Article Type: News

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

new-car registration

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 15th consecutive month of growth and has much to do with the rise in figures across the year.

October marks the 13th 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 42nd 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

UK new car market 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 engine (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.

This content is brought to you by Autovista24.

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.

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.

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.

This content is brought to you by Autovista24.

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.

Volvo EX90 reveal
Volvo EX90
Volvo EX90
Volvo EX90
Source: Volvo

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 EX90
Polestar 3
Source: Volvo, Polestar

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.

Volvo EX90
Tesla Model X
BMW iX
Source: Volvo, Tesla, BMW

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.’

Volvo EX90
Source: Volvo

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.

Volvo EX90
Volvo XC90 Recharge
Source: Volvo

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.

This content is brought to you by Autovista24.

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.

This content is brought to you by Autovista24.

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.

cars
Source: Hyvia

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.

europe
Source: IEA

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)

Source: Autovista Group, Residual Value Intelligence

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’.

This content is brought to you by Autovista24.

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.

This content is brought to you by Autovista24.

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.

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 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 CO2-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).

synthetic fuels
Source: 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

Source: Autovista Group Consulting

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.

ACEA’s influence questioned as Volvo also says it will leave

Questions are being raised about the status and influence of the European Automobile Manufacturers’ Association (ACEA) as Swedish carmaker Volvo has said it would leave the powerful group by the end of 2022. This follows the decision last month by Stellantis to quit its ACEA membership this year.

The Brussels-based industry group aims to represent a unified approach among carmakers, especially as Europe is in the middle of debating the Fit for 55 package that calls for stricter climate goals. But cracks are starting to show. Two members are now set to leave, and for different reasons – Stellantis to create its own mobility forum, and Volvo because it sees its sustainability ethos as not in tune with ACEA’s.

Not fully aligned

Both Volvo and Stellantis have been key members of ACEA, which represents 16 major manufacturers in Europe and is headed by BMW CEO Oliver Zipse. While the association’s goal is to ‘progress on the road to zero emissions’, Volvo is pursuing more ambitious sustainability targets that it says are not in line with ACEA’s.

Volvo Cars told Autovista24 its sustainability strategy on becoming fully-electric by 2030 does not match ACEA’s position on the matter.

The EU is striving to implement a de facto ban on new petrol and diesel cars by 2035, with ACEA demanding ‘technology openness.’ The group wants hydrogen and what it calls ‘other CO2-neutral fuels’ to play a role in decarbonising mobility, it explained.

Volvo Cars’ clear support of an all-electric approach would leave no room for the continued use of fossil-fuel-powered cars beyond 2035.

The Swedish carmaker said: ‘After much consideration, we have concluded that Volvo Cars’ sustainability strategy and ambitions are not fully aligned with ACEA’s positioning and way of working at this stage. We therefore believe it is better to take a different path for now.

‘What we do as a sector will play a major role in deciding whether the world has a fighting chance to curb climate change. At Volvo Cars, we believe that it is incumbent on all of us to step up to the challenge. We have one of the most ambitious plans in the industry, but we cannot realise zero-emission transport by ourselves.’

It also urged its peers to make their mark when it comes to addressing climate change. ‘Whoever does so will find a strong ally in Volvo Cars,’ it said.

Unprecedented change

With ACEA losing two of its members in a matter of weeks, these recent developments are exposing a discord among some of its long-standing members. It shows that some manufacturers follow a more progressive approach to cutting carbon emissions than others.

The potential use of e-fuels beyond 2035 also remains a contentious topic, with opinions being divided on the true environmental friendliness of these products.

ACEA stressed to Autovista24 that it would continue to work on a unified approach. Commenting on Volvo’s withdrawal, the association said:

‘We acknowledge the decision of Volvo Car Corporation to leave ACEA by the end of the year. We are in the midst of unprecedented change. ACEA will continue to drive Europe’s ambitious mobility transformation, building on the industry’s global competitive position throughout the transition. We remain committed to act as the voice of Europe’s car, truck, van, and bus makers, working hand-in-hand with all relevant partners and stakeholders.’

Shake-up

Volvo Cars has been one of the most outspoken manufacturers regarding its sustainability. It aims to be a circular and climate-neutral business by 2040, and says this was its biggest ever challenge. With the automotive industry not traditionally known as a climate protector, Volvo has been vocal about its ethical stance and aims to be a responsible business.

Stellantis’ reason for leaving ACEA seems to differ from Volvo’s as it wants to focus its efforts on a new forum dedicated to the future of mobility.

The move is shaking up automotive lobbying activities in Europe. At this stage, it is unclear whether Volvo would join Stellantis’ new mobility forum. While Stellantis, which includes Citroën, Fiat, Opel, and Maserati, wants to sell only battery-electric vehicles (BEVs) in Europe by 2030, its targets in other markets such as the US is not as high – in contrast to Volvo’s more ambitious goals.

Earlier this year, Stellantis CEO Carlos Tavares said the EU’s proposal to phase out internal-combustion (ICE) engines would carry environmental and social risks. He criticised electrification for being a technology ‘chosen by politicians, not by industry.’

