in two major used-car markets. The Audi e-Tron was sold in an average of only 23 days in the UK, while in Germany the Volkswagen ID.3 needed 42 days.

With year-on-year growth posted in the sales-volume index (SVI) across all six markets, demand for the powertrain does remain. So, while BEV prospects might appear bleak at first, consumers in the used-car market do seem willing to snap up the right model at an attractive price.

A turning point for UK BEVs?

‘Following poor trading conditions throughout December 2023, a three-year-old car’s average %RV fell,’ confirmed Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

At the beginning of January 2024, %RVs dropped to 53.3% from 55.6% in December 2023. Compared to 12 months earlier, levels declined by over 10 percentage points, a stark reminder of just how volatile the used-car market has been over the past year.

All powertrains experienced significant declines in %RVs over the past 12 months, although some stood out more than others. ICE-powered models fared better than electrified vehicles, with petrol falling 8.8 percentage points year on year. Meanwhile, diesel declined slightly less at 8.3 percentage points.

In recent years, HEVs retained significantly more of their cost-new price than other powertrains, however, this has since been eroded. HEV %RVs fell by 15.8 percentage points compared to last year and is only marginally ahead of petrol at 55%. PHEV %RVs fell 12.6 percentage points, down to 50.9%.

BEVs recorded the most noteworthy %RV performance in the past 12 months. Figures fell by 20.7 percentage points, from 59.1% to just 38.4%. All-electric RVs have now settled, and their revised price position is proving popular with consumers. This has been illustrated by the list of fastest-selling models which has included BEVs in the past few months.

According to the SVI, sales activity for the overall market was down 3.8% in the 30 days prior to 10 January 2024, compared to December. This is perhaps unsurprising as consumers tend to have other priorities during this period. However, the SVI was up 4.8% from a year earlier.

Dealers will be hoping that the used-car market will begin to improve and that RVs will stabilise. Early indications are that the wholesale market improved in January. So, dealers clearly have the confidence to stock forecourts, which bodes well.

Slight RV rise in Austria

Lower levels of used-car transactions persisted in Austria as living costs remained high. In January, the SVI fell by 16.5% compared with December, and 6.5% year on year. At the same time, the supply volume of two-to-four-year-old passenger cars was around 2.7% lower than in December 2023.

The average number of days needed to sell a used car increased to nearly 71 days in January. Diesel vehicles sold the fastest, averaging approximately 62 days, followed by petrol cars at 74 days. Plug-in hybrids (PHEVs) sold at around 84 days, and battery-electric vehicles (BEVs) at just over 89 days. Full hybrids (HEVs) posted slower sales at nearly 96 days.

Despite weakening demand, the %RVs of 36-month-old cars increased slightly compared to December, reaching 53% on average. This marked a decrease from 54.9% in January 2023 and shows that pressure on RVs is increasing alongside stable used-car supply.

HEVs led the way with a %RV trade value of 57.2% followed by petrol models (55.5%), diesel cars (51.9%) and PHEVs (50.7%). Meanwhile, 36-month-old BEVs retained the lowest value, at 47.3%. As demand is expected to weaken, further pressure on RVs can be expected.

‘The market’s average %RV of a 36-month-old car at 60,000km ended last year down 4.6% on December 2022,’ Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland outlined.

‘In 2024, %RVs are expected to decrease further by around 3.4% year on year, due to weakening demand and unwavering supply. In 2025, %RVs are expected to decrease but at a slower pace,’ he reflected.

Savage EV spiral in Germany

Absolute RVs in Germany remained stable month on month but dropped 7.7% compared with January 2022. With list prices increasing, %RVs declined 4.6% against December and 10.6% year on year.

The country’s new-BEV market has struggled recently. This follows the abrupt halt of purchase incentives in mid-December. In January, the used-car market saw all-electric %RVs fall to 41.7% from 51.9% a year earlier.

‘At the end of 2023 and into January 2024, news of large manufacturer discounts and price reductions for electric vehicles (EVs) dominated discourse across the automotive industry,’ highlighted Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

This sends out a dire message to potential electric customers: ‘something is wrong with EVs and nobody wants them.’ The concern is that this perception becomes reality as popular opinion turns against the technology, slowing uptake and generating further scepticism.

In turn, dealers have become unsettled as stock volumes increase and days to sell extend. Of the younger used cars on the market from 2022 onwards, roughly one in six is a BEV or PHEV. This trend, alongside the associated risks, is increasing.

‘Prices are falling and competitive pressure is ensuring continued downward momentum. Decreasing new-car prices have only served to accelerate this trend. This will negatively affect models registered between 2020 and 2023 as they enter the used-car market,’ Geilenbruegge added.

The only way to ensure some RV stability in the country is by reducing or delaying volumes via exporting or used-car leasing. Dealers will need support from manufacturers to ensure adequate prices can be maintained until buyers are found.

Ultimately, this negative trend can only be tempered by external stimulation generating more used-car demand. However, five out of six young used cars are still quite profitable. This is thanks to their internal-combustion engine (ICE) powertrain, not to mention those registered before 2020.

Italy awaits EV incentive announcement

Overall, Italy’s used-car market performed as expected in January. Absolute RVs grew by 9.1% year on year, but list prices increased by 9.9%. Therefore, %RVs saw a slight fall of 0.7%.

This descent is only expected to become more severe, reaching a drop of 2.2% by the end of 2024. Given the normalisation of factors which led to strong RV growth in recent years, this downward trend is forecast to continue.

‘However, one factor could change this scenario considerably, namely a new incentive scheme that could be introduced in the coming weeks, potentially in March,’ explained Marco Pasquetti, head of valuations, Autovista Group Italy.

The decree has still to be discussed, but some potential details have come to light in statements made by the Ministry of Enterprise and Made in Italy. Citizens with an annual income below €30,000 could scrap an older vehicle (up to Euro 2) and receive €13,750 towards a new EV purchase. This is more than double the current incentive.

This would likely put far more pressure on RVs, which would fall faster than expected. There has also been some talk of incentives for used cars. However, it is necessary to wait for a final official text before drawing up any conclusions.

EVs still sluggish in Spain

‘It is common for the first month of the year to see a downward adjustment in used-car prices, but at the start of 2024, this added to a negative trend already set in motion in 2023,’ commented Ana Azofra, Autovista Group head of valuations and insights, Spain.

The average absolute RV of a used vehicle fell by 0.9% from December 2023 to January 2024. This was particularly driven by the declining values of PHEVs and BEVS, down 2.1% and 1.4% respectively. EVs have not yet taken off in Spain, despite government incentives.

‘Price adjustments of new models will help remove the economic barrier, but the lack of appropriate charging infrastructure remains a significant obstacle to market integration,’ Azofra confirmed.

Combined sales of new BEVs and PHEVs just about reached a 12% market share across 2023. This is increasingly distant from the European EV average, only similar to Italy, where growth has slowed in recent months.

Yet the number of BEVs on offer continues to expand alongside the pressure to sell them. Leasing companies are integrating these models into their fleets, but rental companies are starting to go the opposite way, despite their importance in southern European markets.

This is increasing the volume of used EVs entering dealerships, where they are still difficult to sell. Therefore, the pressure on used plug-in models is intensifying, with this downward trend expected to continue in the coming months.

Other powertrains have seen more balanced trends in recent months, with HEVs dominating the market and possibly already approaching a natural ceiling. Toyota’s Yaris and C-HR once again saw the best turnover data in January.

EVs struggle in Switzerland

With higher living costs in Switzerland since the beginning of 2023, used-car transactions have struggled over the last 12 months. The country saw its active-market volume index for two-to-four-year-old passenger cars fall by 2.5% month on month. This more than doubled year on year to a decline of 5.5%.

Remaining in stock for 79 days, two-to-four-year-old passenger cars sold slightly faster last month, down a day from December. HEVs were once again the fastest selling on average, after around 58 days, followed by diesel cars (70 days), then petrol models (78 days). EVs took longer to move, as BEVs took over 92 days to sell and PHEVs needed nearly 94 days.

HEVs achieved another slight year-on-year %RV gain, holding firm at 52.6%. Petrol cars came next (49.9%), then diesel models (48%), followed by PHEVs with 46.3%. 36-month-old BEVs held 44.9% of their original list price.

The SVI in Switzerland declined significantly in January, down 16.9% month on month and 13% year on year. Meanwhile, the average %RV of a 36-month-old car declined again, as supply remained stable and demand deteriorated. Figures dropped from 49.4% in December to 49% in January, moving further away from the 52.6% recorded a year earlier.

Three-year-old car values are forecast to decline from a relatively high level, set against a wider declining trend,’ commented Hans-Peter Annen, head of valuations and insights, at Eurotax Switzerland. ‘Used-car demand is expected to weaken while supply remains steady.’

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Residual values set to decline in 2024

Experts from across Autovista Group unpack what happened in Europe’s used-car markets at the end of 2023 and what it means for residual values (RVs) this year.

The residual values of three-year-old cars at 60,000km, presented as a percentage of original list price (%RV), are expected to follow a falling trend into 2024. The used car markets of Austria, Germany, Italy, Spain, Switzerland and the UK can all expect to see values decline this year.

The largest drop is expected in the UK, with %RVs forecast to fall 7.5% year-on-year by December. This is followed by predicted declines of 4% in Switzerland and 3.5% in Austria. Italy is not far off, with an expected drop of 2.3%. Meanwhile, the declines forecast in Germany and Spain are more marginal, at 1% and 0.7% respectively.

These projections follow on from a negative trend established in 2023. The year got off to a good start, but higher living costs soon began to erode spending power across Europe. This meant used-car demand slowed across many markets.

Additionally, consumers who did venture onto forecourts were more likely to find older models in countries like Germany. This was due to a lack of supply from de-fleeting, as new-car purchases in 2020 and 2021 were heavily impacted by the COVID-19 pandemic.

Fears for BEV values

There was also a great deal of concern for the residual values of battery-electric vehicles (BEVs) in 2023. As the powertrain’s early adoption stage came to a close and competition from new brands increased, many carmakers began adjusting the prices of new models. This impacted the value of models already on the road.

Looking at December 2023, BEV %RVs fell in Austria (down 13.7%), Germany (down 15.7%), Switzerland (down 10.8%), and the UK (down 36.2%). Only Italy (up 0.5%) and Spain (up 2.8%) saw more stable all-electric car values.

Incentive schemes will be fundamental in deciding how BEV uptake, both in the new and used markets, will progress in 2024. This includes financial grants towards purchases, adjusted power costs, charging infrastructure implementation and tax schemes.

Residual values fall expected in UK

In the fourth quarter of 2023, the UK used-car market saw large month-on-month declines in residual values (RVs), led by a lack of wholesale activity. This could have been the result of a drop in retail demand or a reluctance of dealers to speculatively stock forecourts.

‘Either way, the outcome was that the overall %RV fell by 9.9%, or 6.2 percentage points when compared with 2022,’ commented Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

The UK’s used-car market began 2023 in a reasonably healthy position. Retail activity throughout the first quarter was very good, and the average three-year-old model did not suffer any depreciation.

This was brought about by a very buoyant wholesale market. Auction conversion rates regularly approached 80%, something not seen regularly in 2022. Retail activity during this period was very good and gave dealers the confidence to speculatively stock forecourts which undoubtedly led to increased wholesale demand.

The second quarter began in a similar vein, with RVs growing stronger in April by almost one percentage point, although this eased in May and June. The summer months were typically subdued. This is frequently a period in which consumers switch their focus to other priorities, such as the holiday season. Consequently, RVs fell throughout the third quarter.

Used-car values were volatile throughout the last quarter of 2023. However, the average RV of a three-year-old car in December 2023 remained 9.2 percentage points higher than in December 2020, just before the significant hike in values observed throughout 2021.

Weakening demand in Austria

Austria saw lower levels of used-car transactions in December as living costs remained high. The sales-volume index (SVI) dropped by 6.9% compared with November, and 2% against December 2022. Meanwhile, the supply volume of two-to-four-year-old passenger cars was around 1.7% higher in December than a month earlier.

The average number of days needed to sell a used car fell to around 67 days in December. Diesel cars sold the fastest, averaging around 64 days, followed by petrol-powered vehicles at 67 days. BEVs took around 74 days to sell and plug-in hybrids (PHEVs) roughly 77 days. Full-hybrids (HEVs) sold more slowly at nearly 81 days.

‘As demand dropped, residual values of 36-month-old cars at 60,000km fell compared to November,’ explained Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland.

‘Average %RVs dropped to 52.7%. This marked a decline from 55.2% in December 2022 and shows that pressure on RVs is increasing as supply remains stable,’ he added.

HEVs led the way with a %RV trade value of 56.1% followed by petrol models (55.4%), diesel cars (51.4%) and then PHEVs (50.2%). Meanwhile, 36-month-old BEVs retained the lowest value at 46.7%. Continued pressure on RVs can be expected alongside falling demand.

‘In 2024, average %RVs are expected to decrease further by around 3.4% year on year, due to weakening demand and unwavering supply,’ Madas added.

Difficult year for residual values in Germany

‘A small amount of used-car-market growth can be expected in Germany in 2024, owing to recent new-car-market trends,’ said Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

Fleet registrations were weak in 2021, as the market was affected by the COVID-19 pandemic and the ensuing supply-chain crisis. Supplies of used cars up to four years old will therefore likely remain low overall this year. Similar to 2023, older models will appear more frequently on used-car portals.

An overall increase to around 6.4 million used-car transactions is realistic in 2024. This would still be down on the over seven million sales recorded in 2019, prior to the pandemic. This will mean a sales gap that retailers will need to address.

Therefore, 2024 will be a transitional year with price stability and undersupply expected in only a few segments of the new and used-car markets. This will primarily affect internal-combustion engine (ICE) models, while competition and oversupply will impact electrified powertrains, including HEVs.

‘Unfortunately, it will therefore be a difficult year for residual values,’ Geilenbruegge added. There will be cause for RV optimism after 2024, fuelled by improving macroeconomic factors, growing demand, and hopefully government support for the purchase of used electrified models.

This does not necessarily mean new incentives, but rather anything that will encourage the use of an electric vehicle (EV). This could mean subsidising electricity, expanding the charging network, easing the administration of constructing private EV infrastructure, or significantly increasing the vehicle tax advantage.

Volatile prices in Italy

Following a recently established trend, December saw %RVs decline in Italy by 0.8% month-on-month. However, these values grew by 1.9% year on year. %RVs can be expected to fall in 2024, following the downward trend observed in the second half of 2023.

‘Alongside falling values, the number of days it took to sell a used car increased,’ stated Marco Pasquetti, head of valuations, Autovista Group Italy. ‘In December, vehicles remained in stock for an average of almost 68 days before the sale was finalised, whereas it only took 56 days at the same point in 2022.’

The only powertrain to see %RVs decline was compressed-natural gas (CNG), from 42.6% in December 2022 to 41.5% in the same month last year. This was despite the cost of the fuel falling significantly compared to a year ago.

On the other hand, average prices have been extremely volatile recently. This has made cautious buyers who are concerned about consumption and budgeting, even more wary. Meanwhile, %RVs have grown most significantly for liquid-natural gas (LNG) models and HEVs, up 15.8% and 9.8% respectively. Growth was more moderate for PHEVs and especially BEVs.

