Article Type: News

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.

Ukraine war means forecast tightens for Europe’s big five new-car markets

Autovista24 has downgraded its forecasts for Europe’s big five new-car markets. Senior data journalist Neil King explains why.

Western Europe’s major new-car markets endured double-digit declines in March as the war in Ukraine destabilised supply chains and delayed vehicle deliveries. The Ukraine war is expected to have a negative impact throughout 2022, and although a significant impact on new-car sales, i.e. order intake, is not expected, supply challenges could persist until 2024.

Beyond the production stoppages announced by the Volkswagen (VW) and BMW groups shortly after Russia invaded Ukraine, Mercedes-Benz has confirmed to Autovista24 that it is ‘temporarily adjusting shift plans at some plants.’ 

The conflict is also indirectly affecting manufacturers as lower neon-gas supplies from the region compound the pre-existing shortage of semiconductors.

‘Ford has very limited direct sourcing from Ukraine and Russia. We have worked with our suppliers to move tools to other locations or supply parts from other regions,’ the carmaker told Autovista24. Nevertheless, Reuters reported on 21 March that Ford ‘will idle its German plants in Saarlouis and Cologne, mostly due to the global chip shortage.’

Volvo Cars told Autovista24 that it has ‘very limited direct relationships with suppliers in the affected areas and so far, we have not seen any impact on supply or production volumes.’ However, the Swedish carmaker ‘is experiencing a temporary worsened production situation, expected to last throughout the second quarter due to lack of a specific type of semiconductor.’

Modest improvement in the second half

In this context, Autovista24’s new-car registration outlooks for the second quarter have been revised further downwards in four of the five major Western European markets. The exception is Spain, where there is a backlog of orders to be fulfilled following the additional dramatic impact of a truckers’ strike in the country from 14 March.

Monthly new-car registrations, Germany, April 2020 to December 2022

(Click image to view – opens in new tab)

The full interactive dashboard presents the latest and previous monthly forecasts for 2022, as well as the annual outlook for the big five European markets to 2025.

The disruption to production is expected to diminish as carmakers secure alternative supplies of raw materials and components, although this typically takes weeks not months. Fundamentally, the outlook for new-car registrations hinges on vehicle deliveries and the anticipated improvement in the supply of semiconductors is weaker than before the invasion of Ukraine.

‘We still see a structural undersupply in 2022, which is only likely to ease somewhat in the third or fourth quarter,’ Volkswagen’s chief financial officer, Arno Antlitz, said in an interview with Germany’s Börsen Zeitung.

In conjunction with the lagged registration of the additional losses that have been factored into the second quarter, the outlook for the second half of the year has been modestly improved compared to last month. Italy also stands to benefit from the reintroduction of incentives for electric and low-emission vehicle purchases. A total of €650 million will be made available until 2024.

However, not all losses are forecast to be recovered by the end of the year. The net effect is that the combined 2022 forecast volume for the big five markets has been reduced from 8.58 million units last month, to 8.35 million units. This marks a reduction of over 230,000 units, or a 2.7% downgrade, and equates to year-on-year growth of just 1.2% in 2022 after two consecutive annual contractions of 25.4% and 2.2%. Compared to the February forecast, prepared prior to the invasion of Ukraine, the 2022 outlook for new-car registrations is about 600,000 units lower.

The new-car markets of France, Spain and Italy are forecast to contract between 2% and 4% in 2022. Autovista24 now expects around 2.75 million new-car registrations in Germany this year, an increase of 4.9% year on year, but this follows the 10% downturn in 2021. The forecast for the UK has been reduced further to below 1.74 million units, representing year-on-year growth of 5.4%.

Disruption persists in 2023

With more new-car registrations displaced into 2023 than previously assumed, higher double-digit growth rates are expected in the five countries next year. However, semiconductor shortages are certainly expected to persist into 2023 and probably beyond. ‘The situation should improve in 2023, but the structural problem will not yet have been fully resolved,’ VW’s Antlitz told Börsen Zeitung.