With the EU still more than a decade away from implementing a potential ICE ban, which could be watered down if an allowance for e-fuels is made, opinions in the automotive industry on how to address climate goals remain divided.  

Launch report: Volkswagen ID.5 aims to build on electric brand popularity

Volkswagen’s ID. range is now a well-established electric sub-brand, and it is no secret that several new models are to be unveiled alongside the already popular ID.3 and ID.4. The new ID.5 is expected to keep up interest in VW’s ongoing brand electrification.

At first glance, the ID.5 is a pleasing automotive spectacle, yet not dissimilar to the ID.4 in design. The main external differentiator is the coupé-like sweep on the roof, which angles down into a rear spoiler and tricks the eye into believing the car is smaller and sleeker than a standard SUV. This lower roof does not hamper interior space, and there is still enough for even the tallest of rear-seat passengers.

The car is also practical, with increased boot space over the ID.4, albeit just six litres. The interior is uncluttered and spacious, with a low central tunnel also optimising space for rear passengers. Volkswagen’s ID.5 makes use of the carmaker’s software version 3.0, which provides better route planning, faster response times for the 12-inch infotainment display, and increased charging performance.

When it comes to powertrains and charging, the 77KWh battery is sufficient for a range of up to 520km, according to WLTP figures. The ID.5 will be available in three variants, the Pro, Pro Performance, and GTX. The latter is designed to be a nod to the GTI branding implemented on VW’s sporty petrol and diesel vehicles. The Pro version starts with 128kW/174hp, the Pro Performance version has 150kW/204hp, and the all-wheel-drive GTX version has 220kW/299hp. However, without rear-brake discs, acceleration and braking are not as efficient as some of the car’s rivals.

Click to open the interactive dashboard

Not all similarities are pleasing

The ID.5 shares much with the ID.4, acting simply as a sporty upgrade to the older, more established model. Unfortunately, some of those things the cars share are not all positive. The interior materials quality is below what users have come to expect from Volkswagen’s petrol and diesel vehicles. Like the ID.4 and ID.3, the carmaker has lavished a lot of plastic surfaces around the inside of the ID.5. This does not give a premium feel, which is a shame with a vehicle costing so much.

The design of the controls around the driver are also not ideal. Climate controls are operated via the infotainment system’s touchscreen and require multiple steps to amend. Touch-sensitive sliders beneath the screen are also easy to knock when adjusting touchscreen controls. While moving functions into a digital realm allows carmakers to increase the scope of over-the-air updates or functions on demand, the distraction for the driver, having to focus more on a screen than the road ahead, is questionable.

However, software 3.0 does allow Volkswagen to build on some of the functionality seen in the ID.4. This includes black-based lane guidance and Park Assist Plus with memory function, which can autonomously retrace parking processes once they have been saved.

Is brand awareness enough?

Volkswagen has strong brand awareness in key European markets covered in this latest launch report, and this helps residual values. The ID. sub-brand has proven popular with buyers, and even though models are just filtering into the used-car marketplace, such interest is likely to continue with those not seeking a new model.

Ultimately, the ID.5 is a sportier variant of the ID.4, and it remains to be seen whether this will be enough to convince buyers to pick this model over its stablemate or the extended family members Skoda Enyaq and Enyaq Coupé. While the ID. the family remains popular, new models are on their way, seeking to take market share from Volkwagen’s mass-market electrification brand. With other ID. models in the pipeline, the hope is that these vehicles will be differentiated against competitors, but also each other.

The Autovista Group dashboard benchmarks the Volkswagen ID.5 in Austria, France, Germany, and the UK for more details. The interactive launch report presents new prices, forecast residual values, and SWOT (strengths, weaknesses, opportunities, and threats) analysis.

Launch Report: Toyota Aygo X gives A-segment the crossover treatment

The Toyota Aygo X serves as a replacement for the Aygo city car in Toyota’s European lineup. It one of the few A-segment models with SUV/crossover styling and proportions.

The Aygo X has a great aesthetic, with a harmonised exterior and interior. It handles well, thanks to a good chassis and 17-inch or 18-inch wheels, which are standard across all trim lines. The car will be easy to park in the city with its very tight turning circle, but rear visibility is compromised by the design, which makes the boot loading sill high.

Higher ground clearance makes front access into the car easy but getting into the back seats is more difficult due to the narrow rear-door opening. Inside, rear legroom is limited too, although this is a common problem in the city-car segment. While many rivals offer electric windows, the Aygo X’s hinged-rear windows will be safer for small children and are not unusual in the A-segment.

Sleekly styled. the model shares its platform with the B-segment Yaris and has grown in length by about 24cm, to 3.7m, compared to its predecessor. The car is also slightly wider, and the crossover styling makes it a few centimetres taller too. This has a positive effect on seating space, as well as the boot, which holds 231 litres. Although this is about 20 litres smaller than in the Kia Picanto and the Hyundai i10, it is still a competitive size, and 60 litres more than in the Aygo.