‘It is not necessary to radically alter the outlook for these powertrains for the next few years,’ Pasquetti said. ‘However, much will depend on whether government promises made at the end of 2023 to revise the incentive scheme are upheld.’

Similar year expected in Spain

For yet another year, while still dealing with various challenges, the Spanish automotive sector came out ahead. The new-car market recorded a year-on-year registration increase of almost 17% across 2023, with nearly 950,000 units.

These figures are still insufficient to meet industry expectations of a stable market in 2024, once production and logistical problems have been resolved and interest rates see more encouraging developments.

‘The Spanish used-car market ended 2023 in positive territory,’ said Ana Azofra, Autovista Group head of valuations and insights, Spain.

Approaching two million used-car transactions, a growth of nearly 4% was recorded in the year. The market was still slightly weighed down by a large number of vehicles aged seven years and above. However, 2023 has seen some rejuvenation with the renewals from car-rental businesses and leasing companies.

Trade values finished the year almost 4% lower than in 2022. Specifically, the average price paid for a three-year-old vehicle at 60,000km was €19,445. These models spent 71 days in stock on average, 10 days more than in December 2022.

Overall outlooks remain roughly stable, with slight declines, especially for PHEVs and BEVs. The RVs of both technologies are forecast to develop negatively moving forward.

HEVs recorded a good year, with strong demand on new and used-car markets as well as healthy transaction price developments. This benefitted the likes of Toyota, Hyundai and Kia, all brands which have supplied HEVs to the used-car market.

‘The coming year can be expected to deliver a similar performance to 2023, which will be considered further in the coming months,’ Azofra added.

Slower sales in Switzerland

‘The supply of used cars in Switzerland recently stabilised on pre-COVID-19 levels,’ explained Hans-Peter Annen, head of valuations and insights, at Eurotax Switzerland. ‘Living costs in the country have climbed since the beginning of 2023, while transactions slowed.’

The active-market volume index for two-to-four-year-old passenger cars decreased by 1.6% from November to December. The supply level was only 1.3% lower than a year earlier. Constrained supply has only persisted for younger models.

The SVI declined by 1.6% month on month and 6.3% year on year. The recent steadiness of supply and deterioration of demand has resulted in the average %RV of a 36-month-old car falling again. The level went from 49.9% in November to 49.4% in December, while the average %RV was higher at the same point last year, at 52.1%.

HEVs achieved another year-on-year %RV gain, this time climbing to 52.6%. Petrol cars followed (50.4%), then diesel models (48.5%), followed by PHEVs (46.7%). Meanwhile, 36-month-old BEVs held 45.4% of their original list price.

Two-to-four-year-old passenger cars sold more slowly in December, remaining in stock for 80 days, up a day from November. HEVs sold the fastest on average after 73 days, followed by petrol cars after 76 days, then diesel models after 79 days. PHEVs took over 89 days to sell on average while BEVs needed nearly 106 days.

Used-car demand is expected to diminish while supply remains stable and unwavering. The values of three-year-old cars are forecast to stay relatively strong, set against a wider declining trend. The %RV level in Switzerland finished 2023 down 5% on December 2022. In 2024, levels are expected to fall by around 4% due to stable supply and lower demand.

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Mixed new-LCV market results in UK as Euro 6 dominated used-van transactions

The UK’s new light-commercial vehicle (LCV) market grew in November while the used market saw a large number of Euro 6 models change hands. Andy Picton, chief commercial vehicle editor at Glass’s (part of Autovista Group) unpacks the trends.

Data from the Society of Motor Manufacturers and Traders (SMMT) reveals that LCV registrations in the UK grew for the eleventh consecutive month in November. A total of 27,433 new units took to the roads, up 12.7% compared to 12 months ago. Registrations in the year-to-date reached 311,754 units, an increase of 19.8% on 2022.

Vans weighing between 2.5 and 3.5 tonnes gross-vehicle weight (GVW) saw deliveries decline by 1.6% year on year to 18,367 units. This category represented 66% of all new deliveries in the month. All other segments recorded year-on-year growth. Pickups recorded a 14.9% increase in registrations. Vans below 2 tonnes GVW rose by 10.4% while those between 2 and 2.5 tonnes GVW rose by 161.1%.

Ford Transit on top

Ford posted another strong month in November. The Transit Custom (3,266 units) and Transit (2,222 units) came in first and second respectively, while the Ranger pickup (1,624 units) finished fourth.

Stellantis also performed well, with the Vauxhall Vivaro (1,783 units) and Citroen Berlingo (1,311 units) finishing in third and seventh respectively. Meanwhile, the Mercedes-Benz Sprinter finished in fifth (1,525 units).

Elsewhere in the top 10, the Volkswagen (VW) Transporter claimed sixth (1,416 units) and the Toyota Hilux eighth (934 units). In ninth place was the Maxus Deliver 9 (819 units), while close behind was the Renault Trafic in 10^th (816 units).

Stellantis led the electric LCV market in November with a 55.4% share. Of this, Vauxhall made up 51.5%, with the Vivaro Electric ending the month as the best-selling model, hitting 405 units, nearly 25% of the whole electric-van market. Elsewhere in the electrified market, Toyota registered 180 units (11% market share), Volkswagen 159 units (9.7%) and Mercedes-Benz 147 units (9%).

ZEV mandate impact

Electric LCV sales have dipped in the run up to the introduction of the zero-emissions vehicle (ZEV) mandate on 3 January 2024. Manufacturers will need 10% of their annual fleet to come from new electric van sales, with units sold from the implementation of the mandate counting towards this goal, while those beforehand will not.

This provides an incentive for manufacturers to pause deliveries, delaying them until the new year. A total of 1,631 all-electric vans were registered in November, down 17.4% on 12 months ago. These units made up 5.9% of the overall market in the month, down from 8.1% in November 2022. The latest figures mean that the year-to-date BEV registrations of 17,289 units account for only 5.5% of the overall market, down 0.3% on the same point in 2022.

With diesel-powered vehicles still making up 91.9% of all LCVs registered this year – down only 0.1% on the same period in 2022 – a lot of effort is needed to drive electric van adoption. This is unlikely to be helped by the introduction of tough Rules of Origin requirements, currently scheduled to come into force at the start of 2024.

The Rules of Origin will see tariffs placed on any all-electric van originating from the EU – currently 83.6% of the year-to-date total – potentially resulting in a reduction in choice and affordability. Unless delayed or cancelled, these new rules will see the new ZEV mandate come under pressure before it even begins.

Cleaner options in used-van market

In an improving marketplace which demands newer and cleaner stock, over 70% of all LCV sales at auction were Euro 6 models, with an average age of 53.5 months. Average mileage was just over 71,300 miles, while the average selling price was £10,825 (€12,633).

Over a quarter of all stock sold was Euro 5 or older, with an average age of 146 months, mileage of nearly 108,500 miles and sale price of just over £3,000. Used electric vans made up less than 2% of all sales at auction with an average price of nearly £5,400.

The volume of sales decreased by 9.5% over the month, but average prices increased by over 6.5%. This reflected a steady market with younger stock, but a lack of variety. Although average sales prices increased quite considerably over the month, figures remain 11% behind the same point last year.

The average age of all vehicles sold sat at 77.9 months, up 5.1 months on October and 0.8 months on November 2022. The average monthly mileage fell by 2.83% to 80,248 miles, 1.35% lower than in November 2022.

More medium vans were sold at auction than any other vehicle type, accounting for nearly 34% of all sales through this channel. Large vans accounted for 26.6% and small vans 26.3%. Volumes of 4×4 stock accounted for only 13.4% of all sales, but attracted the strongest average sales prices of £13,389, up £240 on October. Large vans covered more distance than any other type at an average of 85,339 miles. This was over 6,200 miles less than in October and reflects the younger model mix on offer.

First-time conversion rates for November declined by 0.8% to 75.8% overall, a figure that is 3.2% lower than at the same point 12 months ago. Broken down, the best conversion rates were seen in the medium panel van sector at 80.1% (up 2.9% on October). Meanwhile, a conversion rate of 65.2% (down 10.2%) in the 4×4 pickup sector returned the lowest result.

Used vehicles observed for sale in the wholesale market last month remained relatively static at 42,500 units. A total of 45.7% of all vehicles on sale were valued at £20,000 or more, while 36% were on sale for between £20,000 and £10,000. At the lower end of the market, those vehicles on sale in the £10,000 to £5,000 price bracket made up 14% of the market, while 4.3% were on sale for less than £5,000.

Read about used-car markets developments in other European markets.

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BEV struggles continue as UK beats pre-pandemic registrations in October

The UK’s new-car registration figures in October beat 2019’s numbers for the first time since the COVID-19 pandemic struck, highlighting the strength of the country’s automotive market recovery.

Last month, registrations in the UK were up 14.3% year on year, with the latest figures from the Society of Motor Manufacturers and Traders (SMMT) showing 153,529 new cars took to the country’s roads. This was also 7.2% up on October 2019, with 10,251 more units than four years ago.

This is the first time new-car registration data has improved on pre-COVID-19 pandemic figures, with 2019 held as the benchmark that the market needs to beat to show a return to form. Since then, there have been a number of challenges affecting new-car uptake.

This includes the pandemic itself and associated lockdowns, a supply-chain crisis that impeded vehicle production and deliveries, and economic instability which has hit household and business budgets.

UK new-car registrations

A deeper dive into the SMMT figures shows that large fleets were accountable for last month’s growth, while the private battery-electric vehicle (BEV) market continued to struggle, despite investment in public charging infrastructure.

Fleets forward

The fleet market has driven the UK’s registration figures into a 15^th consecutive month of growth and has much to do with the rise in figures across the year.

October marks the 13^th month in a row that fleet registrations have outperformed those of private deliveries. Last year’s figures swung heavily in the consumer’s favour, leading the market for eight months in total. Yet since delivery backlogs started clearing, large businesses have been driving the country’s automotive market.

Last month, fleet registrations were up 28.8% compared to October 2022. This means 87,479 cars took to the road thanks to large businesses, accounting for 57% of the market. Private sales, however, were stable, with a small 0.3% increase, equating to 62,915 units (41% share), just 177 more than last year.

Smaller business figures declined by 15.2% in October. However, this sector only makes up a small portion of the UK’s overall registration data, and while a double-digit drop looks severe, it equates to just 560 units overall, with 3,135 registrations last month making up 2% of the overall market.

The significance of fleet domination can be seen in the year-to-date figures. In the first 10 months of 2023, the overall UK market is up by 19.6%, with 1,605,437 registrations. 53.2% of this went to the fleet sector, up from 45.2% in the first 10 months of 2022, with 854,372 units equating to a growth of 40.8%.

Meanwhile, private registrations went up by just 1.6%, with 713,301 cars making up 44.4% of the market. This is down from 52.3% in the first 10 months of 2022. Small business registrations increased 11.2% to 37,764 units in the year to date, with a stable market share of 2.4%, from 2.5% this time last year.

Private BEV registrations struggle

The fleet sector is not just responsible for the UK’s new-car registration growth in 2023, but also the impressive uptake in BEVs, with the private sector struggling to adopt the zero-emission technology.

BEV uptake increased for the 42^nd month in a row during October, with a 20.1% rise in the month working out to 23,943 units. The technology took a 15.6% market share, however, this is only up from 14.8% across the same period in 2022. Year-to-date figures were more positive, with 34.2% growth across the first 10 months of 2023, meaning the powertrain technology holds 16.3% of the market so far this year.

However, of the 262,487 BEVs registered in 2023, only 62,478 were private. This means only 23.8% of BEV deliveries took place outside the fleet and small-business market, suggesting a struggle to get consumers engaging with all-electric vehicles.

Plug-in hybrid (PHEV) registrations improved in October, with the 14,285 deliveries up 60.5% on the same month last year, with 9.3% of the market, up from 6.6% in October 2022. This means the entire plug-in market took 24.9% of the new-car market in the month.

Disproportionate infrastructure growth

The performance of plug-in models follows a significant increase in the UK’s charge point rollout during the third quarter of 2023. According to SMMT data, 4,753 new standard points, the largest ever quarterly total, came online between July and September.

This equates to one new public location for every 26 plug-in vehicles taking to the roads in the same period. This was an improvement from the one to 38 ratio during the same period last year.

However, installation was disproportionately focused on London and the south-east, which received four out of five new charge points commissioned during the quarter, despite the region accounting for fewer than two in five new plug-in registrations during the same period. In comparison, just 13 chargers were installed in Yorkshire and Humberside, while the north saw 105 chargers taken out of service.

This uneven distribution could impact private BEV registrations in particular, with many potential buyers likely to rely on the public infrastructure, especially those without access to off-street parking.

The SMMT is calling for binding targets for charge point rollout, in line with those set for the automotive market by the Zero Emission Vehicle Mandate. This would also need to be supported by the necessary changes to planning and grid connections, which would also help accelerate installations.

Unlike other major European markets, the UK has no incentive scheme in place for BEV purchases. This is likely impacting private sales, with vehicles still prohibitively expensive for some.

The overall performance is in line with other markets, but the needs of businesses to build their environmental credentials, rather than the willingness of the public to adopt zero-emission technology, seems to be the main driver.

Petrol leads the market

The poor performance of the private sector does not take away from the fact that BEVs were the second most popular powertrain in the UK last month. The strong fleet uptake will also translate into the second-hand segment in three years, as these businesses de-fleet. This will give private buyers who cannot afford a new model the opportunity to experience zero-emission motoring.

UK new-car market share by fuel type

Petrol once again led the registration figures last month, with 84,451 units, including petrol mild hybrids (MHEVs). This was an improvement of 8.3% against last year, however, the market share of the fuel slipped to 55% from 58% in the previous period.

Diesel suffered another month of losses, with 11,276 units, including MHEVs, equating to a 4.5% fall. With just a 7.3% market share, the fuel dropped to the bottom of the chart in October.

In the year-to-date numbers, petrol-powered cars increased their registrations tally by 17.4%, with a market share of 56.4%, down from 57.4% at the same point last year. Diesel saw deliveries drop 9.4% in the first 10 months, with a 7.6% market share. However, this is above the share for PHEVs with 7.1% of the new-car market.

Hybrids saw a 24.4% improvement in the month, with their 19,547 deliveries holding 12.7% of the market. So far in 2023, hybrid registrations are up by 27.8%, placing them firmly in third place amongst the fuel types.

SMMT downgrades BEV outlook

The SMMT has revised its market outlook upwards to reflect the better-than-expected market growth. Overall new-car registrations are anticipated to reach 1.886 million by the end of the year, a rise of 2.1% from July’s expectations. However, forecasted BEV uptake was downgraded again slightly, by 1.7% to 324,000 units, resulting in an expected overall 2023 market share of 17.2%.

Looking ahead to 2024, the overall market outlook is marginally more positive, up 1% to 1.97 million units, a 4.4% rise on the 2023 outlook. With an absence of consumer incentives and an overwhelming dependency on fleet registrations for growth, the BEV market share outlook has been revised downwards to 22.3%, despite 439,000 expected registrations, a 35.5% increase on 2023.

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Monthly Market Update: European used-car markets slow in September

Compared to both August 2023 and September 2022, European used-car markets hit the brakes last month. Average days needed to sell a vehicle increased across the majority of countries examined, as demand fell below supply.