This opinion is echoed by BMW Group CEO, Oliver Zipse. ‘The investment cycle for semiconductor producers to build new capacity is between 24 and 48 months,’ Zipse explained to the Swiss newspaper Neue Zuercher Zeitung. ‘Currently, we are still in the peak phase of the chip shortage. I expect that we will see an improvement next year at the latest. But we will still have to deal with the fundamental shortage in 2023,’ Zipse added.

Autovista24 forecasts that the volume of registrations across the five key Western European new-car markets will rise above 10 million units in 2023, but this is still 11% lower than in pre-pandemic 2019.

A return to comparative normality is expected in 2024, a year which is also expected to benefit from a pull-forward effect as automotive manufacturers and consumers seek to register cars ahead of the EU Commission’s target of a 55% reduction in CO2 emissions in 2025, compared to 2021 levels.

Autovista24 expects a modest correction in Europe’s leading new-car markets in 2025, except in Spain as the anticipated slower recovery means the market will be the furthest adrift in 2024.

There are significant downside risks to this challenging forecast. The outlook ultimately depends on the duration and severity of the conflict in Ukraine, whether it extends to the west of the country, including the critical port city of Odessa, and even beyond its borders. This would add greater supply and logistical challenges.

Unlike previous crises, such as the global financial crash of 2008-2009, the registrations outlook for Western European markets hinges far more on new-car supply than any economic impact on new-car sales.

The new Dacia Jogger: an unlikely residual value hero

Autovista24 principal analyst Sonja Nehls digs into the new Dacia Jogger and its remarketing potential.

The new Dacia Jogger might seem an unusual choice in a series focused on remarketing potential, residual values (RVs), and fleet relevance of new-car launches, but there are many good reasons for choosing it. Together with the Dacia Duster, the Jogger represents a new generation of Dacia models with improved quality and design. Just like its stablemates, it will enter automotive markets at benchmark new-car prices, maintain low depreciation throughout its lifecycle and will reach used-car markets with strong residual-value potential.

The low depreciation makes it a total cost of ownership (TCO) champion. Rising list prices and energy costs, as well as a shortage of used cars and soaring residual values, all add to a climate of economic uncertainty. Smaller businesses in particular need to look more closely at their costs and buying or leasing decisions. Backed by a convincing cost performance the Dacia Jogger has the potential to win over commercial customers, but the brand’s image and reputation will be its biggest obstacle.

Dacia Jogger remarketing potential

Remarketing upsidesRemarketing downsides
Low list prices and strong residual values (RVs) result in benchmark depreciation and TCOBrand perception and image
Improved quality and design110hp petrol and 100hp LPG engines are slightly underpowered, especially with a fully-loaded car
Occupies a niche segment and combines characteristics of a van, estate and SUVUnusual silhouette and roofline
Modularity and roominess, seven-seater option 
Liquefied-petroleum gas (LPG) engine available as an alternative to diesel with additional cost-saving potential 

Three body styles in one model

The new Dacia Jogger replaces not just one but three previous Dacia models and combines characteristics of a van, an estate, and an SUV – all in one. Add to that the possibility of up to seven seats and this is a unique model. The Dacia Jogger has no truly comparable rivals.

As the focus for potential purchasers is getting plenty of car for their budget, other models in the relevant segment will be the likes of a Kangoo passenger van, a Fiat Tipo estate or a Skoda Scala. The typical seven-seater vans like a Grand Scenic or Volkswagen Touran or SUVs exist in a different league price-wise.

Specifications and dimensions versus main rivals

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Source: Autovista Group specification data

The new Dacia Jogger joins the Duster in demonstrating how far the Romanian car manufacturer has come, working hard on overcoming the reputation of being cheap and delivering poor quality.

Due to the unusual combination of several body shapes in one car, the Jogger looks a bit quirky, especially from the side and towards the rear. It is reminiscent of classic estates from the 1990s, but with a higher roofline. In any case, it is instantly clear that this car is all about space and versatility.