There are no hybrid or electric powertrains available for the Aygo X, only a one-litre petrol engine. However, there is a choice between a five-speed manual gearbox or a CVT automatic transmission. The three-cylinder petrol engine, carried over from the Aygo, hums a little and is noisy at higher speeds. Taking 14.9 seconds to accelerate from 0 to 100kph, the model appears to be down on power compared to the competition, but usage costs will be low, with official fuel consumption of only 4.8 litres per 100km.

The interior is dominated by an egg-shaped central display that houses a multimedia system with either a seven-inch or nine-inch touchscreen. Standard equipment includes LED daytime-running lights, a rear-view camera, and Toyota ‘Safety Sense’, which features systems such as collision warning, brake assistant, lane-change warning, adaptive cruise control, high-beam assist and traffic-sign recognition.

High price positioning

The Aygo X is the freshest offering in the A-segment and competes against older models – the most recent addition was the third-generation Hyundai i10, which launched in 2020. There are also fewer A-segment models in the market, especially since the withdrawal of the former Aygo’s siblings, the Peugeot 108 and Citroën C1.Aygo X

Open the interactive dashboard

However, the comparatively high list prices of the Aygo X position it at the upper end of the A-segment. This is partly because advanced driver-assistance systems (ADAS) such as active cruise control and lane assist are included as standard, which are arguably unnecessary in a car that is not dedicated to driving outside cities.

There are cheaper city-car alternatives for consumers that do not feel the need for a higher driving position, and this segment is often more influenced by cost than others. However, the Aygo X does benefits from Toyota’s reputation for producing high-quality, reliable cars, and enjoys strong brand loyalty.

City cars in jeopardy

City cars, with their relatively low weight and compact dimensions, are more environmentally friendly than B-segment cars and SUVs. But there is limited room for demand growth in both the new and used-car markets, due to their low versatility and specific use.

However, due to increasingly stringent emissions regulations and safety requirements, they are becoming increasingly expensive, with prices approaching those of B-segment models that offer greater versatility. A case in point is the iconic Fiat 500 that, despite being a smaller rival and a different concept to the Aygo X, is available as a battery-electric vehicle but with B-segment pricing.

There are not many crossover/SUV-style vehicles in the A-segment, although that is likely to increase due to their popularity and the need to accommodate batteries for hybrid and electric powertrains. Nevertheless, as city cars can hardly be produced at an attractive end-customer price, especially with electrified powertrains, they are even threatened with extinction.

View the Autovista Group dashboard, which benchmarks the Toyota Aygo X in Austria, France, Spain, and the UK for more details. The interactive launch report presents new prices, forecast residual values, and SWOT (strengths, weaknesses, opportunities, and threats) analysis.

Delayed delivery of Europe’s electric-van market

While much of the automotive industry stalled during COVID-19, the light-commercial vehicle (LCV) market developed at a pace. Demand for vans increased as shoppers turned to online retail and companies rushed to keep up with the change in purchasing behaviour.

However, the sector now faces the same external difficulties as the entire automotive market. Shortages of semiconductors, component-supply issues caused by the Ukraine war, and pressure to switch to zero-emission technologies are causing a decline in new LCV sales. New-vehicle list prices are rising, and residual values (RVs) are generally remaining positive.

Just like the passenger-car market there is an increasing push towards electrification, particularly as fuel prices rise. The LCV market presents a significant development opportunity for electrification. However, it must first overcome some serious obstacles such as charging times, infrastructure location, and logistical practicality. 

There is also a big opportunity for hydrogen fuel-cell technology in the LCV market. The technology offers significant advantages over battery-based propulsion when it comes to zero-emission LCVs. This includes reduced refuelling times and better payload opportunities without the weight of batteries, which could see the market spearhead development of the fuel type.

All these topics were discussed in the recent Autovista24 webinar, Europe’s light-commercial vehicle market – The road ahead for new and used vans. The panellists looked at economic scenarios in Europe, how RVs are faring, outlooks for the UK and German markets, the electric LCV market, and how hydrogen could grow in the segment.https://www.youtube.com/embed/Ravk1RYhe_4?feature=oembed

Infrastructure and other challenges

The LCV market is a sleeping giant when it comes to electrification, Dr Christof Engelskirchen, chief economist at Autovista Group, stated. There are still challenges to overcome, not least with the infrastructure required. The existing electrification infrastructure has been built around the passenger-car market, and charging points can be restrictive for vans, which require larger parking spaces and car-park height clearance. Additionally, van drivers need a fast charging time to avoid delays to deliveries and the resulting impact on business costs.

One answer could be the development of delivery hubs on the edges of urban areas, with last-mile deliveries made by electric LCVs. Christian Schneider, head of analytics at Autovista Group, suggested that such facilities should have dedicated charging points for vans.