Indicating the number of used-car transactions, the sales-volume index (SVI) fell month on month in six major European markets. This included Italy (down 34.5%), Spain (down 15.7%), Austria (down 11.6%), France (down 11.5%), the UK (down 10.7%), and Germany (down 4.5%). Only Switzerland bucked the trend, recording growth of 8.8% compared with August.

The active-market volume index (AMVI) revealed that Austria, France, Germany, Italy and the UK all saw supply outperform demand in September. The two outliers were Switzerland and Spain, both posting better results in the AMVI than the SVI. However, Spain’s 15.7% month-on-month decline in demand was only marginally better than the 15.8% drop in supply.

The SVI and AMVI drops were not as severe when compared with September 2022. Italy saw the greatest year-on-year fall in demand at 26.2%. However, the trend of supply exceeding demand remained, with only France posting better SVI (down 3.2%) than AMVI results (down 11.7%).

Increased stock days in September further confirmed slowing demand, with dealers needing more time to sell used models. The small amount of speed picked up in August all but dissipated in many markets. Italy saw the greatest increase, up 8.1 days to hit nearly 72 days on average. Meanwhile, the UK saw one of the smallest increases (0.2 days), but sales were achieved in just over 38 days. Stock days were the highest in Switzerland at over 83 days on average.

Increasing supply and falling demand will continue to put pressure on used-car residual values (RVs). Compared to August, both absolute trade values and RVs presented as a percentage of the original list price (%RV), saw mainly marginal downturns. Italy saw the greatest month-on-month fall, with absolute values down 3.6%. Meanwhile, the UK was the only market to see growth, up 2%.

Click here to open the interactive dashboard.

Demand drops again in Austria

Compared to 2022, Austria keeps seeing its living costs grow as used-car transactions wither. In September, the SVI revealed significantly weaker demand, with a month-on-month decrease of 11.6% and a year-on-year decrease of 14.3%. At the same time, the supply volume of two-to-four-year-old passenger cars was around 2.2% lower in September than a month earlier.

It took 72.5 days on average to sell a used car in the country last month. This increase confirms a further slowdown in demand. Hybrid-electric vehicles (HEVs) sold the fastest, averaging around 65 days, followed by diesel cars at 68 days, petrol cars at 72 days and plug-in hybrids (PHEVs) at around 84 days. Battery-electric vehicles (BEVs) sold more slowly at around 99 days.

‘With weakening demand and generally improving supply, %RVs of 36-month-old cars declined to 53.6% on average. This marked a 1.4% year-on-year decrease and shows that pressure on RVs is increasing,’ explained Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland.

HEVs led the way with a %RV trade value of 57% followed by petrol (54.6%), diesel cars (54.1%) and then PHEVs (51.7%). Meanwhile, 36-month-old BEVs retained the lowest value, at 46.2%. As demand is expected to weaken while supply recovers, further pressure on RVs can be expected.

‘The market’s average %RV of a 36-month-old car at 60,000km is forecast to end 2023 approximately 3.5% down compared to December 2022. For 2024, %RVs are expected to decrease further by around 3.4% year on year due to weakening demand and increasing supply,’ added Madas.

Waiting effect in France

‘RVs of used cars in France fell slightly from August to September. While the year-on-year gap shrank, the overall market still appears to be in decline, although petrol and diesel values remained stable,’ said Ludovic Percier, Autovista Group residual value and market analyst for France.

There were slight fluctuations in the sample, which played on list prices and %RVs. HEVs saw values increase slightly, however, this is the result of premium models entering the used-car market. If only mass-market models were considered, this trend would be reversed.

PHEVs saw stable absolute RVs and %RVs in September, but the supply of premium vehicles fell. The market is also becoming more crowded with French models, such as the Peugeot 3008 and Renault Captur.

‘Moreover, newer cars are arriving on the used market with greater ranges, around 100km (WLTP). This affects currently available vehicles, including returning leased cars,’ Percier added.

BEV values were stable in September, with less expensive vehicles on offer. This meant %RVs increased, but absolute trade RVs remained consistent. Some declines have been observed at the 12 and 24-month marks, with 36 months soon to follow.

Supplies of the Tesla Model 3 increased with the launch of the refreshed version. Lower Tesla prices can be expected in the coming months, something which always impacts the wider electric vehicle (EV) market. As new EV brands, including those from China, make an entrance with lower-priced models, established manufacturers are seeing customer loyalty challenged.

Once again, the SVI was lower than it should be, however, the year-on-year gap is diminishing. Purchases are still driven by budgets, generating a ‘waiting effect’ as consumers put off expensive decisions, hoping for prices to come down. In the meantime, drivers will likely wait for the vehicle they want, or explore cheaper options in a lower segment.

September illustrated this point, with the smallest cars once again selling the fastest. The Dacia Sandero, Toyota Aygo Yaris and Audi A1 all sold in fewer than 40 days. While this is longer than last month, these models are still the easiest to sell.

Divergent influences in Germany

At first glance, the market indicators for used cars up to five years of age in Germany might suggest everything is running reasonably steadily at a comparatively high level. However, the divergence between different factors, such as fuel type and age, reveals just how much the market is being driven by separate forces.

Internal-combustion engine (ICE) powered vehicles still look to be the least affected by the current recessionary price trend. Meanwhile, younger models, especially BEVs and PHEVs, are suffering from budgetary restraints. This is the result of absolute price levels conflicting with falling spending power.

‘The supply of used cars up to five years of age has already returned to near pre-crisis levels, but determining factors, such as fuel type and list price, have changed considerably,’ stated Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

The light-commercial vehicle (LCV) market, which does not often see the limelight against the passenger-car sector, has also seen some interesting developments. For the last few months, an increasing number of young Volkswagen (VW) ID.Buzz models have entered the market, spearheading a new generation of electric LCVs.

The powertrain’s share of the wider commercial market still lags far behind that of all-electric passenger cars. However, supply volumes of the dealer-desired ID.Buzz, are now consistently in the three-digit range. Time will tell just how in demand these models are on the cost-sensitive, used-LCV market.

All in all, used-LCV demand is currently stumbling after its pandemic-related peak, which was the result of a strong increase in transport volumes. Declining sales and corresponding stock days have already returned to pre-crisis levels. However, the quantities of vehicles on offer are not increasing due to a lack of supply, which means it is becoming increasingly difficult to maintain high price levels.

C-segment SUVs popular in Italy

Italy’s new-car market recovered over the first eight months of 2023, growing 20.3% year on year. Meanwhile, the country’s used-car market continued its decline in September. Most of the events behind the shock increase in used-car RVs have been resolved or are at least stabilising.

%RVs declined month on month to 54.7%. Despite this downturn, the average %RV across all powertrains remained up 8.8% on September 2022. On the other hand, the %RVs of BEVs were up 1.2% against August. Growth was also recorded for natural gas models (up 4.2%) and LPG vehicles (up 0.2%) month on month.

Between August and September, average stock days increased by 8.1 days to nearly 72 days. C-segment SUVs proved the most popular on the Italian used-car market last month, with the Citroen C5 Aircross selling in roughly 44 days on average. The only car from an Italian brand to appear in the top five fastest sellers list was the Alfa Romeo Stelvio.

‘The RV outlook for the Italian used-car market remains positive for 2023, with the market forecast to be up 5.5% year on year. So, used-car values can be expected to continue on a slow path of normalisation back towards pre-COVID-19 levels, before heading into a gradual decline,’ said Marco Pasquetti, head of valuations, Autovista Group Italy.

Timid growth in Spain

New-car registrations in Spain continue to show slight signs of improvement. In the first eight months of 2023, the market saw year-on-year growth of 20.5%. In August, a large part of this momentum came from the private channel, which is typical during the holiday period.

‘Still weighed down by a lack of stock, the used-car market showed more timid growth, remaining close to 3% in the year-to-date. In line with a trend observed across previous months, used-car prices have continued to fall,’ explained Ana Azofra, Autovista Group head of valuations and insights, Spain.

September did see a less drastic decline. The average trade transaction price for a three-year-old car at 60,000km hit €19,832 in the month, down from €19,924 in August. Trade prices can be expected to fall below the levels reached in 2022.

Despite the scarcity of stock, demand continues to be held back by rising interest rates and economic uncertainty. As usual, one of the indicators that best reflects the situation is the number of days it takes to sell a car, which has increased by six days, now exceeding 74 days on average.

In the case of BEVs, this period is now eight days longer than in August. The price outlook for all-electric cars is still negative, dragged down by Tesla’s price drop. However, it is less noticeable on average due to high-performance BEVs entering the used market. ICE models continue to show great resistance, especially petrol-powered cars.

After losing some pace in August, HEVs regained momentum in September. This was probably due to people returning to urban areas, while also being concerned about expected emissions restrictions. Accordingly, the fastest-selling model ranking was once again led by the Toyota RAV-4, then the Hyundai i20, with the Ford Puma in third.

Stock days up in Switzerland

‘Switzerland’s used-car market has seen supply stabilise on pre-pandemic levels in recent months, with low supply only being felt by younger models,’ said Hans-Peter Annen, head of valuations and insights, at Eurotax Switzerland.

From August to September, the AMVI for two-to-four-year-old passenger cars fell by 1.9%. However, it was 18.4% higher than a year earlier. While living costs have continued to climb in the country since the beginning of the year, used-car transactions have slowed.

The SVI increased by 8.8% compared to August and by 10.3% year on year. The recent stabilisation of supply and weakening of demand has resulted in the average %RV of a 36-month-old car falling again. This was only a marginal drop from 50.3% in August to 50.2% in September, while the figure was slightly higher at the same point last year, at 51.1%.

HEVs posted a particularly strong year-on-year %RV gain of 8.6%, reaching 54.1%. This was followed by petrol cars (51.2%), diesel models (49%) and PHEVs (47.5%). Meanwhile, 36-month-old BEVs retained 46.9% of their original list price.

The average days needed to sell increased in September, with two-to-four-year-old passenger cars in stock for some 83 days. HEVs sold the quickest after an approximate average of 71 days, followed by petrol cars after 80 days, then diesel cars at 86 days, PHEVs at 88 days and finally BEVs after 102 days.

Looking ahead, demand for used cars is expected to weaken while supply stays high and stable. A declining trend can be expected; however, the values of three-year-old used cars should stay relatively high.

‘The %RV level in Switzerland is forecast to finish this year down roughly 4% on December 2022. In 2024, levels are expected to fall again by around 4% due to constant supply and lower demand,’ Annen added.

UK feels plate effect

On the face of it, UK used-car values rose again in September, with the average %RV of a three-year-old car rising from 60.6% to 62.1%. However, the ‘plate effect’ is masking the true picture. But what is the plate effect and how is it distorting values in the UK used-car market?

Cars registered at different points in the year will display different registration markers, indicating a vehicle’s age and affecting its value. The first major plate change happens each March with a subsequent variation in September. A final change the following January does not affect the registration mark but does impact a car’s value as it was registered in a different year.

‘In September, a car that was registered three years ago would display a 2020 70 plate. Yet in August of the same year, a three-year-old car would show a 2020 20 plate. The difference in value between these plates is approximately three percentage points,’ explained Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

So, if the market remained level between August and September, the average value in this report could be expected to increase from 60.6% to 63.6%. In September this year, values only increased 1.5 percentage points, indicating that the market actually fell.

The safest way to compare values in a plate-change month is against the previous year. This comparison shows that, like-for-like, RVs in September 2023 were down by 0.6 percentage points on September 2022, which is a relatively small RV adjustment considering how high values have been over the past couple of years.

In the 30 days prior to 6 September, retail activity appears to have retracted, with 10.7% fewer cars sold than last month, although 11% more sales were recorded compared with a year ago. This month’s report shows that 4.4% fewer cars were advertised for sale, the third consecutive month a decline has been observed.

The most noteworthy RV trend in the first nine months of 2023 was the fall of BEV values. Driven by an increase in supply, values have fallen significantly more than any other fuel type. However, this is not a result of falling demand, with the BEV SVI up nearly 400% year on year. Demand has failed to keep pace with the increasing volume of end-of-contract vehicles de-fleeting into wholesale channels.

The average %RV of a three-year-old BEV in the UK fell from 67.2% to 44.3% over the course of 12 months. Many in the industry will be hoping that this is the beginning of BEV value stabilisation.

The average number of days it took a dealer to retail a BEV fell by 8.6 days to 37 days, which is faster than petrol and diesel. Consumers may have found that used BEVs are now a reasonable value-for-money proposition, with some reaching price parity with ICE and hybrid models.

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Monthly Market Update: Summer slump for European used-car markets

Europe’s major used-car markets experienced a slight seasonal slump in August. From month to month, many countries saw demand sink lower than supply, putting residual values (RVs) under pressure.

Compared with July, the sales-volume index (SVI) posted double-digit drops in Spain (down 28.7%), Switzerland (down 25.8%) and France (down 11.7%). The declines in Austria and Germany were less pronounced, falling by 7.4% and 2% respectively.

As indicated by the active-market volume index (AMVI), the levels of supply to these five used-car markets sat above demand. Germany and France even saw figures improve compared with July, growing by 2.8% and 1.5% respectively.

Meanwhile, Switzerland (down 9.1%), Spain (down 7.5%) and Austria (down 6.1%) all saw downward momentum. The only outliers to this trend were Italy and the UK, where demand grew but supply shrank month on month.

Absolute trade RVs for 36-month-old cars at 60,000km saw the largest month-on-month declines in Spain (down 3.3%), the UK (down 2.9%), and Germany (down 2%). France was the only market to see an improvement, up 1% compared with July.

For many markets, results were slightly more marginal in terms of RVs presented as a percentage of retained list price (%RV). The UK experienced the greatest drop, down 3.1%, followed by Spain with a 1.6% fall, then Italy with a decline of 0.8%. However, France bucked the trend for a second time with %RV levels increasing by 1.4%.

There was another silver lining in August, as the majority of markets saw used-cars sales pick up pace. Spain recorded the greatest improvement, with used cars taking just over 68 days to sell on average, equating to a month-on-month drop of nearly five days.

The UK and France saw average sale speeds improve by 2.4 and 2.2 days respectively. Meanwhile, Switzerland dropped by 1.8 days, while Germany and Austria both fell by 0.9 days. Stock days only increased in Italy, up by 1.8 days.

Click here to open the interactive dashboard.

The interactive monthly market dashboard examines Austria, France, Germany, Italy, Spain, Switzerland, and the UK. It includes a breakdown of key performance indicators by fuel type, including RVs, new-car list prices, selling days, sales volume and active-market volume indices.

Supply grows stronger in Austria

Living costs in Austria continue to climb compared with 2022. In August, the SVI showed slower demand for used cars, with a month-on-month decrease of 7.4%. However, this was still up 13.6% on August 2022.

The supply of passenger cars between two and four years of age also increased, with the AMVI up 0.7% year on year. It is worth recognising that supply was significantly lower last year than before the COVID-19 pandemic hit at the beginning of 2020.

The average time needed to sell a used car fell again, hitting 70 days. However, this is still an increase of 10.8 days compared with August 2022. Petrol cars are currently selling the fastest, averaging around 68 days, followed by diesel cars with 69 days, hybrid-electric vehicles (HEVs) with 71 days and plug-hybrids (PHEVs) with around 78 days. Battery-electric vehicles (BEVs) sold more slowly at around 86 days.