The interior greets drivers and passengers with a conventional style, including traditional control elements and instruments as well as an eight-inch touchscreen (not standard on the entry version). Material selection is aiming towards the simpler end of the spectrum, as you would expect, but the dashboard and door panels are cleverly styled and well executed. The third row seats adults comfortably enough and the two additional seats can be built in and out individually. With models of this size and price, the seven-seater option is a unique selling point (USP).

Initially, the Jogger is available with a 110hp petrol engine and a 100hp LPG engine. In some markets, such as Poland or Italy, LPG is very popular and in the light of soaring energy costs, the alternative fuel type offers additional saving potential. To put this into context, a spot-check calculation of fuel costs in Germany in March 2022 results in €11.50 per 100km for the petrol engine and €8.30 per 100km for the LPG engine (calculated with the WLTP consumption figures). A hybrid version will follow in 2023 and the smaller sibling Dacia Spring caters for battery-electric vehicle (BEV) demand.

Benchmark new-car price

Price is obviously the strongest selling point for the Dacia Jogger as you can buy a top version of it for under €20,000. Entry versions start at around €14,000. How convincing the price argument is becomes obvious when looking at the list-price development in the C-segment across Europe.

New-car price development (all fuel types, C-segment), unweighted, 2019-2021

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Source: Autovista Group. Note: Green 95% percentile, orange mean price, blue 5% percentile.

Since 2019, list prices in the C-segment increased by 15-20% in most markets, with the exception of a more moderate 7% in France and a 26% surge in Hungary. France also saw a stronger increase of 16% for the cheaper 5% of models (the blue line) offered in the segment, but a less pronounced increase for the more expensive and better-equipped versions.

With list prices exceeding inflation levels, increased economic uncertainty and rising energy costs, private and commercial customers will look more closely into the affordability of their mobility needs and the TCO of new cars.

TCO driven by depreciation

The depreciation of a vehicle typically accounts for the largest share of its TCO. A lower depreciation, therefore, brings down TCO significantly, resulting in better leasing rates and lower monthly costs.

As a reference, the below example shows the TCO of the Dacia Lodgy TCe 100 seven-seater compared to three potential rivals on the French market. The overall TCO is the lowest, by a margin of almost €2,000 to the Skoda Scala 1.0 TSI. At €5,910 the depreciation only makes up 25% of the Lodgy’s TCO, 15 percentage points less than for the Skoda Scala (€10,160). The Dacia then loses some of its initial advantages due to fuel consumption and insurance costs. Keep an eye out for the TCO data of the Dacia Jogger included in Car Cost Expert upon its official arrival in the market.

TCO comparison Dacia Lodgy versus competitors, France, 36mth/60kkm, March 2022

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Residual values are a major advantage

Dacia models repeatedly won the Schwacke and AutoBild Wertmeister Award in Germany thanks to their high relative RVs and subsequently low depreciation. The Dacia Jogger seems to be willing to follow their lead. Thanks to strong residual-value forecasts in combination with low list prices, the depreciation for the Dacia Jogger will be its major advantage across markets. In the countries shown in this interactive dashboard, depreciation will range between only €4,700 to €6,700 over two years and 60,000km in Germany and Hungary and go up to €7,500-10,000 in Italy.

Dacia Jogger forecasted depreciation, 36mth/60kkm, March 2022

Open the interactive dashboard

While the situation in Italy looks less favourable in the cross-country overview, this is mainly rooted in general differences in RV levels between countries. When compared to rivals in Italy, the Dacia once again manifests its advantage in terms of an extraordinary RV strength and therefore low depreciation.

Dacia Jogger forecasted depreciation versus competitors, Italy, 36mth/60kkm, March 2022

Open the interactive dashboard

Strong new-car registrations and RVs in Eastern Europe

In Romania, Dacia’s domestic market (not shown in the dashboard), the situation is even more beneficial than in Germany or Hungary, with residual values around 74% and a depreciation of below €5,000 on any model.