Although all manufacturers are introducing battery-electric vehicle (BEV) models, there are few vehicles filtering through to the used-van market, highlighted Andy Picton, chief editor (CV) at Glass’s, part of Autovista Group. Used BEVs may be a better fit for small and medium enterprises and sole traders. These businesses usually have smaller budgets, making these lower-priced models more appealing. Picton added that recent fuel-price increases may speed up the switch to BEVs.

Development of new BEVs is expensive, which is leading to an increasing number of partnerships, such as that between Ford and Volkswagen, Picton added. Andreas Geilenbruegge, Autovista Group’s head of valuations also observed that manufacturers should work on range and charging times if there is to be an uptick in adoption. This, above all, requires dedicated electric LCV platforms, something manufacturers are working on. There is another challenge when it comes to retail, with dealerships needing to explain electric-vehicle technology and its benefits, alongside specifications and pricing.

‘There are three main pressures on vehicle manufacturers, a personal CO2 reduction, carbon-footprint target, and regulations from the European Commission to reduce emissions to zero by 2035,’ stated Pierre-Yves Combeaud, sales director at Hyvia, a hydrogen mobility company. ‘It is a question of giving possibilities to companies to have an alternative-fuel source for demanding journeys, for big LCVs mainly, or even sometimes medium LCVs.’

Hydrogen option

Currently, more than 80% of LCVs on Europe’s roads are diesel-powered. Green hydrogen offers many of the benefits of diesel, such as short refuelling times and long ranges, but without the harmful emissions. The zero-carbon technology also allows for better vehicle payloads, without heavy batteries taking up crucial weight.

However, like in the early days of the electric-vehicle market, one of the areas delaying the development and deployment of hydrogen is the lack of infrastructure. But this is coming, as Combeaud highlighted: ‘It is possible that there will be 1,000 hydrogen refuelling stations in France and Germany by 2030, while by 2035, as part of the ‘Fit for 55’ package announced by the European Commission, there needs to be one refuelling station every 50km on European motorways.’ 

Picton pointed out that the LCV market is subject to the same supply-chain pressures as the passenger-car sector, with semiconductors a particular issue. He also stated that it may not be until the middle of 2023 that we see this situation ease.

New-van prices rise, but RVs stable

LCV list prices for diesel models in particular have been rising more than for passenger cars, with increases of 7% compared to 4%. Diesel vans have seen prices rise more than for BEVs. Engelskirchen pointed out that such price increments show manufacturers are heading towards price parity between internal-combustion engines and their electric counterparts, with petrol and diesel going up, rather than BEVs coming down in cost.Autovista24-LCV-webinar-June-2022Download

The COVID-19 boom led to a shortage of supply in the new-van market. This, together with the semiconductor supply problem, means that very positive RV development has occurred across all countries in Europe, according to Schneider. Additionally, an increase in purchases of motorhomes, driven by the desire for ‘staycations’ during the pandemic, is helping RV development. Motorhome customers are less price-sensitive than business buyers, added Schneider.

The LCV market in Europe is currently resisting change to electrification. This is in part due to the particular charging and range requirements of vans. Also supply issues are putting pressure on new models reaching the market. However, change is coming, with more electric models available, and used BEVs coming through remarketing channels. Although the sector is behind the passenger-car electrification trend, there is a requirement for it to fulfil zero-carbon targets, with hydrogen also a developing option in the years ahead.

Prices of new petrol and diesel cars on the rise – electric vehicles less affected

As inflation continues to rise in Europe, Christof Engelskirchen, chief economist of Autovista Group, explores why carmakers are pushing up the price of internal-combustion engine (ICE) vehicles more than electric vehicles.

Eurozone inflation is rising, with the latest consensus suggesting it will sit around 7% for 2022 in the European Union and the UK. This rise has been spreading into the automotive sector, underpinned by ongoing supply shortages of new and used cars. Price rises are being further compounded by a steep ascent of raw-material and energy costs as a result of Russia’s invasion of Ukraine.

Autovista24 expects the trend of rising new-car prices to continue as long as supply constraints remain ubiquitous. This will positively affect used-car prices as well – if demand cannot be met on new-car markets, buyers will turn to used models and this supports price realisation. Carmakers will have no other choice than to increase prices to support their margins.

Not all vehicle powertrains are affected in the same way, however. Prices for ICE models have been rising more than those of electric vehicles (EVs) over the past year. There are substantial segment differences too, as can be witnessed in the German market.

Gross list-price changes by segment in Germany – April 2022 year on year

Source: Autovista Group

Prices for diesel and petrol vehicles rise on a similar scale within the same segment. For example, in the mid-size segment (e.g. BMW 3-Series, Audi A4 and Mercedes-Benz C-Class), both powertrain types have risen by 7% over the past year. In the large-vehicle segment, prices for each rose by 4%, while in the compact-vehicle segment petrol and diesel-vehicle prices rose by 6%. This was no coincidence. In fact, they appear to be equally affected by rising costs of materials and are treated similarly from a carmaker’s pricing-strategy perspective.