‘With weakening demand and improving supply, %RVs of 36-month-old cars stagnated at 54.1%. This meant a 0.7% year-on-year gain, however, pressure on values looks set to keep building,’ said Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland.

HEVs led the way with a %RV trade value of 57.9% followed by petrol (55.1%), diesel cars (54.4%) and PHEVs (53.1%). Meanwhile, 36-month-old BEVs held onto the least value, at 47.3%. More pressure on RVs can be expected should demand weaken and supply grow. This means the value of thirty-six-month-old cars will remain relatively high, just on a falling trajectory.

‘The market’s average %RV of a 36-month-old car at 60,000km is forecast to end 2023 approximately 2.4% down compared to December 2022. Next year, %RVs are expected to decrease further by around 3.4% due to weakening demand and increasing supply,’ Madas added.

Sales driven by budgets in France

‘August is always a special month in France,’ commented Ludovic Percier, Autovista Group residual value and market analyst for France. ‘Many companies close for the summer, people go on holiday, and the used-car market is always less active.’

This was confirmed by August’s SVI falling by 23% year on year. RVs were stable overall, with only slight increases in absolute and %RV terms. Petrol and diesel-powered cars followed this wider market trend, with very slight increases in absolute values and %RVs.

This demonstrates the resilience of diesel, given its tarnished reputation and the implementation of low-emission zones (ZFEs). However, the powertrain did see the largest month-on-month fall in transactions.

The RVs of hybrid-electric vehicles climbed in August, even as list prices fell compared with July. The %RVs of plug-in hybrid vehicles remained stable, but the powertrain’s list prices, and absolute RVs fell. BEV RVs remained firm even with Tesla’s pricing strategy, which has consequences not only for list prices but also stock-vehicle discounts.

Sales were still driven by budgets in August, with purchases pushed into lower segments. Older cars will suffer the least from this trend, and demand for small and inexpensive cars is set to continue. The Dacia Sandero, Toyota Aygo and Toyota Yaris were three of the fastest-selling used cars in France, averaging fewer than 33 stock days.

Dealers hold out in Germany

‘Used-car dealers still appear to be resisting a rapid drop in prices,’ pointed out Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group). ‘A growing number of these businesses are instead accepting rising stock days before resorting to any price adjustments.’

This trend is helping slow the descent of prices for internal-combustion e ngine (ICE) models made between 2020 and 2021. Meanwhile, the absolute prices of younger used cars have already been altered downwards quite significantly, despite comparatively small volumes and low days in stock.

This occurred for two reasons. Firstly, more short-term tactical registrations from dealers, manufacturers and rental companies are returning to the market, meaning more used models aged six to 18 months are now available. Secondly, young used vehicles were particularly affected by price boosts in recent months. Levels developed faster than purchasing power could keep up with.

Conversely, HEVs benefitted from a very loyal clientele, greater demand-orientated volumes and very low offer thresholds for those willing to electrify. The powertrain also benefitted from a lack of government purchase incentives, meaning prices remained firm and did not pass on a burden to the used-car market. However, HEVs are currently experiencing a downturn due to the nearly intolerable level of absolute offer prices.

Used cars five years and older remained the market winners, despite rising supply volumes, relatively low stock days and continually high prices. On average, cars of this age are achieving five-figure sums, which is drawing dealer attention away from younger models. A market is therefore opening up given the expansion of agency systems into used-car offerings as well as the gradual decline of young ICE-powered models.

Small signs of growth in Spain

New-car registrations saw more positivity in July, up 22% year on year, marking seven consecutive months of growth. While the rent-a-car channel previously led the way, the companies and private individuals were responsible for pushing the figures forward in July.

‘The used-car market, which continues to be weighed down by a shortage of stock, showed slight signs of growth, up roughly 2% both in July and in the year to date,’ highlighted Ana Azofra, Autovista Group head of valuations and insights, Spain.

Despite low stock levels, used-vehicle prices fell faster in August. The average transaction price of a 36-month-old car at 60,000km fell by more than 3% month on month. This decline steepens to 4% and 5% in the case of BEVs and PHEVs, respectively. Both recorded extended sales periods, close to 80 days. This was nearly 20 days longer than HEVs and 10 more than petrol or diesel-powered cars.

Considering the evolution of used-car prices, only HEVs escaped the downward trend thanks to a positive buffer built up over recent months. This allowed the powertrain’s values to stabilise instead. There was also a change to the fastest-sellers ranking in August. Toyota’s hybrids retained fourth and fifth position but were overtaken by the Hyundai Tucson, BMW X1 and Mercedes CLA.

Switzerland sees %RVs sag

‘Supply into the Swiss used-car market has increased significantly in recent months,’ explained Hans-Peter Annen, head of valuations and insights, at Eurotax Switzerland. ‘Only younger used models continue to see lower levels of supply compared with the pre-COVID-19 pandemic period.’

Across all two-to-four-year-old passenger cars, the AMVI was 9.1% lower in August than in July, but 18.8% higher than a year earlier. Used-car transactions have slowed since the beginning of 2023 while living costs soared.

The SVI fell by 25.8% compared to July and is up 11% year on year. With increased supply and overall weakening demand in recent months, the average %RV of a 36-month-old car, decreased again. The figure fell to 50.3% in August, down 0.3% month on month, and down 1% year on year.

HEVs hit a %RV of 54.5% after a healthy year-on-year increase of 10.9%. Petrol cars were not far off this mark (51.2%), then diesel models (48.7%) and PHEVs (47.6%). Meanwhile, 36-month-old BEVs retained 47.1% of their original list price.

August saw stock days of two-to-four-year-old cars reach some 79 days. HEVs sold the quickest after an average of roughly 50 days, followed by petrol cars after 77 days, then diesel cars at 80 days, BEVs at 85 days and finally PHEVs after 92 days.

Used-car demand is expected to weaken amid overall high and stable supply. A further falling trend can be expected, although values of three-year-old used cars remain relatively high. The %RV level is forecast to finish 2023 down roughly 4% on December 2022. In 2024, levels are expected to fall again by around 4% year on year due to constant supply and lower demand.

Retail activity rises in UK

‘UK used-car retail activity improved in August according to the sales-volume index. Sales increased by 10.1% compared to July and 23% compared with August 2022,’ said Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

The average number of days it took a dealer to sell a used car also fell, down to 38.2 days. This equated to a decline of 2.4 days compared with the previous month and made for an impressive 10-day drop compared with August last year.

The AMVI shows that fewer cars were available in August than in July. The market saw a 4.5% decline in used cars advertised for sale, although there was 9.2% more than in August 2022.

BEV retail demand in August was similar to July, with a downward adjustment of just 0.5%. However, demand for all-electric models remains on a broader upward trajectory as unit sales were up 308.8% on August 2022. While there is no shortage of used BEVs, the dashboard indicates that there were 5.4% fewer units available for sale month on month.

BEVs sold more quickly in August, needing 7.3 fewer days on average than in July. While the powertrain clearly bounced back, sales still took 9.8 days more than last year. For the second consecutive month, a BEV was the fastest-selling used car in the UK, with the Tesla Model 3 taking just 17 days on average to sell.

The average three-year-old car retained 60.7% of its original cost-new price last month, down from 62.6% in July, but up from 60% in 2022. Accounting for the circa 30% rise in RVs that took place throughout 2021 and the relatively small depreciation (down 2.5%) in 2022, values remain surprisingly high.

‘But with used-car supply unlikely to increase throughout the remainder of 2023, Glass’s expects the average RV of a three-year-old used car to remain in line with December 2022 at year-end,’ Whittington concluded.

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Monthly Market Update: European used-car markets see stable residual values in July

Residual values (RVs) held steady in July across European used-car markets. Trade RVs presented as a percentage of the original list price (%RV) saw only marginal deviations for 36-month-old cars at 60,000km.

The UK experienced the greatest month-on-month decrease. A 2.1% drop left the country’s %RV level at 62.6%. Meanwhile, France saw the largest %RV upswing, with its values increasing 0.7%, reaching 56.3%.

The country also saw the greatest increase in absolute residual values, up 2.3% compared with June. This puts the average trade value for a 36-month-old car in France at €19,700, up from €19,235 in the previous month. Austria experienced one of the largest value declines, with prices moving from €22,205 in June to €21,844 in July (down 1.3%).

While many European markets saw used cars sell more rapidly in June, this slowed significantly in certain countries during July. After a month-on-month decline of 14.4 days in June, the speed of sales in Italy increased by 17.2 days last month. The second greatest increase occurred in Spain, where used cars spent an additional 9.8 days on the forecourt.

Used cars only sold faster in Austria and Switzerland, taking 2.2 and 0.8 fewer days to sell respectively than in June. For Austria, this is the second consecutive month of faster sales, taking the total in July down to 71.9 days. But this was the first time this year Switzerland was able to reverse its trend of slowing sales, now standing at 80.4 days.

Month-on-month changes in the sales volume index (SVI) and active-market volume index (AMVI) reveal that most markets saw a great upswing in demand than supply in July. Switzerland experienced the greatest SVI increase of 20.2% compared to June, while the AMVI fell by 2.2%. The only exception was Italy, where a 24.9% decline in demand was overshadowed by a 0.8% uptick in supply.

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Demand slowing in Austria

Living costs in Austria have climbed continually this year when compared with 2022. However, the sales volume index revealed stronger demand in July, with month-on-month growth of 3.1% and a year-on-year increase of 1.3%. The month also saw a 3.3% year-on-year improvement in the supply volume of two-to-four-year-old cars. But it is worth recognising that supply was markedly lower in 2022 when compared with the pre-COVID-19 period.

The average number of days it took to sell a used car decreased to 71.9 in July, after strong increases in the first half of the year. Overall, this development confirms a slowdown in demand. Hybrid-electric vehicles (HEVs) sold the fastest in the month, averaging around 56 days, followed by diesel cars with 70 days, petrol cars with 71 days and plug-in hybrids (PHEVs) at around 82 days. Battery-electric vehicles (BEVs) sold more slowly, around 94 days.

‘As demand weakened and supply improved, %RVs of 36-month-old cars decreased slightly by 0.3% compared to June, reaching an average of 54.1%. This marks a 2.1% year-on-year gain but shows that pressure on RVs is increasing,’ said Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland.

HEVs boasted the largest %RV trade value of 57.9% followed by PHEVs (53.4%), diesel cars (54.3%) and petrol cars (55.1%). BEVs retained the lowest value at 47.7%. Mounting pressure on RVs can be expected as supply recovers and demand drops. So, RVs of 36-month-old cars are set to stay relatively high, while following a decreasing trend.

‘The average %RV of a 36-month-old car at 60,000km is projected to end this year roughly 2.4% down on December 2022. As for next year, %RVs are expected to drop by around 3.4% year on year due to growing supply and shrinking demand,’ Madas added.

Positive developments for France

Compared with June, France saw a slight increase in absolute RVs last month, with list prices also growing. Sales volumes saw the most positive month-on-month developments, following continual declines so far in the year. However, this demand is still down significantly compared with 2022.

The fastest-selling cars were still the cheapest and smallest models. The Dacia Sandero sold the fastest after an average of roughly 31 days, followed by two Toyotas, the Yaris and the Aygo. As previously forecast, budgets are influencing purchasing decisions, pushing consumers to lower segments.

Petrol and diesel models were effectively on par with the overall market trend. The RVs of diesel-driven cars held firm, even with their tarnished reputation and the implementation of low-emission zones (ZFEs) in the country.

Only cities with 150,000 inhabitants or more, are currently impacted by ZFEs and high-milage drivers are not affected at all. However, from late 2024 and into 2025, diesel will feel the effects more heavily, particularly with the ‘Crit’Air Sticker 2’ coming into play in Paris.

Compared with June, HEV RVs increased, both in absolute and %RV terms, alongside sales volumes. PHEVs saw stable RVs, with even greater growth in the sales volume index thanks to greater availability on the used-car market, as well as improved ranges. Absolute RVs of BEVs fell slightly month on month, due to dropping list prices. Sales volumes increased as these all-electric models become more affordable.

‘Even with a higher level of sales overall, the market has still not recovered, even falling short of last year’s performance. Sales are still being driven by budgets, pushing purchases into lower segments. Older cars will suffer the least from this market trend,’ said Ludovic Percier, Autovista Group residual value and market analyst for France.

The party is over in Germany

‘When it comes to the used-car market, the consensus within the automotive industry appears to be that the party is over. Stock volumes and average days to sell are growing once again, while prices are coming under increasing pressure,’ commented Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

The growing share of electric vehicles (EVs), including PHEVs and BEVs, is causing problems due to a lack of sufficient demand in the German used-car market. However, the situation does not seem quite so dire when contrasted against more difficult periods, such as during the COVID-19 pandemic. In this comparison, current key performance indicators such as average prices, %RVs and even days in stock, are still advantageous on average.

The growing gap between increasing supply and weak demand is causing problems. Compared with the first half of 2022, more used vehicles were sold between January and June this year, but stock levels are climbing much faster than sales. Moreover, BEVs and PHEVs now account for almost 15% of newer used-car stock, which is a rapidly accelerating trend. The issue is that too few buyers are seeking out these models.

Supply for the coming years has become quite stable again too. Fleet registrations are seeing a record year, with large fleets making a significant contribution. However, this uptake consists of an increasing percentage of electrified models.

‘There is hope that tactical registrations from the likes of dealers, manufacturers and rental companies have not yet been returned to the level of earlier years. These vehicles usually reach the used-car market six to 18 months after initial registration. This means less pressure on the used-car market and its prices,’ Geilenbruegge added.

However, internal-combustion engine models are under less pressure. They still represent the vast majority of the market and are mostly selling at stable prices. There is still a lack of enticing government-driven benefits for EVs. The ownership and operation of electric vehicles need to be made more appealing in order to stoke demand for used models.

Change is coming to Italy

‘It would be fair to say that the first half of 2023 has been a period of substantial stability for the Italian used-car market, with small variations in RVs,’ stated Marco Pasquetti, head of valuations, Autovista Group Italy. ‘However, operators in the sector have been warning for a few months that change is coming,’

July presented the first evidence of this emerging adjustment. Compared with June, there was a 1.2% drop in %RVs. This was the result of increasing list prices and decreasing absolute RVs. This drop in %RVs was recorded across all fuel types, with the sole exception of LPG vehicles, which instead saw a marginal growth of 0.4%.

Despite this overall downward trend, the market is still performing better than in July 2022, with average absolute RVs up 27.4%. This means that the average 36-month-old car is now worth €4,500 more than it was at the same point a year ago (not adjusted for inflation).

The time it took to sell a used car also increased in July, models remained in stock for an average of over 65 days, 17 days longer than in June. While stock levels of HEVs grew, these vehicles were also the fastest selling, taking fewer than 52 days on average to pass through a dealership. Meanwhile, natural gas vehicles and BEVs saw some of the slowest selling times, both above 70 days. However, it is worth recognising that the sales volume of both powertrain types is quite low.

Peak tourism season in Spain

The first half of the year closed with a near 25% increase in new-vehicle sales, still lower than pre-pandemic records but very close to expected market levels. The private channel remains restricted, with interest rates slowing purchasing decisions. Meanwhile, the corporate channel is growing steadily. The arrival of the peak tourism season has pushed the rental channel to achieve growth of 70% in the first half of the year, after more than a year of product drought.