Ulmis Horchidan, Autovista Group’s chief editor in Romania, explains that Dacia ‘made a big step forward in terms of quality and design and carved out a new segment for the Jogger, which does not have any direct competitors. The Dacia Jogger has the potential for family and commercial use and, most importantly, it is a good match for the economic reality of people.’ He explains that due to continuously rising residual values, energy costs and new-car prices, many brands simply become too expensive – as new cars and on the used-car market – and the Dacia Jogger is a good option in this market environment.

‘The Dacia Jogger has the potential for family and commercial use and most importantly it is a good match for the economic reality of people.’

Ulmis Horchidan, chief editor Romania, Autovista Group 

Poland is the biggest Eastern European automotive market and with a 10% share, Dacia ranks third in private registrations, only exceeded by Toyota and Kia. However, when it comes to commercial registrations Dacia’s share drops to 3% and the Duster is the only Dacia model in the top 20.

Marcin Kardas, head of valuations and specification with Autovista Group in Poland, states that ‘the Dacia Jogger will not be a typical fleet car, but there still might be some potential due to current economic circumstances and increasing costs. The battery-electric vehicle Dacia Spring already sees rising commercial registrations, mainly with car rental companies.’

Jędrzej Ratajski, Autovista Group market analyst in Poland, adds that Polish customers see Dacia models as ‘cheap, practical and best value for money. The Jogger might change this point of view as it also looks nice and is well built. It can fill the gap that the phase-out of some vans leaves. For example, the passenger versions of Renault Kangoo and also Citroën Berlingo are at least temporarily not available.’

An option for car fleets

Does the improved quality, low depreciation and benchmark TCO make the Dacia Jogger a perfect model for car fleets?

So far, commercial registrations for Dacia vehicles remain the exception and the clear focus is on private customers. The Jogger will appeal especially to families in need of space and versatility at an affordable price. And this focus on private customers is one of the drivers of the strong RV performance.

However, Dacia has come a long way and there might be a small window of opportunity opening for a new target group of commercial buyers. Economic uncertainty, increasing costs and energy prices will make smaller businesses, in particular, look into their cost structures and seek improvements. The Dacia Jogger will certainly not be the car attracting user-chooser fleets, but for non-user chooser fleets or white fleets in need of cars as ‘workhorses’, as Ulmis Horchidan said, it could be a viable and rational option.

Not evoking desirability

The one thing that stands in the way of rising commercial registrations and fleet adoption is the brand Dacia itself. Being the rational choice and a sign of understatement does not leave much room for automotive emotions.

But in the end, every technician or craftswomen also takes pride in the quality and reputation of the tools they use, so maybe also the non-user-chooser fleet purchase decision is a more emotional one than you would initially think. The brand of tool or car an employer provides for working hours, but oftentimes also for personal use, helps with employee satisfaction and retention. While Dacia has improved significantly on so many levels, it remains a brand not evoking desirability.

How much further will new-car prices rise?

Christof Engelskirchen, chief economist of Autovista Group, explores how much further new-car list prices could increase on the back of recent global developments.

Disrupted automotive supply chains and semiconductor shortages cut a quarter off new-car registrations in 2021/2020 versus 2019. Scarce supply and pent-up demand propelled new-car prices to record highs. The war in Ukraine and sanctions on Russia are causing more disruption as costs for raw materials, energy, and logistics are rising.

Inflationary trends drive up prices, including those of new cars – and vice versa. However, list prices for new vehicles rose more steadily than inflation rates during the past years. The last decade was characterised by record-low inflation in the Eurozone and the UK. In an attempt to move the needle towards healthy inflation levels (grey corridor in the chart below; around 2%), the European Central Bank (ECB) rates went negative. Inflation remained unimpressed, dropping further and even going negative in several Eurozone markets and Switzerland during the second half of 2020.