There was one exception to the parity in this development. Diesel prices in the small-vehicle segment (e.g. Opel/Vauxhall Corsa, Volkswagen Polo and Renault Clio) have jumped on average by 16%, which has been driven by the added costs to emissions treatment, which weigh more heavily on cars in this segment. Petrol-vehicle prices only rose by 8%.

Steering customers towards electric powertrains

OEMs are shifting their portfolios towards battery electric vehicle (BEV) and plug-in hybrids (PHEVs). It is no surprise, therefore, that price rises for BEVs were more moderate than those of petrol and diesel vehicles: 3% in the small-vehicle segment and 2% in the mid-size segment.

In the compact-vehicle segment, the average price rise of 11% for BEVs can be attributed to the launch of the Hyundai Ioniq 5, which changed the mix and drove average prices up. Similarly, the 12% increase in the large-size segment was driven by the Taycan Cross Turismo debuting in May 2021.

PHEV price rises are also substantially more moderate than for ICE vehicles, given their contribution to meet EU CO2-emissions standards. The exception was a 14% price increase in one year in the large-SUV segment, which was driven by price increases from BMW. Overall, the number of PHEV-powertrain offerings was still relatively small, so every new launch affects vehicle-price averages significantly.

While price rises for BEVs and PHEVs have been more moderate, the prices of ICE vehicles are almost exactly trailing annual inflation rates (around 7% to 8%). Higher price rises for ICE vehicles than for BEVs and PHEVs are evidence that most carmakers are steering customers towards electric powertrains.

Higher inflation in eastern-European countries

Annual inflation stayed at a high level in April 2022, driven by price rises for food and energy. April’s Eurozone annual inflation remained stable at a high 7.4%, while inflation in the UK was 7%. Prices have been rising since the beginning of 2021, but it is worth noting that the Ukraine war has driven energy and food prices through the roof. If you take these out of the equation, annual inflation would have been around 3.5% in April.

Inflation was much higher in eastern than in western-European countries. For example, in the Czech Republic, annual inflation rose to 14.2% in April. In Estonia it was 18.9%, Lithuania 16.8%, and Poland 12.4%.

Spain was one of the few countries where inflation fell in April, to 8.3% from 9.8% in March. Countries that are less dependent on energy (and food) imports, like Spain, show lower inflationary tendencies. Other examples include Norway at 5.4%, and France at 4.8% in April.

Inflation outlook above 6% in Europe

Inflation is expected to surge to around 7% in both the EU and the Eurozone for the full year of 2022, with some central and eastern-European countries likely to see double-digit price rises in this timeframe. For 2023, the EU’s inflation will likely fall to 2.7%, but still sit above the European Central Bank’s (ECB’s) 2% target. Interest-rate rises in July are very likely in the Eurozone.

It is worth noting that the next possible escalation of the Ukraine war could result in a stoppage of oil and gas supply from Russia, which would trigger a gloomier scenario. The EU expects gross domestic product (GDP) growth to come down from an already subdued 2.5% in 2022 to 0.2%, and inflation would be 3% higher than in the base case, perhaps approaching 10% in that scenario this year. In 2023, inflation would be one point higher than in the base case, i.e. around 4%.

Volkswagen Group prices higher than others

Across all powertrain types, and controlling for changes in the model mix, Volkswagen (VW) Group brands led the way in terms of price rises. Audi, Cupra, Seat, Skoda and VW have increased prices more than other carmakers (see chart below). There are two possible reasons for this:

  • They are pushing customers towards electric powertrain types, via price rises for ICE vehicles
  • They are particularly affected by supply constraints, which leads the brands to consolidate their margins via price rises more than other OEMs.

New-vehicle price index in Germany by brand January 2019 to April 2022

Source: Autovista Group –
(graphic opens in new tab)

In terms of price development, Kia and Hyundai are at a comparably low 102.9% and 102.4% level respectively. They are apparently less exposed to supply issues than VW Group brands and are building market share with their more moderate pricing strategy. According to Germany’s national ministry of vehicle transport, the KBA, Kia’s market share in the country in April 2022 was 3.8%, compared to 2.4% in April 2021. Hyundai grew its April market share from 3.3% to 4.1%. VW, on the other hand, dropped from an 18.8% market share in April 2021 to 16.6% in the same timeframe. 

Used-car transactions cool for most of Europe’s big five markets in first quarter

Autovista24 deputy editor Tom Geggus considers the cooling of Europe’s big five used-car markets in the first three months of 2022.

With all the first quarter results of the year revealed, the used-car markets of France, Germany, and Spain look to be cooling as transactions slow. However, not all of the big five experienced the same chill, in fact, Italy appears to have enjoyed a heatwave, while the UK also posted positive results. However, when compared with the artic results of the new-car market, Germany was the only country to see comparatively colder used-car market conditions.

Used-car markets have enjoyed a long summer of increased transactions as the new-car market froze. COVID-19 saw semiconductors redirected to the consumer electronics market, leaving the automotive industry scrambling when restrictions were lifted.