‘On the other hand, the used-car market grew moderately by 2.7% in the first half of the year,’ commented Ana Azofra, Autovista Group head of valuations and insights, Spain. ‘Leasing companies continue to supply young used cars, and for the first time in recent years, sales of older models have slowed. However, despite this deceleration, these cars continue to best maintain their average transaction price.’

In contrast, the downward trend in the average transaction price of models up to six years old continues. For example, while the value of a three-year-old used car at 60,000km remains 5% above the levels seen in 2022, prices are beginning to drop slightly each month. This trend is more intense the younger the used car is.

Other market indicators, such as average days to sell a used car have also worsened. In July, this indicator increased by nearly 12 days for petrol vehicles, eight for diesel, seven for HEVs and almost six for PHEVs. Only BEVs saw an improvement, taking four fewer days to sell on average, despite their stock levels increasing by 50% month on month.

‘Reflecting current market trends, residual values are forecast to fall 1.8% by the end of this year, with less severe declines expected in 2024 and 2025,’ said Azofra.

Transactions slow in Switzerland

Switzerland’s active-market volume index was 2.2% lower month on month in July across all two-to-four-year-old passenger cars, but 33.4% higher than a year earlier. Used-car transactions have also slowed since the beginning of the year as costs of living soared.

The sales-volume index increased by 20.2% compared to June and is up 25.7% year on year. With increased supply and overall weakening demand in the last few months, the average %RV of a 36-month-old car decreased again. The figure fell to 50.5% in July, down 0.2% month on month, but still up 0.3% year on year.

HEVs posted a particularly strong year-on-year %RV gain of 11.1%, reaching a total of 54.5%. This was followed by petrol cars (51.5%), diesel models (48.7%) and BEVs (47.8%). 36-month-old PHEVs retained 47.8% of their original list price.

The average days to sell decreased in July, with a passenger car aged two-to-four years in stock for 80 days. HEVs sold the quickest after an average of 77 days, followed by petrol cars after 78 days, then diesel cars after 81 days, BEVs after 90 days, and finally, PHEVs after 92 days.

Hans-Peter Annen, head of valuations and insights, at Eurotax Switzerland, explained that used-car demand can be expected to weaken amid overall high and stable supply. ‘A further and slightly accelerated fall can be expected, although values of three-year-old used cars remain relatively high.’

The %RV is forecast to finish 2023 down roughly 4.2% on December 2022. In 2024, RVs are expected to fall by around 4% year on year due to constant supply and lower demand.’

Concerning depreciation in UK

The average trade %RV of a 36-month-old car fell from 64% in June to 62.6% in July, representing a typical level of depreciation that would be seen in a non-COVID-19-affected market. Meanwhile, the average number of days it took a dealer to sell a used car increased from 38.5 to 39.5, indicating that retail activity has begun to slow, as is usually the case in the summer months. However, certain models are still proving popular, selling at a much faster rate.

In what will be a surprise for some, the fastest-selling car was a BEV. The Tesla Model 3 took dealers an average of just 22 days to sell. It seems that following significant month-on-month market-driven depreciation, BEVs may have hit a price point that makes them appear reasonable to consumers as a value-for-money proposition.

‘The average %RV of a three-year-old BEV in the UK fell from 64.4% to just 44.2% over the course of 12 months. A depreciation of 20 percentage points is very concerning over such a short period,’ said Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles. ‘Many industry figures will be hoping that BEV values are now beginning to stabilise. But how do current BEV values compare with other European countries?’ he asked

This month’s dashboard shows that of the seven countries reviewed, the UK sits in fifth place. The UK’s average BEV value is 4.6 percentage points lower than the highest-performing country, Spain. However, this is still a better result than recorded in France and Italy, with the UK’s BEV RVs sitting on a broadly similar level to the average across the seven reviewed markets.

‘This should inspire some comfort, as BEVs may now have found a new level which is in line with other markets. While Glass’s expects BEV values to continue to depreciate in 2023, this should be at a similar rate to other fuel types,’ said Whittington concluded.

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Volvo goes bigger, electric, connected and autonomous with the new EX90

Electric, connected and autonomous features are almost expected in a newly launched car. Dr Christof Engelskirchen, chief economist at Autovista Group, explores how the Volvo EX90 delivers against these ambitions – and where it fails.

What used to be unique in a car has changed over the last 10 years. Some people might miss debates about horsepower, torque, and responsiveness, as traditional vehicle qualities have largely evaporated. They have been replaced by new performance dimensions. Now what counts is range, connectivity, digitalisation of the user experience (UX), and ‘driver assistance’ technology. Design remains crucial, however, and has become much more daring and adventurous.

These are exciting times for a vehicle launch and Volvo has gone all out with its EX90, seemingly hitting the mark with its new flagship model. A 111kWh battery delivers a range of around 600km (WLTP). BMW’s iX is already performing at that level. Cars such as the Nio ET7, the Lucid Air, and the soon-to-be-launched Audi Q6 e-Tron, can feature WLTP ranges of 700km and beyond, but with different body types.

A WLTP range of 600km is almost 50% less than what a diesel engine can deliver in a large SUV, but this looks to become irrelevant in a new fossil-fuel free world. That electric range should be enough to pacify fearmongers. It should make the vehicle future-proof, as a diminishing marginal utility of additional distance can be expected once the 500km real-range threshold is passed.

With range issues largely contained, connectivity and digital UX help differentiate the vehicle from some of its premium competitors. Like the Polestar 3, a gigantic 14.5-inch screen dominates the dashboard. Volvo also relies on the Android Auto operating system (OS) from Google. OEMs could personalise how systems appear to the user, but many limit their influence, conscious of costs.

Volvo is no exception. Unsurprisingly, interaction between the user and the vehicle is responsive and Android Auto OS-specific. Users familiar with Google Maps will feel right at home. That is not a bad thing at all, as it simplifies operations and resembles smartphone functionality.

The interior is a substantial upgrade versus Volvo’s current lineup. It leaves a modern but minimalist impression, with very few buttons. Even the steering wheel lacks physical controls. Instead, touchscreens are at the centre of the car’s human-machine interface (HMI). The only exception is the volume dial in the centre console. Along with other premium players, BMW follows a different UX concept and relies on fewer touchscreen-only operations.

Zero-accident vision

The EX90 looks to establish a new standard when it comes to advanced driver-assistance systems (ADAS) and safety. 16 ultra-sonic sensors, eight cameras, five radars and one lidar – prominently positioned on top of the car, but less visible than many feared – are standard and impress.

There are two cameras to detect driver drowsiness and distraction. An in-vehicle radar observes whether people or animals have been left in the car when locking it. This is consistent with Volvo’s safety ambition and its ‘zero-accident vision.’

Sleeker and less SUV-like

Volvo’s exterior design language is bold, consistent, and conveys a strong family identity. The EX90 is no exception. Any worries that the EX90 would look like a fully-electric XC90 have been put to bed. It is not just the grille that has gone though. The front, side, and rear are all highly differentiated.

The EX90 is sleeker and less SUV-like than its internal-combustion engine (ICE) sibling, despite having nearly equal dimensions. Volvo manages to visually stretch the EX90 with longer horizontal lateral creases, a declining roofline, a windshield and rear window that rises and falls at a flatter angle, as well as a slimmed window design towards the rear. Adding 84mm in length and dropping 32mm in height versus the XC90 also helps visually stretch the electric car further.

The light signature is clearly Volvo – the headlights are referred to as the ultimate ‘Thor’s Hammer’. Volvo has also picked up the trend towards ‘pixels’ in the front and rear, something seen in other recent launches, such as the Hyundai Ioniq 5. The daytime running lights (DRL) open to reveal LED headlamps hidden underneath.

Big presence

With so much going for it, are there any areas where the EX90 falls down? It is very big – its dimensions may be slightly more streamlined than those of the XC90, but they almost match the Audi Q7, which is still slightly shorter. But why could this be a problem?

With efforts to make mobility more sustainable, it becomes more difficult to justify cars of this size and drag. They require larger batteries to deliver acceptable ranges, which in turn add more weight (and costs) to the vehicle.

Energy consumption is high for large and heavy SUVs, even if they are fully electric. The EX90 consumes 21kWh/100km (WLTP). That is more than the smaller BMW iX at 19.7-21.3kWh/100km (depending on equipment level). Smaller cars such as the VW ID.5 can achieve 17kWh/100km.

The EX90’s price is ambitious – admittedly because at launch, only the highly-equipped ultra-trim will be available. Most people will choose the twin-motor AWD-variant (408hp) that is priced at €105,550, including VAT, in Germany, and not the twin-performance AWD-variant (517hp), which costs €110,650.

There are very few features to add – but choosing any colour other than ‘vapour grey’ will cost another €1,150. The park-assist-package, with its improved ADAS features, costs another €2,400. Those wanting a Bowers & Wilkins sound system, instead of Bose, will have to pay €3,050. Overall, the EX90 is priced at the level of the BMW iX but has seven seats instead of five. The EX90 is also slightly longer and higher than the iX, and will likely offer a better ADAS experience.

Strong value proposition

The EX90 features an appealing, modern, and differentiated exterior design that is unlikely to age quickly. Strong Volvo-family cues are a plus but so too is the clear distinction from the XC90. A WLTP range of approximately 600km should pacify those with range anxiety. Its ambition to be the safest vehicle on the road is credible, with a state-of-the-art ADAS setup. The interior screams ‘connected car’ and is on trend. But the omission of buttons, except for one, will not appeal to every car buyer. Nevertheless, it is now an established UX philosophy that people are getting used to.

There are few alternatives in the segment when looking for a fully-electric experience. Seven seats come as standard in the EX90, and consumers should look to use them if they want to feel good about driving a vehicle of this size. Power consumption is high and the EX90 does not partake in the emerging trend towards a more aerodynamic body style.

The EX90 is a lot of vehicle, but buyers will need deep pockets at a ‘haggle-free’ price of around €110,000. For those looking to avoid such a large commitment, there is the option of an all-inclusive subscription model. However, at an annual mileage of 20,000km and not committing for more than three months, a consumer would pay a staggering monthly rate of €1,900.

There is no doubt that the EX90 will find many buyers and given the connections with China’s Geely, supply constraints may be less of an issue than for some European rivals. Currently, though, buyers should anticipate 16-18 months for delivery.

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Cap on energy prices averts crash in UK used-car prices

Set against a backdrop of 2021’s exceptional used-car market performance, when demand drove vehicle residual values (RVs) to unprecedented levels, the first half of 2022 was rather downbeat. Dominated by a lack of retail demand, trading in the wholesale market was poor, with dealers not needing to replenish stock as frequently.

The UK’s Society of Motor Manufacturers and Traders (SMMT) reports that 3.5 million used cars changed hands during the first half of 2022, down 8.3% year on year. However, the market has endured a reversal of fortune, whereby the volume of transactions was down 18.8% in the second quarter, after growth of 5.1% in the first.

Growing appetite for zero-emission cars

‘It was inevitable that the squeeze on new-car supply would filter through to the used market. Despite this, Britain’s used-car buyers clearly have a growing appetite for the latest low- and zero-emission cars, and we need a thriving new-car market to feed it,’ commented SMMT chief executive Mike Hawes.

Initially, auction hammer prices held up well this year, but they came under pressure in the second quarter, resulting in RVs suffering heavier depreciation than seen for over 12 months. In the third quarter, wholesale activity began to improve with hammer prices stabilising. Glass’s values stabilised too, staying broadly level in July and August before falling just under 0.5% in September.

Weak demand and poor supply have been evident in recent months, and this unusual dynamic is expected to continue in the final quarter of 2022. There is a risk that demand will fall further due to the upcoming festive period. The financial burden that accompanies the season could add to the pressure that households are already contending with due to the mounting ‘cost of living crisis’ that has developed throughout 2022.

However, the outlook for the fourth quarter is not as bad as it could have been, thanks to the UK’s new Prime Minister, Liz Truss, throwing in an economic lifeline in the shape of a proposed cap on energy bills. Without this, customers without a fixed energy deal would have faced sharp increases in bills due to the end of the UK energy regulator Ofgem’s current energy-price cap and huge increases in global energy prices. This would have had a major impact on disposable incomes, with bills expected to have more than doubled for many consumers.

A financial shock of this nature could have led to a significant drop in consumer confidence, which is already at an all-time low. Although it looks likely that this will be averted, it is important to remember that many households are already experiencing shrinking disposable incomes due to energy-price rises early this year, together with the increasing costs for many everyday essentials.

Challenges for used-car market but no crash

While there is no doubt that the UK’s used-car market faces challenges in the fourth quarter and into 2023, Glass’s does not expect a crash in used-car prices. There is likely to be more depreciation than we have seen over the past two years, but that is not unusual as cars are for the most part a depreciating asset.

Delays in new-car supply that have affected the flow of cars entering the used-car market, at either contract de-fleet or via the part-exchange route, are still prevalent. This lack of stock is helping to protect residual values. Had there been poor demand and strong supply over the past few months, residual values would have come under serious pressure.

The volume of new cars registered in the UK in August was higher than Autovista24 predicted, and supply is expected to improve throughout the remainder of 2022. However, interest-rate hikes are expected as the Bank of England attempts to bring rising prices under control, with the consumer prices index (CPI) topping 10% in July and only receding slightly to 9.9% in August. The mounting financial pressure on businesses and consumers alike means the new-car market faces a growing derailment risk, but consumers’ attention is likely to turn once again to used cars.

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Hydrogen vehicles in Europe – is there growing support?

While electromobility is in full swing, some European manufacturers are also working to bring hydrogen vehicles to the roads, writes Autovista24 journalist Rebeka Shaid.

With the EU planning to ban the sale of new petrol and diesel cars from 2035, European carmakers have shifted their focus to electromobility. But some manufacturers are exploring alternative powertrains, with hydrogen vehicles pitched as another ‘clean’ mode of transport.

Political backing came this month from the European Parliament, which has set minimum quotas for the use of hydrogen and synthetic fuels. By 2030, the share of so-called ‘renewable fuels of non-biological origin’ should make up at least 5.7% in the transport sector.

Two of the main hydrogen cars that are commercially available now are produced by Asian brands. Toyota’s Mirai and Hyundai’s Nexo are among the best-known hydrogen-based vehicles, but European car manufacturers are also diving into fuel-cell technology – both for passenger and commercial vehicles.

‘If we look at Europe, what we hear is the need for hydrogen is increasing dramatically,’ David Holderbach, CEO of Hyvia – a joint venture between Renault Group and hydrogen fuel-cell maker Plug Power – told Autovista24.

Hydrogen vehicles are ‘the closest to diesel,’ according to Holderbach. ‘European OEMs are monitoring fuel-cell technology and have been working on it,’ he added, citing Renault’s endeavours to build hydrogen-powered cars.

The French brand introduced its concept car, the Scenic Vision, earlier this year – a prototype hydrogen fuel cell-powered SUV, which has a 75% smaller carbon footprint than a conventional battery-electric vehicle (BEV). But the car will not be available until the next decade, when electromobility will be the norm across Europe.

Hyvia, on the other hand, will start dispatching its first hydrogen vans later this year, coming with a range of up to 500km. ’10 years ago, it was clearly too early for Europe to be in the hydrogen business. Today, with what is happening in Europe – whether it is France, Germany, the Netherlands, Spain – there is a big change. Infrastructure is coming and production is coming,’ Holderbach added.