The pandemic depressed private spending across several sectors and oil prices were in freefall during the first half of 2020. COVID-19 reactive VAT reductions also played a role in many markets. Three factors reversed this trend in 2021. First, there were base effects compared to periods of very low prices. Second, energy costs rose substantially in 2021, beyond pre-COVID-19 levels. Third, CO2 prices were added to fuel, oil and gas in January last year. By the end of 2021, monthly inflation hit 5.3% in Germany, 5.7% in the Netherlands, 6.5% in Spain and 4.8% in the UK.

Monthly inflation rates (y/y) by country

Source: OECD, Autovista Group analysis

Steady rise of new-car prices during the pandemic

Between Q1 2019 and March 2022, average prices in the D-segment (e.g. BMW 3-series, Mercedes-Benz C-class, Volkswagen Passat) rose by 16% in Spain, or €7,183. In Germany, new-car prices surged by 14% in the segment, while France increased slightly less – by 11%. Sweden topped this comparison with a steep 23% list-price jump over the three-year-period.

These price increases were not due to a change in mix. It is consistent across the more expensive versions of a model (turquoise coloured line in the chart below) as well as the cheaper ones (blue line). Not visualised, but noteworthy, smaller-vehicle segments increased even more than larger-vehicle segments. OEMs took the opportunity to increase prices, as supply was short and demand was building. These price rises were also seen in used-car markets.

Average new-car list price development, indexed and unweighted, D-segment

Source: Autovista Group. Note: Green 95% percentile, orange mean price, blue 5% percentile.

Best-case scenario: stagflation in 2022

Eurozone inflation hit a new high of 5.8% in February and this could increase further. Analysts are reviewing their inflation forecasts upwards – and outlooks will be suspect to frequent changes. Reviewing different year-on-year forecasts for 2022, Autovista24 expects inflation for the Eurozone to hit 3.5% to 4% (versus 2.6% in 2021); double this for the UK (7% versus 2.6% in 2021). In the US, inflation is expected to be around 4.5% to 5% in 2022 after an already substantial 4.7% inflation in 2021. One underlying assumption of these forecasts is that there will be no complete ban on Russian energy imports into Europe.

Stagflation is a likely scenario for many developed economies and is difficult to manage for central banks. It represents a period where prices keep rising (e.g. oil, gas, wheat, raw materials, other agricultural products, logistics, used-car prices, new-car prices), but the economy is not growing, or only slightly. Central banks face the question of how interest-rate increases would help bring inflation down.

This would probably have a limited impact because the prices for commodities like oil and gas are not rising because of an overheated economy. The real dilemma is if central banks do not act, consumers, employees, companies will get used to high inflation, which risks fuelling inflation even further. The ECB decision at the beginning of March, to maintain its interest rate at -0.5% and to reduce bond purchases is in line with stagflation expectations.

A recipe for rising list prices

Several major factors, depicted below, point towards further additional increases, with Autovista24 expecting list prices to remain on the growth trajectory depicted in the charts above.

  • Semiconductor bottlenecks have not gone away and have become systemic. Demand for chips is rising beyond the automotive industry
  • Supply chains continue to be fragile. The Russian invasion of Ukraine has exposed some OEM supply-chain issues in the areas of neon (critical for semiconductor production) and wire harnesses, which are model-specific. Ukraine-based companies assemble many of them
  • Demand for cars will outstrip supply in the coming years. There may be a dent in demand versus any pre-war scenario, but pent-up demand, which has been building up over the past two years, will more than compensate
  • Prices for raw materials, energy, production and logistics have risen substantially and this will wash through to higher prices.

Of course, there is a limit to how much consumers and companies will be able to pay for vehicles. An expected dip in economic growth will affect personal incomes and profits. Some car consumers may put a purchase on hold, or consider downsizing or buying used. It all depends on how successful the containment of the Russian invasion of Ukraine is. Should the war escalate further and the EU invokes a full Russian energy embargo, a deeper recession is probable. This would reduce the demand for cars, which may halt the rise of new-car prices, but it does not mean that they will come down.