Meanwhile, the Russian invasion of Ukraine resulted in a shortage of wiring harnesses alongside an increasingly troubled geopolitical climate. Rising inflation and costs of living are also putting new cars out of reach for many. So, production is problematic, delivery times extended, and more people are opting not to buy a new car.

This is now having a knock-on effect, as many are abstaining from buying a new car and not passing their current vehicle over to the used-car market. Therefore, a lower level of supply is being met by a shrinking demand across Europe’s major automotive markets, which is helping bolster residual values (RVs).

France and Spain slump

In the first three months of 2022, France saw its used-car market decline by 11.2% year on year, recording 1,395,230 transactions, according to figures from AAA Data. But this was still an improvement on its new-car market which dropped further, by 17.3% in the same period.

The number of used-car transactions in Spain dropped by 1.8% in the first quarter of the year, down to 449,086 units, GANVAM revealed. Meanwhile, the country’s new-car market tumbled into a double-digit decline, down 11.6% year on year.

Compared to the first three months of 2021, Germany’s used-car market only saw a decline of 7% in the first quarter of this year with 1,472,042 transactions. However, its new-car market faired better still, only dropping by 4.6% year on year, the latest figures from the KBA have shown.

Italy and the UK positivity

Italy’s used-car market stood out as a clear winner in the first quarter of 2022 as 1,205,939 transactions represented a growth of 34.9% year on year. But its new-car registrations saw the biggest drop among the big five markets, declining 24.4% against the first quarter of 2021, according to ANFIA.

new-car
Source: SMMT

The UK’s used-car market also saw an increased number of transactions in the first three months of the year the SMMT reported. With 1,774,351 units moving hands, the country recorded a growth of 5.1% against the first quarter of 2021. However, its new-car market did decline in the reporting period, but only by 1.9% with 1,687,755 registrations.

Residual values stay warm

The latest Monthly Market Update (MMU) confirmed that key European markets saw cooler used-car transactions in April, compared with the previous months in 2022. Autovista Group’s monthly market dashboard covers Austria, France, Germany, Italy, Spain, Switzerland, and the UK. It also considers fuel type, average new-car list prices, sales volumes, and active market-volume indices.

RVs have held firm as individuals and companies hold on to their vehicles for longer due to the difficulty of acquiring a new car. This extends across the automotive spectrum, from purchased models to leased vehicles, and fleet cars. So, as the supply of used-cars dries up, demand is dropping in parallel, which means residual values remained boyant.

Looking at the MMU for April, Autovista Group’s RV outlook for this year has been upgraded in Austria, Italy, and Switzerland. Meanwhile, the UK’s forecast was downgraded as market activity is notably subdued. The outlooks for France and Spain are maintained, so too is Germany after an upward revision last month.

Great Wall Motor’s ORA Cats set to become a challenger in Europe

Newcomers used to be easy prey for the giants in the automotive market, but with the disruption of electrification, they have become hunters. José Pontes, data director at EV-volumes.com, considers the strategies of one of the most daring Chinese EV makers, Great Wall Motor’s ORA brand.

Created as a dedicated battery-electric vehicle (BEV) brand by Great Wall Motor Co. of China, ORA, which stands for “Open, Reliable and Alternative”, started out in 2018 with two distinct models, the R1 city car and the larger iQ5 crossover.

Unlike the weirdly proportionated iQ5, the cheeky little R1 became a success, which allowed the ORA brand not only to survive its first steps, but to expand its line-up with the R2. This successor is a slightly larger city car, with a design not unlike some Japanese and Korean high-roofed city cars.

The first ORA cats are born

In the second half of 2020, the compact Good Cat was introduced, and with it, Great Wall Motor’s ORA cat-family theme was unleashed, with the R1 being renamed as Black Cat, and the R2 as White Cat. The names come from a Deng Xiaoping quote: ‘No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat.’

If the previous models already had their distinct personalities, the Good Cat took ORA’s design one step beyond, thanks to design director Emanuel Derta, who worked for Porsche for five years.

Derta was probably a frequent visitor to Porsche’s Museum, because the front design of the Good Cat is somehow reminiscent of the Porsche 356, or early Porsche 911s. The rear of the vehicle is more its own design, taking cues from what a Toyota Corolla could look like in 2030.

The interior is also innovative and retro-futuristic, but this is not a case of ‘all show and no go’ – the specifications support the distinctive design, as proven by the 143hp (171hp in GT spec) electric motor and 63kWh NMC battery (a 48kWh LFP battery is also available), allowing the Good Cat to have an electric range of 420km WLTP.

This compact (4.24m) model is ORA’s first EV planned to be taken to overseas markets. It is already present in markets like Thailand and Costa Rica.

Europe is also in ORA’s sights, with the Good Cat, or simply 01 Cat, as it will be known in Europe, set to land during the summer 2022 in top specification (171hp electric motor, 63kWh battery). With prices expected to start at around €30,000, the initial list price does not seem to be as low as one would expect, but given the comprehensive standard equipment, it becomes attractive, as it is in the same segment as the VW ID.3 or Nissan Leaf.