Going against the flow

While European car manufacturers are investing in hydrogen, camps remain divided on its use. BMW recently confirmed it has started producing fuel-cell systems for its hydrogen-powered iX5, describing it as a climate-friendly alternative. Hydrogen cars only emit water and warm air. They can be made from renewable energy resources, and BMW considers them to be a sustainable addition to BEVs.

But the Munich-based business is going against the flow as its German rivals do not generally view hydrogen technology as a viable solution for passenger cars. In 2018, Mercedes-Benz rolled out a hydrogen SUV, the GLC F-Cell, which has since disappeared from the market.

The GLC F-Cell was primarily delivered to customers in Germany and Japan, with the carmaker being selective from the outset by limiting the availability of the SUV. Mercedes-Benz is now clearly going down the electric path and is moving away from hydrogen technology.

‘The potential of fuel-cell technology and hydrogen as an energy-storage medium is beyond question. Nevertheless, the EV battery is currently superior to the fuel cell in terms of a large-volume market launch, especially for passenger cars, not least in view of the still small number of hydrogen fuel stations worldwide and the relatively high technology costs,’ Mercedes-Benz told Autovista24.

As another German luxury brand, Audi has similarly moved its attention away from hydrogen to concentrate on electrifying its fleet. It did consider developing a hydrogen car, dubbed the h-tron, but scrapped the concept a while ago.

While Audi, which is part of Volkswagen (VW) Group, told Autovista24 that it is responsible for the development and industrialisation of fuel-cell technology within the group, it said: ‘Under the current conditions, we do not see any significant field of application for fuel-cell propulsion in the passenger-car sector.’

Low-volume production

Like Mercedes-Benz, Audi cited challenges such as building an appropriate infrastructure. It added that high energy losses during the production of hydrogen are also problematic, as well as converting the fuel to green hydrogen, which is the most sustainable way of developing the fuel.

None of this is deterring BMW, which is also taking a vested interest in e-fuels. The manufacturer is following through with its hydrogen plans, believing in the future potential of fuel-cell technology for passenger vehicles. The company sees an advantage in the technology as it could lower reliance on rare-earth materials. That is because hydrogen-powered systems mainly rely on recyclable metals such as aluminium, steel, and platinum.

Another benefit for BMW is the battery in a fuel-cell electric vehicle, which is smaller than those used in a BEV as it is not the main source of power for the car. The iX5 features an electric motor and a high-performance battery. Cold temperatures are also not an issue for hydrogen-powered cars, which have a comparable range to electric vehicles and can be filled up in a few minutes.

‘We think hydrogen-powered vehicles are ideally placed technologically to fit alongside battery-electric vehicles and complete the electric-mobility picture,’ said BMW CEO, Oliver Zipse, at an event last month.

BMW will start low-volume production before the end of the year, with hydrogen enthusiast Toyota supplying individual fuel cells. The two car brands have been collaborating on fuel-cell drive systems since 2013, and BMW will initially test the hydrogen-powered vehicles on a small scale. But the company does not exclude large-scale production in the next five years – if the automotive market is ready by then.

Commercial vehicles

According to H2Stations.org, there were 685 hydrogen fuel stations worldwide last year, most of which can be found in Asia. In Europe, Germany leads the way, with around 100 refuelling stations. The German government is heavily funding hydrogen projects, but with infrastructure lagging behind worldwide and the variety of hydrogen models still limited, analysts believe that the fuel is unlikely to offer a breakthrough for passenger cars any time soon.

However, the number of fuel-cell electric vehicles is on the rise, with the International Energy Agency (IEA) recording more than 40,000 vehicles in use globally by the end of June 2021. It noted that deployment is concentrated on passenger light-duty vehicles, which accounted for three quarters of the stock at the end of 2020.

For commercial vehicles then, such as trucks, busses and vans, hydrogen could play a bigger role. France-based Hyvia wants to offer an ecosystem that includes light-commercial vehicles (LCVs) with fuel cells, hydrogen refuelling stations, as well as the supply of carbon-free hydrogen and services for financing fleets.

The company aims to achieve a 30% market share in the hydrogen light-commercial vehicle market by 2030, and it wants to get there in a more sustainable way. Holderbach told Autovista24 that Hyvia aims to ‘lead green-hydrogen mobility.’ He believes that hydrogen-powered vans will quickly become available in Europe, within the next couple of years or so, with the brand presenting its vehicles at the IAA Mobility show in September.

‘It will start with hubs,’ Holderbach said, especially in places such as France, Germany, and the Netherlands. ‘When you create hubs, you have massive production of hydrogen for heavy-duty industries and light-commercial usage.’

Audi told Autovista24 that its competence centre for fuel-cell technology in Neckarsulm is continuing its research activities in the area. ‘The results of our development activities could become relevant for the Volkswagen Group in the medium term, particularly for light-commercial vehicles and trucks,’ the carmaker said.

German automotive supplier Bosch projects that one in eight newly-registered commercial vehicles worldwide will be powered by a fuel cell by the end of the decade. The company told Autovista24 that it initially sees the automotive use of hydrogen in the commercial-vehicle sector.

Various European carmakers have at one point or another announced hydrogen-powered commercial vehicles. Stellantis-owned Citroën is currently testing the ë-Jumpy Hydrogen, which can be filled up in three minutes and has a range of 400km. The automotive group has other hydrogen-based vehicles in the works, modelled on their BEV counterparts, including the Opel Vivaro-e and the Peugeot e-Expert.

LCVs are an obvious choice for hydrogen, Holderbach noted. So, what about the passenger-car market? ‘I think there will be a point where hydrogen can become more meaningful for passenger cars, but we first need to make the breakthroughs,’ he said.

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Tables are turning – used-car markets down in 2022, recovery in 2023?

The pandemic saw European used-car markets deliver solid profits on prices that went through the roof. But the situation has changed this year and the used-car market is under pressure. Dr Christof Engelskirchen, chief economist at Autovista Group, provides an outlook for 2023.

Used-car markets boomed during the pandemic. Demand outstripped supply, as people looked for safe alternatives to public transportation and replaced older used cars with younger ones. Prices just kept rising.

The reduction in new-car supplies also helped used-car markets to prosper. This delivered solid profits to stakeholders, who complained about a lack of supply. The rise in prices may have slowed lately, but the market has not yet reached its turning point – with the exception of some milder downward corrections, e.g. in Finland, Poland and the UK.

Used-car price index by country

*Source: Autovista Group, Residual Value Intelligence*

Used-car transactions down in 2022

Used-car sales initially held up well compared to new-car registrations. Between 2019 and 2020, used transactions in the big five European markets (Germany, France, Italy, Spain, and the UK) dropped by 2.6 million units (from 29.3 million to 26.7 million), partly due to lockdowns. Used-car markets recovered swiftly to 27.8 million transactions, down merely 5% compared to pre-C0VID-19 year, 2019.

In contrast, new-car transactions fell by roughly 25% in 2020 compared to 2019 and ended slightly lower than in 2021. Based on the latest outlooks for 2022, new-car sales may contract further, but not on the same magnitude as used-car markets, which will lose roughly 3 million transactions in 2022 compared to 2021.

‘In the third year of broken supply chains for the automotive industry, tables are turning for used-car markets,’ comments Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group). ‘Used-car transactions are coming under pressure. Our most recent outlook indicates that for Germany alone, there will be one million fewer used-car transactions in 2022. There will only be roughly 5.7 million transactions compared to 6.7 million in 2021 – a contraction of 15%.’

New- and used-car transaction big five markets 2017-2022*

Consumer confidence at all-time low

This contraction is more substantial than many players had anticipated at the beginning of the year. There are several reasons why used-car markets tightened like this:

With surging inflation, used-car prices have risen so much that elasticity of demand is kicking in. People are thinking hard about whether they can afford to buy a used vehicle at this price point. The alternative is to hold on to an existing used car for longer.
Changing monetary policy from central banks aimed at combating inflation, bears a tangible risk of negative consequences on economies and job markets. This is another crucial factor that delays purchase decisions.
The Russian aggression in Ukraine adds another layer of uncertainty to the equation, not only linked to rising costs for energy. Consumer confidence is at an all-time low.
The continued lack of new-car supply also reduces the number of available used cars. For example, models registered in 2018/ 2019 which are now up for leasing renewal are facing longer holding periods as replacements are not coming in – reducing the number of used cars created. Furthermore, three years of lower-than-normal short-cycle registrations lower the number of (young) used cars in the market.

Fewer used-car transactions

The contraction of used-car markets is largely associated with older used-cars, i.e. those older than four, or even 10 years. ‘The transactions of younger used cars, especially those coming off leases, have held up remarkably well. They are largely on pre-crisis level’, said Marc Odinius, managing director at Dataforce. ‘We also see the anticipated dip in short-cycle registrations washing through to used-car markets now, as OEMs seek higher-value channels. That is why used-car transactions in the zero to two-year age cluster are down. But clearly, the most impactful contraction happens in the older-vehicle segments.’

Used-car transaction by age (example: Germany) Jan 2017-2022*

*Full- year forecast for 2022
*Source: National registration offices, Dataforce, Autovista24 analysis*

High prices reduce willingness to compromise

Used-car transactions are coming under pressure in the older than four-year segment. Prices were rising in this category more than in any other age group, which explains why this segment is now slowing down. According to Geilenbruegge, ‘the lack of abundant supply of cars combined with very high prices make it more challenging to find the right buyer for a specific car. At those prices, people are not willing to compromise and some walk away from the market.’

Used-car price index by age cluster (example: Germany)

Uncertain outlook for 2023

The origin of the current crisis lies in cracked supply chains, strong demand, as well as solid private and public spending power. Following the economic contraction in 2020, there was a quick rebound in 2021, which drove energy prices and inflation up already towards the end of 2021.

The Russian invasion of the Ukraine in early 2022 has driven energy prices up further. They account for roughly 50% of the inflation we are witnessing in Europe. Central banks are now biting down late, but harder, creating another element of economic stress. Furthermore, there are continued semiconductor shortages and lockdowns in China, which keep on disrupting supply chains. Autumn and winter waves of COVID-19 infections may also have a negative impact.

Autovista Group’s base case for 2023 anticipates continued supply chain issues, very low economic growth paired with high uncertainty, and inflation above target zones. This will keep new- and used-car markets under pressure. The current level of contraction on new-car markets is largely caused by supply chain issues – most cars due to be registered were ordered many months ago. Some of the automotive supply-chain issues should ease come 2023, which is the fourth year of the crisis.

New-car registrations should rise versus 2022. Used markets are expected to be stimulated accordingly, as more cars will be supplied. A recovery is expected in 2023 versus 2022 on both, new- and used-car markets, but this does not mean 2023 will be a rebound year for the automotive industry.

Of course, projections into 2023 are sensitive to assumptions on how quickly the abundance of negative factors will ease. There may be more positive scenarios evolving in 2023, for example if a stable ceasefire can be achieved in the Ukraine or if energy prices fall. However, it seems wise to caveat any outlook towards a more negative turn of events. For example, in its economic outlook in July, the IMF stated: ‘the risks to the outlook are overwhelmingly tilted to the downside’.

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Monthly Market Update: Used-car prices stubbornly resist weakening demand

Despite slowing used-car sales activity across Europe in August as consumers contend with rising living costs, residual values (RVs) grew slightly quicker than list prices. This resulted in month-on-month growth of average used-car prices represented as a retained percentage of list price (%RV) in all markets, albeit ranging from only 0.1% in Spain to 1.3% in Austria.

The recovery of new-car registrations lost momentum in July, curtailing supply into the used-car market. Accordingly, Autovista24 downgraded its European new-car market forecasts last month. The supply of new cars, and subsequently used cars, remains an issue that is expected to persist into 2024, which will continue to support RVs.

On the other hand, used-car prices are under increasing pressure as used-car transactions retreat with the cost-of-living crisis further eroding the willingness of consumers to buy both new and used cars. Despite supply challenges, the prospect of diminishing demand means prices may already have peaked in some countries and the %RV is forecast to decline, or at best stabilise, across European markets in 2023 and 2024.

The interactive monthly market dashboard features Austria, Germany, Italy, Spain, Switzerland, and the UK. It also includes a breakdown of key performance indicators by fuel type, average new-car list prices, as well as sales-volume and active market-volume indices.

Supply remains key RV factor in Austria

The Austrian used-car market continues to be underpinned by limited supply. ‘On average, across all passenger cars aged two-to-four years, the supply volume in August was 0.8% lower than in the same month last year. Already in 2021, supply was significantly lower than at the beginning of 2020,’ noted Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland.

Diesel cars are still missing from the market, with a drop of 8.3% compared to August 2021. But the supply of battery-electric vehicles (BEVs) showed an even stronger downward trend again, with a drop of 46.6% year on year. Market activity shows weakening demand for BEVs and hybrids of all types, but their supply remains challenging.

Nevertheless, the overall supply situation stabilised somewhat in August, with a month-on-month increase of 2.8%, but sales activity is slowing, and average stock days increased slightly to an average of 58.2 days. BEVs are selling the fastest, averaging 55.3 days, followed by petrol cars with 56.8 days, hybrid-electric vehicles (HEVs) with 58.9 days, and diesel cars with 59.1 days. Plug-in hybrids (PHEVs) are selling the slowest, averaging 65.2 days.

There was a modest increase in RVs of 36-month-old cars in Austria, in terms of both absolute values (€RV) and retention of list price (%RV). The %RV rose by 21.7% year on year (1.3% month on month) in August, with cars retaining 53.7% of their list prices on average. PHEVs are currently leading with a trade value of 55.0%, followed closely by HEVs (54.3%), diesel cars (54.1%), and petrol cars (53.7%). BEVs aged 36-months retain the lowest value, at 48.3% of list price.

Madas assumes the market parameters will not change in the medium term, because new-car registrations are still noticeably lower than before the crisis. Last year was down 27% compared to 2019, and the outlook for 2022 is even below last year’s volume. ‘Even with cooling demand, the supply of new cars will be the key factor in the future development of RVs. Supply chains were already disrupted, and together with the semiconductor shortage, the war in Ukraine and COVID-19 lockdowns in China have led to even longer delivery times for most new vehicles,’ Madas noted.

Due to this undersupply, Madas expects RVs of three-year-old passenger cars to continue to rise this year. ‘Only when the new-car market picks up significantly, and thus volumes on the used-car market increase, and demand diminishes, are values likely to come under pressure. This will probably not be the case before 2023.’

RV peak ‘possibly reached’ in Germany

The German used-car market continued to show signs of significant consolidation in August. Price development is tense, with few and infrequent increases, while stock days continue to rise.

‘This is another sign that “the air is out” and that the peak has possibly been reached across the board. More vehicles are currently flowing in than are flowing out and expensive vehicles are not moving on. However, a rapid and sharp drop in prices is not expected this year,’ commented Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

It is interesting to look at the latest new-car registrations data, i.e. the used cars of tomorrow. The total volume to July was 11% lower than in the same period last year, which is in part ‘due to the low motivation of manufacturers to steer the limited output that is available into the unprofitable dealer, manufacturer and, above all, rental channels,’ Geilenbruegge noted.