Ukraine conflict cuts 2022 forecast for Europe’s big five new-car markets

Russia’s invasion of Ukraine has led Autovista24 to cut its forecasts for Europe’s big five new-car markets, senior data journalist Neil King explains.

All of Europe’s big five automotive markets showed signs of improvement in February, but Russia’s invasion of Ukraine will curtail the anticipated 2022 recovery. Although a significant impact on new-car sales, i.e. order intake, is not expected, the conflict is already adding further disruption to beleaguered automotive supply chains.

This is causing production stoppages far beyond Russia and Ukraine, with numerous carmakers affected. These include BMW (as well as its Mini operations in the UK), and Toyota, which has announced ‘additional production suspension in March’ at one of its plants in Japan.

Volkswagen (VW) Group’s Dresden and Zwickau plants in Germany are also contending with component shortages. Audi and Porsche production in the country, as well as Skoda output in the Czech Republic, is similarly afflicted.

‘The war in the Ukraine is dramatic and causes human tragedy and economic upheaval that we thought we had overcome throughout years of multilateralism and diplomacy,’ said CEO Herbert Diess at VW‘s annual earnings press conference in Wolfsburg on 15 March.

These disruptions will impact deliveries of some new cars and delay registrations in the short term. Accordingly, Autovista24’s new-car registration outlooks for the leading west European markets have been subtly revised for March, with greater reductions reflected in April.

Wiring harnesses ‘a dominant constraint’

However, the supply-chain issues will inevitably persist in the coming weeks and months. For example, the Financial Times reports that Ukraine ‘accounts for about a fifth of Europe’s supply of harnesses, which also come from other parts of eastern Europe as well as north Africa, according to estimates from AutoAnalysis.’

In response to a question at the VW media conference, Diess commented that ‘the dominant constraint is indeed wiring harnesses. We receive wiring harnesses from Ukraine from nine to 11 plants. Nine of them are working on reduced capacity so that means we are able to produce in most of our plants, but in a reduced rate of capacity.’

‘This is why we initiated relocation programmes for all those components, but which will take time. Currently, we are trying to get the most out of the wiring-harness production in Ukraine but in parallel, right from the start of the conflict, we started to work on alternatives, which are on the way. This affects most of our German plants.’ However, Diess added that ‘the overseas plants and also the West European plants in Spain and Portugal are not affected.’

Furthermore, the anticipated improvement in the supply of semiconductors that was factored into Autovista24’s forecasts, especially in the second half of the year, is jeopardised. Reuters reported on 11 March that ‘Ukraine’s two leading suppliers of neon, which produce about half the world’s supply of the key ingredient for making chips, have halted their operations, threatening to raise prices and aggravate the semiconductor shortage.’

Downward revisions to 2022

Autovista24 assumes that the disruption to car production will reduce throughout the year, albeit after securing alternative supplies of critical raw materials and/or components that are sourced from Russia and/or Ukraine. Nevertheless, the monthly forecasts for new-car registrations have been revised downwards in all five of Europe’s major markets from May until the end of the year.

Monthly new-car registrations, Germany, April 2020 to December 2022

Open the interactive dashboard

The full interactive dashboard presents the latest and previous monthly forecasts for 2022, as well as the annual outlook for the big five European markets to 2025.

As not all losses are forecast to be recovered by the end of the year, the net effect is that the combined 2022 forecast volume for the big five markets has been reduced from over 8.9 million units last month, to below 8.6 million units. This marks a reduction of over 360,000 units, or a 4.1% downgrade, and equates to year-on-year growth of just 4% in 2022 after two consecutive annual contractions of 25.4% and 2.2%.

The previous positive 2022 forecasts for France, Spain and Italy are now negative, albeit only modestly. Autovista24 now expects around 2.8 million new-car registrations in Germany this year, an increase of 7.7% year on year, but this follows the 10% downturn in 2021. The previous forecast of 1.9 million new-car registrations in the UK has been slashed to 1.83 million units, although this still represents year-on-year growth of 11.3%.