But if ORA wants to make an impact in Europe, just one model will not be enough. This is why Great Wall Motors has confirmed that the upcoming Lightning Cat midsize sedan will eventually be made available in Europe, as the 03 Cat.

This is another ORA Cat model where Porsche’s inspiration is visible, not only from the front (911), but also from the profile (Panamera), and once again the specifications follow the striking design with decent numbers. There is an 82kWh battery pack, allowing some 450km WLTP range, and 300kW electric motors, giving a 0-100km/h time of 3.5 seconds.

These days, an SUV crossover is mandatory for every self-respecting carmaker. Hence the third model for Europe will be the Cherry Cat, a compact crossover that might seem less design-driven next to its ORA Cat siblings. In reality, it is not an ORA model but a reskinned model from WEY, another Great Wall Motor brand, specialised in more premium-like crossovers.

ORA has a number of challenges ahead when it comes to establishing itself as a significant EV manufacturer in Europe. These include, but are not limited to:

  • Great Wall Motors has little visibility in Europe and most potential purchasers will not have seen a Great Wall car in the flesh. The ORA name is even more unknown.
  • If the Good Cat and Lightning Cat have passing resemblances to Porsche models, other ORA Cat models, namely the Punk Cat and Ballet Cat, are unashamed modern interpretations of the classic Volkswagen Beetle Despite their own virtues, they do not help the brand break the western preconception about Chinese cars being cheaper versions of known models.

It will be interesting to see if ORA dares to bring the Punk Cat to Europe. In other markets, Volkswagen has already indicated that it reserves the right to take legal action against any perceived model or design violations.

While the ORA Cat specifications are not necessarily bad, there are models in the same category that present higher range (VW ID.3). Most direct competitors have higher charging speeds than the (Good) Cat, which tops out at 80kW. ORAs are cars that attract because of their overflowing personalities, with their respective specifications doing enough not to be deal breakers, not the other way around.

No customer base or dealer service

One challenge for Great Wall Motors in bringing ORA to Europe is that, like a start-up company, it will have to start from scratch to build a customer base and dealership network. Added to absent brand recognition, it will have to work harder to make itself known and win the trust of the public.

BEVs are not attractive without dense, reliable charging infrastructure (CI). Drivers should be able to plug in while on the road, avoiding charging anxiety, which can be as damaging for BEV adoption as range anxiety. CI differs greatly from country to country. For example, in the Netherlands, the density and availability of EV charging points allow drivers to travel without major concerns. In most other countries, CI is sparse, limiting BEV success.

This is something that Tesla has completely prepared for in any given country, as it deploys its top-notch supercharger network simultaneously with the start of official sales.

Due to aerodynamics and skateboard-compliant batteries and platforms, BEVs tend to have similar looks and profiles, thus making them harder to distinguish in a crowd. Not so with ORA. Despite having elements inspired by models of other brands, Great Wall Motors has managed to create models that are cute, original inside and out, and appealing to both genders, something many brands have struggled to do successfully.

Strategic partnership with Mini

Great Wall Motors has a partnership with Mini’s parent company, the BMW Group, called Spotlight Automobile, owned in equal terms by both carmakers. This is a cheeky deal considering there is some similarity to the Mini with ORA.

The deal establishes that the next-generation Mini Cooper BEV, said to arrive next year, will share mechanics (batteries too?) with the Good Cat, but in a smaller, more premium format.

This different positioning should prevent cannibalisation while also lowering development costs and increasing parts purchasing power. An indirect benefit is that ORA’s product planners gain access to Mini’s (and BMW’s) marketing and engineering skills.

Competitive pricing

Pricing of the ORA starts at £25,000 (€29,800) in the UK and €30,000 in mainland Europe, targeting more expensive rivals like the VW ID.3 or Renault Megane E-Tech.

And expect a long list of equipment, even in base trim, like standard LED lights (front and rear), 18-inch alloys, a pair of 10.25-inch screens with smartphone mirroring, rear parking sensors, a 360-degree camera, facial recognition, and a suite of driver aids. So, it could become a cut-price alternative to Mini’s electric offerings.

Fast ramp-up processes and model launches

Two of the most impressive characteristics of many Chinese EV makers, among them ORA, is that they have prolific new-model launch calendars. Despite being just four years old, ORA has already launched four models (iQ5; R1/Black Cat; R2/White Cat; Good Cat) and with a few more on the way, it has ramped up model production fast. The R1 ran from 0 to 4,000 units/month in just three months and the Good Cat from 0 to 3,500 units/month in six months.

When launching a new brand in Europe, ORA should be able to respond accordingly if it faces surging demand, thus avoiding the formation of year-long waiting lists that plague many European carmakers.

Market more open to new players

With the ever-growing share of leasing registrations and numerous new ownership models, there is a new automotive trend of ‘giving it a go’.

Customers are not as risk-averse as they used to be and are more willing to try new brands and new concepts. The shorter the holding period, the less risk-averse customers are. Also, ORA includes a five-year vehicle warranty as further encouragement.