The share of so-called tactical registrations through these channels is at a historic low of less than one third, a figure that was last reached in 2002 – excluding 2009 when a scrappage scheme was in place. ‘There are bleak prospects, then, for the segment of very young used cars this year and next,’ Geilenbruegge surmised.

Also interesting is brand performance in view of the general supply shortages. Cupra, for example, is now only just behind its SEAT sibling and had already surpassed last year’s total by 2,000 units in July. So far this year, the Cupra Formentor is the second most registered C-SUV in Germany, behind the Volkswagen Tiguan and ahead of the Ford Kuga.

Newcomers that can deliver cars are doing well too. MG is just ahead of Honda with four models and a fifth, the MG4, is already in the starting blocks. Polestar is registering more cars than Jaguar, closely followed by Lynk&Co, which has moved ahead of Alfa Romeo and Lexus. ‘So, the used-car market of the near future will still have a volume problem, but it will become more diverse,’ Geilenbruegge concluded.

RV growth continues in Italy despite sales slowdown

Although the pace has slowed in recent months, the growth in residual values did not stop in August, with an average increase in the %RV of 0.3% compared to July and 16.2% compared to a year ago. This is despite the sales-volume index falling 8.1% compared to a month earlier, although it is 29.2% higher than in August 2021. The time a used vehicle remains in stock increased slightly, to 62 days, with the Toyota C-HR and Nissan Qashqai being the best performers in August in terms of sales speed.

‘Diesel is the fuel type with the most surprising results in terms of %RV development, with a 1.5% increase over a month earlier and 19.6% growth compared to August 2021,’ commented Marco Pasquetti, head of valuations, Autovista Group Italy.

The sales-volume and active-market volume indices of diesel cars fell similarly month on month, but Pasquetti notes that the respective index figures of 95.7 and 82.1, ‘indicate a greater fall in the active listings on the main online used-vehicle portals, of around 18%, compared to January 2021.’

The average %RV of BEVs is on a downward trend, with a month-on-month decline of 2.2% in August. Nevertheless, prices are significantly higher than a year earlier and RVs of liquefied petroleum gas (LPG) and compressed natural gas (CNG) cars, which are still well established on the Italian market, are positive too. Values of both fuel types have grown around 14% compared to August 2021.

Shift to cheaper, smaller, older used cars in Spain

The Spanish new-car market continues to post negative results, with a cumulative year-on-year drop of 9.4% for passenger cars and SUVs that, although steep, is less dramatic than the 30% contraction of the light-commercial vehicle (LCV) market.

‘The lack of semiconductors continues to limit the entry of LCVs into the market and, in addition, high inflation, fuel prices, and economic uncertainty are slowing down, or at least postponing, consumers’ purchasing decisions,’ explained Ana Azofra, Autovista Group head of valuations and insights, Spain.

The shortage of supply in the used-car market has, therefore, not yet been resolved, and continues to reduce the available stock volumes by almost a half compared to a year ago. This is partly why there is also a drop in the sales-volume index, which was down 12.1% year on year in August.

Economic uncertainty is also having an impact on the used-car market, although its most visible effect is not so much a lack of demand but a shift towards cheaper, smaller and – especially – older cars. Four out of 10 used cars sold in 2022 are more than 10 years old and, as an example, there are as many 15-year-old cars sold as new cars. In these circumstances, it seems difficult to move towards a less polluting fleet. As the stock of these vehicles is shrinking, their prices have continued to rise. Buyers pay 30% more today for a vehicle that is over seven years old than in August 2021.

‘Considering the market sector that most affects sales by professionals, the shortage continues to impact pre-owned cars up to four years old. Dealers have neither been able to feed on sales of new cars nor have they been able to feed on renewals of leasing and rental fleets. Imports have thus become a relevant source of sales, increasing by 50% so far this year,’ Azofra commented.

In this scenario, residual values of vehicles continue to rise, although not at the same speed as in previous months. August’s rise was less than 1% for the first time in months. Economic uncertainty is holding back demand and prices are beginning to peak. Nevertheless, compared to August 2021, the average price of a three-year old used car with 60,000 km has risen from €16,095 to €19,765, equating to a rise of €3,670 or 22%.

Sales slow but RVs outpace list prices in Switzerland

For over two years, the Swiss used-car market has been characterised by healthy demand, low supply, and rising used car-prices. ‘Across all two-to-four-year-old passenger cars, the supply volume in August was 10.9% higher than a year earlier and already in 2021, the supply was significantly lower than at the beginning of 2020,’ noted Hans-Peter Annen, head of valuations and insights, Eurotax Switzerland (part of Autovista Group).

The sales-volume index in August was 17.7% lower than in July, and 14.8% down year on year. Nevertheless, residual values have grown slightly quicker than list prices. This market environment has led to a further increase in the average value retention of 36-month-old passenger cars, to 50.8% (up 18.5% compared to August 2021). Petrol cars posted strong year-on-year %RV gains of 17.6%, to 51.6%, as did diesel cars (up 20.1% to 49.7%) and BEVs (up 21.4% to 48.6%).

Diesel cars are still missing from the market, with a drop of 8.7% compared to August 2021. But the supply of BEVs showed an even stronger downward trend again, with a drop of 31.6% year on year. Nevertheless, market activity shows comparatively strong demand for BEVs and hybrids of all types, leaving their supply short.

The average days to sell decreased in August compared to July, with a passenger car aged two to four years in stock for 64 days. Petrol cars are selling quickest, after an average of 63 days, followed by diesel cars after 66 days, BEVs after 69 days, PHEVs after 80 days, and HEVs after 85 days.

Disruption to the supply of new cars, exacerbated by the war in Ukraine, and recent list-price increases are key factors in the future development of RVs in Switzerland. Supply chains are heavily affected, leading to long delivery times for most new vehicles.

‘As new-car registrations in 2022 are markedly lower than before the COVID-19 pandemic (2021 was down 23.4% compared to 2019), the market parameters will not significantly change in the medium term, even as used-car demand cools. Values of three-year-old used cars will remain high this year, and are forecast to end 2022 approximately 11% up on December 2021, before declining over the years 2023 and 2024,’ Annen concluded.

Living costs affecting UK consumers’ willingness to buy

The average residual value of a three-year-old car in the UK increased by 3.8% month on month in August. ‘Whilst positive, this movement does not accurately reflect the country’s general used-car market, instead it reflects rising list prices and the shortage of three-year-old models available in the market,’ explained Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

With new-car availability being hampered by long delays due to component supply, the contract-hire sector continues to experience a high volume of contract extensions. This is in turn leading to a reduction of de-fleeted cars hitting the wholesale market, creating a supply and demand imbalance for this age of car.

‘The average movement across all vehicle ages that Glass’s values in the UK was 0.02% in August compared to July, reflecting a stable overall market being influenced by generally low demand and supply,’ Whittington commented.

It took a used-car dealer 47.2 days on average to retail a unit in August, a similar time to last month, but this is 9.5 days longer than in August 2021. ‘Whilst it is possible that a shortage of “in-demand” cars could be contributing to this sales rate, it is more likely that cost-of-living pressures in the UK are affecting consumers’ willingness to commit to buy,’ Whittington concluded.

The August 2022 monthly market dashboard provides the latest pricing, volume and stock-days data.

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Monthly Market Update: Modest RV growth in July despite stable new-car list prices

Supply constraints in both the new- and used-car markets across Europe, together with rising inflation and energy costs, are playing a part in the development of residual values (RVs). July saw a more stable period, but a recoupling of supply and demand in the used-car market will place more focus on list prices for RV growth in absolute value terms (€RV).

During the last month, new-car list prices were stable across Europe, ranging from a 1.3% month-on-month decline in Switzerland to growth of just 0.3% in Spain. Residual values performed slightly better in value terms, resulting in modest growth of average used-car prices represented as a retained percentage of list price (%RV) in most markets.

The exception was Spain, where the average %RV gained 3% month on month. Used-car sales activity in the country is slowing far more than elsewhere, but supply is even more dramatically impacted, driving up RVs.

Although the June new-car registration figures confirmed expectations of a gradual recovery, Autovista24 downgraded its European new-car market forecasts in July – except for a modest upward revision in France. As the supply of new cars, and subsequently used cars, remains an issue that is expected to persist into 2024, this will continue to support RVs.

However, a steep ascent of raw-material and energy costs because of the Ukraine war, and rising inflation in general, is contributing to cooling demand for both new and used cars. With improving supply and diminishing demand, the %RV is forecast to decline, or at best stabilise, across European markets in 2023 and 2024.

Supply cannot meet used BEV demand in Austria

The Austrian used-car market continues to be underpinned by low supply. On average across all passenger cars aged two-to-four years, the supply volume in July was 10.8% lower than in July 2021, noted Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland. Already in 2021, supply was significantly lower than at the beginning of 2020. However, this situation has stabilised somewhat compared to June, with a slight month-on-month increase of 1.2%.

Diesel cars are still missing on the used-car market, with a 17.2% shortfall compared to the same month last year. But the supply of battery-electric vehicles (BEVs) showed a far stronger downward trend again, with a 50.4 % year-on-year decline. Market activity shows healthy demand for BEVs and hybrid-electric vehicles (HEVs), leaving their supply short and boosting RVs.

Despite the general ongoing context of used-car demand outstripping supply, average days to sell increased slightly, to an average of 57.9 days in July. BEVs are selling the fastest, averaging 51.9 days, followed by petrol cars at 54.5 days and diesel cars at 59.1 days. Meanwhile, HEVs take an average of 71.4 days and plug-in hybrids (PHEVs) are selling the slowest, averaging 83.4 days.

This market environment has led to a further slight increase in RVs of 36-month-old cars, in both absolute value and retention terms. The %RV rose by 20.8% year on year (0.4% month on month) in July, with cars retaining 53.0% of their list price on average. Diesel cars and HEVs are currently leading with a trade value of 53.5%, followed closely by petrol cars (53.2%) and PHEVs (50.1%). 36-month-old BEVs retain the lowest value, at 46.4% of the list price.

The market parameters will not change in the medium term, because new-car registrations are still markedly lower than before the crisis (2021 was down 27% compared to 2019). ‘The supply of new cars will be the key factor in the future development of RVs. Supply chains were already disrupted and together with the semiconductor shortage, the war in Ukraine has led to even longer delivery times for most new vehicles,’ Madas commented.

Due to this undersupply, Madas expects the %RV of three-year-old passenger cars to continue to rise this year, by 11.8%. 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.

Weak tactical and fleet registrations in Germany

New-car registrations continue to struggle in Germany, especially in the channels that are most relevant for the used-car market. ‘Tactical registrations are now more than 100,000 units below last year’s weak level and fleet registrations, which are known for their relative stability, also show a drop of almost 30,000 units compared to the same period last year,’ highlighted Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

Accordingly, the market for very young used cars will continue to be undersupplied this year and next. The buyback years 2024-2026 will also be relatively weak for cars aged between two and four years. ‘Only dwindling purchasing power is preventing the further unchecked increase of used-car prices. Volumes on offer are slightly increasing again despite lower replenishment, which is due to high price levels and growing stock days. Purchasing decisions seem to be postponed in view of tighter and unsafe budgets or are being shifted to cheaper models’ Geilenbruegge added.

The RV outlook for the rest of this year and the coming years remains stable, but this does mean that the forecast 19.9% increase for 2022, i.e. the comparison of December 2022 versus December 2021, is disproportionately higher than for the coming years.

Even though value retention has been dampened for a short time, the used-car price development of HEVs continues to be optimistic. However, a strong discrepancy is building up between initial pricing and achieved transaction prices, which will no longer be supported by buyers in the foreseeable future and will then lead to stagnation.

‘As HEVs are more affordable than other electrified vehicles, fuel consumption is lower than for internal-combustion engines (ICEs), and the technological change is limited, these are obviously good arguments for the respective models from Toyota, Hyundai, and Honda, among others,’ concluded Geilenbruegge.

Divergent performance of new and old technologies in Italy

In July, the average %RV of a vehicle with 36 months/60,000km was 50.1% in Italy. This is essentially stable compared to a month ago but up on last year (+15.7%). This stability is the result of a slightly positive trend for petrol and diesel RVs, whereas values of HEVs, PHEVs and BEVs are down by 1.5% to 2% compared to June.

‘Although used-car prices are still strong compared to last year, it is surprising that in this generally positive situation, new technologies are on a downward trend, while traditional engines continue to grow in value, albeit only slightly,’ commented Marco Pasquetti, forecast and data specialist, Autovista Group Italy. ‘Even if there are many drivers to consider, the higher average list prices of these technologies and current concerns about high inflation and economic instability are part of the picture.’

Used-car sales are up both on last year (+5.9%) and June (+41.1%), with the sales-volume index of 148 a clear indication of a healthy second-hand market. ‘This is another reason why we see, neither in the short nor in the medium term, the preconditions for a reversal of the trend and a return of the used-car market to 2019 levels,’ explained Pasquetti. Accordingly, he has revised the RV outlook for 2022 upwards, with expected growth of 9.4% compared to December 2021, followed by a slight further increase in 2023 and a slow reduction in RVs from 2024.

Stock levels depleting in Spain, despite import boom

The picture that emerged in the first half of 2022 in Spain is very different from the one envisaged in the middle or end of 2021. ‘It was just a year ago that we saw used-vehicle transaction prices soar, driven by the shortage of supply caused by the COVID-19 pandemic, coupled with the semiconductor crisis,’ explained Ana Azofra, Autovista Group head of valuations and insights, Spain.

Azofra expected this scenario to start to stabilise in the first half of 2022 and adjust in the second half of the year. However, the war in Ukraine and the ensuing economic crisis have made the situation more adverse. The Spanish new-car market has endured a cumulative decline of 11% and the used-car market has fallen by 4.5%. Stock levels continue to deplete and are less than half of what they were last year, cushioned only by a boom in imports.

‘Naturally, all this has impacted the average value retention of used cars, which is up 20% compared to July 2021 and even 30% when considering petrol-powered cars. In general, the RV increases are affecting all powertrain types. This started with ICE cars, while HEVs joined the positive trend a few months later. In 2022, BEVs and PHEVs have also joined this evolution, with high fuel prices and the lack of availability of ICEs and HEVs orienting demand to electric vehicles,’ commented Azofra.

Despite the price craze experienced in recent months, the trend of the last two months is confirmed, which already points to a certain stabilisation of prices. The average number of days to sell a used car continues to rise, inflation continues to soar, and it is expected that the rise in interest rates announced by the European Central Bank (ECB) will weigh on the purchasing power of households. Accordingly, demand is forecast to recede in the coming months, for both new and second-hand cars, lowering RVs.

List prices fall but RVs stable in Switzerland

For over two years, the Swiss used-car market has been defined by healthy demand, low supply and rising used car-prices. ‘Across all two-four-year-old passenger cars, the supply volume in July was in line with the level of a year earlier. Already in 2021, the supply was significantly lower than at the beginning of 2020,’ noted Hans-Peter Annen, head of valuations and insights, Eurotax Switzerland (part of Autovista Group).

The sales-volume index in July was 3.9% higher than in June, but 18.2% down year on year. Nevertheless, RVs remain stable whereas list prices are down 1.2% compared to June. This market environment has led to a further modest increase in the average %RV of 36-month-old passenger cars in July, to 50.3% (up 19.1% compared to June 2021). Petrol cars posted strong year-on-year %RV gains of 18.5%, to 51.2%, as too did diesel cars (up 21% to 49.3%) and BEVs (up 18.6% to 47.2%).