One of the reasons why ORA is flexible with its production flow is because its battery supplier, the innovative SVOLT, is part of the Great Wall Motor group. It was one of the first battery makers to have cobalt-free lithium manganese cobalt oxide (NMC) and this means that ORA is a preferred battery customer and benefits from not being subjected to the current volatility of supply and demand that is troubling many vehicle manufacturers that are dependent on third-party battery suppliers.

 It is a little-known fact that Chinese brands were responsible for over half of the BEVs registered in 2021 globally. With the exception of the already-established MG brand, which is part of Chinese carmaker SAIC, 2022 will be the first year that Chinese car manufacturers export to Europe in significant volumes. Great Wall Motors is looking to be one of the first to surf this wave, with the 100% BEV brand, ORA.

The ORA Cat family looks to be a promising line up in a rapidly-increasing market and their cuteness and personality could appeal to a public that has not yet been drawn to any particular brand or does not find a satisfying electric model among established brands.

With the right price and/or finance deals, the ORA Cats could prove to be quite popular on the continent. Last year, MG sold 52,546 units in Europe, serving as a guideline for the future.

Electric-vehicle charging: How many and which cables does an electric car need?

A complete set of charging cables for electric cars is no longer a standard item with all models. Autovista24’s principal analyst Sonja Nehls looks at the challenges that charging cables present for electric-car drivers.

People buying an electric car for their personal use will simply purchase the cables they are potentially missing. However, with so many battery-electric vehicles (BEVs) being sold as leasing cars, via subscription schemes or other new ownership models, buying an additional cable is not always a viable option. Despite the hype, electrification is still new for most people and many are yet to drive, own or lease their first BEV. The one thing car makers need to avoid is disappointing customers and making their BEV transition anything but smooth. One way to a hassle-free experience is to include all the necessary cables with the car as standard equipment.

When Tesla announced it would no longer include the mobility connector cables for slow charging as a standard feature with its new-car deliveries in the US, it faced a major backlash online. Elon Musk explained via Twitter that ‘usage statistics were super low’ and it thus ‘seemed wasteful’ to deliver them with every Tesla. The fact that the mobility connectors are sold out on the official website suggests that customer demand is high despite the low usage.

In Europe, drivers receive both charging cables, the Mode 2 cable for household sockets and the Mode 3/Type2 cable for public slow chargers, when ordering a Tesla. There is no general approach to EV-charging solutions and the situation differs largely between brands, models and countries.

Volvo in Germany lets customers choose between either the Mode 2 or the Mode 3 cable as standard, while customers in the UK or Sweden will always receive both. Mercedes-Benz equips the EQB with a Mode 3 cable and charges €286 for an additional Mode 2 cable. Audi has a similar approach, but asks for an additional €650. The BMW iX3 or Hyundai Ioniq5 come with all cables as standard.

Peace of mind is the main thing drivers of electric vehicles need to overcome charging anxiety, which increasingly replaces range anxiety as one of the hurdles for the transition to electromobility. Once the real range of an EV reaches a certain threshold – and discussions where exactly this threshold lies can entertain car enthusiasts for hours on end – speed of charging, availability, charging-points locations, and whether these are accessible become paramount. Accessibility, on the one hand, is down to various apps and providers. On the other hand, it depends on which charging cable you carry with you.

Charging flexibility is key

‘On a recent extended test drive with the Volvo C40 Recharge I did not have the Mode 3 cable with me’, said Sonja Nehls, Autovista 24’s principal analyst. ‘That meant that none of the public slow chargers typically found in city centres etc. were available to me. At least in Germany that ruled out a lot of medium-distance destinations for a day trip, unless I wanted to add another 30 minutes at an inconveniently placed fast charger on the way back home.’

One of the reasons for the backlash Tesla faced when it revealed it would no longer include the mobility connector cable is the fear of losing charging flexibility. And this is not about charging a vehicle at home, where BEV drivers will most likely have installed a wallbox. It is also not about charging on a longer trip, where people can rely on fast chargers.

The issue lies with charging at your destination, wherever that might be, and making efficient use of your time while you are there. ‘Charging your electric car does take longer than fuelling up with petrol and ideally you can do it while running errands, meeting friends for dinner or visiting your family’ said Nehls. ‘Not having both the Mode 2 and Mode 3 cables with you will limit this flexibility and potentially reduce the time you can spend on the things you enjoy or simply have to get done.’

After-sales not always a viable option

As the owner of a BEV you will probably buy a missing cable from the car-maker’s accessory list or turn to a solution from an independent supplier. Ideally, the buyer already made an informed decision during the ordering process and was advised by a dealer or sales agent. If not, they are in for a disappointment when finding out about the missing cable. People leasing the vehicle or using it via a subscription model will not be willing on buying an additional cable. Also, a future used-car buyer will be confronted with the same situation, if the charging cables are not part of the standard equipment of the vehicle.

While Elon Musk certainly is right about usage statistics, he seems not to be taking into account how important it is for customers to know they have options, flexibility, and fall-back solutions.