BEVs and diesel cars in particular are less offered on the active market, with supply down 39.9% and 16.4%, respectively, compared to July 2021. For petrol cars, there are currently 10% more two-to-four-year-old cars offered than a year ago. The active-market volume of PHEVs is around 28% higher than in July 2021, whereas the volume of HEVs is stable.

The average days to sell increased in July compared to June, with a passenger car aged two to four years in stock for 63 days. BEVs are selling quickest, after an average of 58 days, followed by petrol cars after 62 days, diesels after 65 days, and PHEVs after 79 days.

The disrupted supply of new cars, exacerbated by the war in Ukraine, as well as recent list-price increases, are key factors in the future development of RVs. Supply chains are heavily affected, leading to long delivery times for most new vehicles.

‘As new-car registrations in 2022 are markedly lower than before the COVID-19 pandemic (2021 was down 23.4% compared to 2019), the market parameters will not significantly change in the medium term. The %RV of three-year-old used cars will remain high this year and is forecast to end 10% up on December 2021, before declining over the years 2023 and 2024,’ Annen concluded.

UK used-car market ‘on a rollercoaster ride’

‘Since the start of the COVID-19 pandemic, the UK’s used-car market has been on something of a rollercoaster ride, with unexpected peaks and troughs in demand. This rollercoaster ride continued into the first half of 2022 with a downturn in residual values,’ explained Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

The UK’s unusual trading conditions continued throughout June and into July, with both poor demand and supply evident. As a result, hammer prices at auctions across the country began to stabilise, and whilst overall sales volumes are below the level seen last year, this strange supply and demand dynamic has resulted in a steadying development of RVs.

Used-car prices in the UK were essentially static in July with only a 0.1% movement compared to June, although comparisons with the same period last year show growth of 19.5%. The average number of days it took a UK dealer to retail a car also remained static in July, at almost 49 days.

‘This is 9.6 days longer than last year and gives a good insight into why auction activity is somewhat subdued – because dealers do not need to replenish stock as frequently,’ Whittington concluded.

The July 2022 monthly market dashboard provides the latest pricing, volume and stock-days data.

Can e-fuels save the internal-combustion engine?

E-fuels are being touted as a carbon-neutral alternative that some hope could keep internal-combustion engine (ICE) cars on the roads despite a looming ban, writes Autovista24 journalist Rebeka Shaid.

Do we want to save the planet or the internal-combustion engine? That question might sound provocative, but policies around transportation and mobility have centred on the environmental impact of diesel and petrol cars for years.

Fully-electric vehicles are seen as the solution as they have no tailpipe emissions. Still, ICE cars will not disappear from the roads in Europe any time soon, despite the EU planning to phase out the sale of new fossil-fuel-powered vehicles by 2035. This is where e-fuels come in – combustibles that have found both fans and critics.

What are e-fuels?

Simply put, e-fuels are synthetic fuels with their production based on hydrogen and CO₂. Labelled as climate-neutral, these fuels use carbon dioxide from the atmosphere and can, ideally, be produced using renewable energy resources.

Proponents, including automotive associations and some carmakers, argue e-fuels can relieve the climate of CO₂ and may replace conventional fuels altogether. E-fuels also have a high energy density, are easy to store, and can be distributed by an already existing network of petrol stations.

Advocates tend to pitch synthetic fuels as a sustainable way to transform the transport sector. The eFuel alliance, whose members include numerous automotive suppliers such as Bosch, Mahle, and ZF, told Autovista24: ‘We strongly believe that the climate targets cannot be achieved without e-fuels. E-fuels are climate friendly, contrary to what critics claim. To produce e-fuels, CO₂ is used from the air and liquefied using water and renewable energy.’

Mazda was the first carmaker to join the alliance, arguing that CO₂-neutral fuels could contribute to automotive manufacturers’ emissions reduction efforts. With the EU reviewing carbon emissions standards for cars and vans, e-fuels have once again become a hotly debated topic.

Opinions are split

In Germany, transport minister Volker Wissing recently emphasised that new ICE cars should still be relevant beyond 2035 if they can be topped up with e-fuels. This opinion has caused a rift, not only among politicians but also among carmakers.

Volvo Cars is leaving the European Automobile Manufacturers’ Association (ACEA) because its sustainability strategy does not match ACEA’s. The powerful lobbying group supports the use of what it calls CO₂-neutral fuels while the Swedish car manufacturer is betting on an all-electric future.

Others are not jumping ship despite considering the future of mobility to be broadly electric. Mercedes-Benz told Autovista24 that while it is preparing to go fully-electric by 2030 where market conditions allow, it was: ‘intensively involved in ACEA’s positioning on the EU Commission’s “Fit for 55” legislative initiative.’ The manufacturer added it was ‘continuously committed to a more progressive positioning of ACEA on the way to climate-neutral mobility.’

Meanwhile, German rival BMW wants to keep its options open. The group’s CEO Oliver Zipse is backing the use of e-fuels as opinions on them remain divided – even within the same company.

The head of Volkswagen (VW) Group, Herbert Diess, told a German media outlet that the efficiency of synthetic fuels was extremely poor. He also questioned the cost effectiveness and high-energy consumption required to produce them.

VW subsidiary Audi once seemed convinced by e-fuels but appears to have changed tack, saying synthetic fuels are not the future. But Porsche, which has been part of VW Group for more than a decade, is still heavily investing in the synthetic fuel. The sportscar maker has teamed up with Siemens Energy and other companies to build an industrial plant in Chile, which will be dedicated to the production of an ‘almost carbon-neutral e-fuel.’

Porsche plans for 80% of its sales to be made up electric vehicles (EVs) by 2030. The company told Autovista24: ‘Climate protection must be considered holistically. Synthetic fuels are a useful addition to electromobility to make a contribution to CO₂ reduction. We must also offer the owners of existing vehicles a perspective. Compared to pure hydrogen, e-fuels made from water and carbon dioxide extracted from the air for automobiles, airplanes or ships have the advantage that they can be transported more easily.’

While Germany’s carmakers are following different approaches, the country’s powerful association of the automotive industry (VDA) is in favour of synthetic fuels. ‘E-fuels could become a permanent fixture in transport in the future and make an important contribution to climate protection,’ it states.

Is carbon-neutrality enough?

After a key meeting among environment ministers last month to debate the phase-out of ICE cars in Europe, the EU has now left a door open for carbon-neutral fuels. In other words: synthetic fuels could be used past the 2035 deadline.

A spokesperson for the European Council told Autovista24 that the agreement: ‘includes a recital, giving the possibility to the Commission to make a new proposal to allow the use of CO_2-neutral fuels beyond 2035.’

Supporters of e-fuels want to keep the internal-combustion engine alive. After all, synthetic fuels could not only continue to power ordinary passenger cars, but also hyper- and sportscars, with Porsche planning to use synthetic fuels in motorsports. But this approach does not come without criticism.

Synthetic fuels will likely be considered in sectors where electrification is currently not plausible, but critics warn that the automotive use of e-fuels would send the wrong signal to car manufacturers and consumers. They suggest that using synthetic fuels in the long term would do more harm than good and delay the transformation to electromobility.

The shortcomings

There are clear downsides to e-fuels, as campaigners point out that these fuels still emit pollutants. Energy loss is also an issue as the efficiency of e-fuels is lower compared to battery-electric vehicles (BEVs). Energy gets lost when converting electricity into synthetic fuel, giving these combustibles an efficiency of around 15%.

To make e-fuels carbon neutral, renewable energy has to be used. This would mean depending on countries that have the capacity to produce enough green electricity. Additionally, producing e-fuels is expensive and consumers are going to feel those costs.

‘The production cost of the amount of e-fuels required for driving a combustion engine car 100km is nearly 10 times the production cost of the amount of renewable electricity for driving a battery-electric car the same distance,’ according to the International Council on Clean Transportation (ICCT).

The eFuel alliance is rejecting critics and told Autovista24: ‘The biggest criticism levelled against e-fuels is the apparent inefficiency, because a lot of renewable electricity is needed to produce e-fuels. However, this argument can be invalidated if we think globally. E-fuels can be produced worldwide in places with abundant sun and wind and transported via the existing infrastructure.’

So, will e-fuels be able to save the combustion engine? The German Climate Alliance told Autovista24 that synthetic fuels would, at most, be a niche in the future.

‘E-fuels are not yet available in significant quantities, are inefficient and very expensive. The best alternative – it is cheap, efficient and can already be implemented today – is called electrification. E-fuels only make a contribution to climate protection if it can be guaranteed that they are actually produced exclusively with renewable electricity and are only used where there are no better alternatives. This is not the case on the road.’

Synthetic fuels may provide a lifeline for companies that have their business models threatened as the industry switches to electric. These fuels could potentially have their merits under the condition that their production relies solely on renewable energy. They would also need to be accessible and economical. But even if these criteria are met, it does not mean e-fuels are good for the environment. Realistically, they might only be used as a bridging technology.

BMW in the hot seat – opportunities and risks of features on demand

Features on demand (FOD) can open up a world of potential, but not without risk. Sonja Nehls, principal analyst at Autovista24 explores the hot topic.

At the start of July, BMW quietly introduced heated seats as a subscription item to its ConnectedDrive store in several markets. The news sparked an intense debate online, with social media comments ranging from amused to worried.

BMW is in the hot seat, but the topic of FOD is a high-ranking one for all carmakers. Some are more advanced in the process, while others lag behind. Although getting the set-up of FOD right holds certain risks, both on the new and used-car market, there are major opportunities and potential benefits for all stakeholders.

FOD builds on over-the-air update (OTA) technology in a vehicle’s software and adds a commercial angle to it. Through FOD, customers can enhance their car’s set-up and activate certain functionalities for a trial, a limited subscription period, or the lifetime of the vehicle. In a recent video, Autovista24 deputy editor Tom Geggus explains what FOD is all about.

Advantages and opportunities for stakeholders include:

Carmakers can simplify their production processes by unifying the hardware set-up of vehicles. The FOD platform represents a direct customer relationship and a potential revenue stream throughout the lifecycle of a car.
Drivers can experience new features they did not initially order, enhancing and personalising their cars.
Used cars with FOD capabilities can be upgraded individually and therefore appeal to a wider group of potential buyers. Remarketers benefit from increased flexibility and avoid take-it-or-leave-it scenarios.
Fleets do their maths, taking into account the holding period of the car, costs for a FOD subscription compared to the lifetime buy, and implications on remarketing potential.

Not all items qualify for features on demand

Besides the reasonable advantages and opportunities, features on demand face challenges as to the right applications and cost, as well as how to ensure profitability.

Jennifer Bilatscheck, head of Car To Market and consulting at Autovista Group, has worked with a number of carmakers on consulting studies regarding FOD, and identified the main strategic challenges. ‘Selecting the right features at the right subscription price is key. Prices need to be high enough to compensate for the initial hardware investment and attractive enough to secure high take rates. If set up incorrectly, FOD could result in financial loss and impact residual values (RVs) negatively,’ she said.

The team has developed a framework to identify eligible and commercially viable items for FOD, which on the one hand considers the desirability of a feature, represented by the take rate. On the other hand, it reflects the initial hardware investment needed to enable FOD for an item. Functions are commercially viable when there is no additional hardware needed or when the additional hardware is compensated for by a high or growing demand.

Viability of FOD depends on demand and hardware investment

In a recent Autovista24 webinar, Bilatscheck used an example now in the spotlight, heated seats, to explain the risks of FOD. ‘You cannot simply remove an item, which typically is a standard feature with the carmaker’s models, and then offer it as FOD. The basic RV would suffer and the FOD’s potential positive contribution to RVs will not outweigh that impact,’ Bilatscheck explained.

Also, the potential positive impact of the FOD capability depends heavily on the attractiveness of the FOD offer on the used-car market. Used-car buyers are more price-sensitive than new-car buyers.

If FODs are perceived as too expensive, the take rates in the later stages of the lifecycle, and therefore the contribution against initial hardware costs, will be very low and the RV impact of the capacity can even turn into a negative one.

Used-car buyers will deduct the required investment for activating the features they want from the price they are willing to pay for the car. A downward adjustment of prices in line with the overall depreciation of the vehicle will secure relevance for the second or third-hand owner.

Pitfalls for features on demand

The recent criticism BMW faced after it revealed heated seats as a FOD, showed that customers felt robbed of a feature which is already built into cars, but requires additional payment.

BMW UK shared a comment on this saying that ‘where heated seats, or any feature available in the ConnectedDrive store have been purchased when a customer vehicle is ordered, no subsequent subscription or payment is necessary.’ Additionally, there will now be the possibility to enable the heated seats at a later date, for the entire lifetime with a one-time payment of £200 (€235), or a more flexible monthly rate of £15.

In any case, the recent discussion showed that not all items are equally fit for FOD. There is a thin line between offering customers flexibility and putting them off.

FOD has major potential for all software-based functions, which can be truly enhanced and potentially add new features over the lifecycle, including advanced driver-assistance systems (ADAS) or navigation functions. Purely hardware-based items, like the heated seats, struggle with customer acceptance.

In May 2021, Sonja Nehls and Dr Christof Engelskirchen, chief economist at Autovista Group, touched on this in an Autovista24 podcast on the benefits and challenges of FOD. ‘A customer will know that everything is already built in and will assess the value of activating a feature lower than what OEMs hope’, Nehls said.

The podcast named the biggest pitfalls to avoid when it comes to FODs and the used-car market:

Transparency of activated features and available FODs is crucial to find eligible vehicles and identify the equipment level, especially in comparison to conventionally-equipped cars.
Off-lease vehicles will lack some important features due to expired subscription periods. Attractive packages targeting used-car buyers are needed to mitigate an RV risk for these vehicles.
A clear definition and process are still needed as to taxation and benefit-in-kind for company-car drivers.

Features on demand come with opportunities and challenges. The advantages, especially for remarketing, are promising and enable more flexibility. Carmakers benefit from streamlined production processes, a direct customer relationship, and potential revenue streams.

The current debate on heated seats makes it crystal clear that not all features are eligible and that transparent communication with customers is key, regardless of whether a new or used car is being sold.

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Article Type: News

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EVs still sluggish in Spain

EVs struggle in Switzerland

Fears for BEV values

Residual values fall expected in UK

Weakening demand in Austria

Difficult year for residual values in Germany

Volatile prices in Italy

Similar year expected in Spain

Slower sales in Switzerland

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ZEV mandate impact

Cleaner options in used-van market

UK new-car registrations

Fleets forward

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Disproportionate infrastructure growth

Petrol leads the market

UK new-car market share by fuel type

SMMT downgrades BEV outlook

Demand drops again in Austria

Waiting effect in France

Divergent influences in Germany

C-segment SUVs popular in Italy

Timid growth in Spain

Stock days up in Switzerland

UK feels plate effect

Supply grows stronger in Austria

Sales driven by budgets in France

Dealers hold out in Germany

Small signs of growth in Spain

Switzerland sees %RVs sag

Retail activity rises in UK

Demand slowing in Austria

Positive developments for France

The party is over in Germany

Change is coming to Italy

Peak tourism season in Spain