Displacement into 2023 and beyond

With the expectation of even more new-car registrations displaced into 2023 than previously assumed, double-digit growth is expected in the five countries next year. However, Autovista24 forecasts that the new-car markets will all be at least 8% smaller than in pre-pandemic 2019.

A return to comparative normality is unlikely until 2024, a year which is expected to benefit from a pull-forward effect as automotive manufacturers and consumers seek to register cars ahead of the EU Commission’s target of a 25% reduction in CO2 emissions in 2025, compared to 1990 levels.

Autovista24 expects a modest correction in 2025, except in Spain as the anticipated slower recovery means the market will be the furthest adrift in 2024.

There are significant downside risks to this challenging forecast. The outlook ultimately depends on the duration and severity of the conflict in Ukraine, and whether it extends beyond the country’s borders. Unlike previous crises, such as the global financial crash of 2008-2009, the registrations outlook for western European markets hinges far more on new-car supply than any economic impact on new-car sales.

Circular economy and the automotive industry: the shift towards the zero-carbon car

Sustainability and circular economy strategies go hand in hand, with cars being the perfect product to be reused, remanufactured, and recycled. Carmakers are also putting an increasing focus on cleaning up vehicle production and supply chains. Autovista24 journalist Rebeka Shaid considers some of the car industry’s circular approaches to producing the zero-carbon car, looking at the efforts of Skoda, BMW, and a promising Dutch startup, Circularise, which hopes to make the auto industry more circular.  

While carmakers face numerous challenges as they transition to cleaner forms of electromobility, the common consensus is that the industry needs to look beyond battery-electric vehicles (BEVs) to decarbonise transportation. Establishing concise circular-economy strategies can help the automotive sector drive down lifecycle carbon emissions of passenger cars. But what does it take to make a vehicle truly circular?

Net-zero carbon car waste

This is a question the World Economic Forum and the World Business Council for Sustainable Development are attempting to address after forming the Circular Cars Initiative. The project has a clear agenda: to increase the environmental sustainability of mobility.

By looking at how new technologies and business models can close material and production loops, the central idea is that of a zero-carbon car – a ‘vehicle that has reached its full potential with respect to carbon efficiency.’ Although industry experts admit that the automotive value chain might never be free of emissions, it can be improved by focusing on net-zero materials waste.

After all, a circular economy is based on the principle of reusing and recycling resources, including anything from tyres to the vehicle body shell, with the aim of extending the life of cars and their components. It can involve sharing, leasing, repairing, refurbishing, and recycling materials and products for as long as possible. Keeping in mind that the EU generates more than 2.5 billion tonnes of waste a year, and the world is only 8.6% circular, taking care of resources is crucial.

Closing the car-production loop

The EU’s end-of-life vehicles directive states that 95% of the material in passenger cars and vans needs to be reusable or recoverable, depending on the vehicle weight. Setting clear targets and objectives certainly helps limit waste from cars and their components. Automotive companies are increasingly working towards improving their degree of circularity, which takes shape in many forms.

Czech carmaker Skoda, part of Volkswagen (VW) Group, told Autovista24 it is actively engaged in applying the principles of a circular economy. ‘We follow four key principles: we minimise negative impacts on the environment, diminish resources inputs and the loss of these resources, conversely maximising the circulation of resources,’ said Martina Špittová of Skoda’s corporate communications department in the Czech Republic.

Source: Skoda

She added that the carmaker is working with an interdisciplinary team to implement these concepts in coordination with the ecology and occupational protection department. Špittová emphasised circular economy is ‘an integral part’ of Skoda’s strategy. The brand closely cooperates with recyclers and suppliers to cut down on primary materials and extend the lifetime of used materials. The efficient use of resources, she said, also shows financial benefits.

So, what are some of Skoda’s milestones on the sustainability front? ‘At Czech production sites, we have zero production waste to landfill. That means, all the waste from production is either materially or energetically reused,’ she said, adding that Skoda has also expanded circular activities to its production sites in India and Russia.

The carmaker uses seat covers made from recycled PET bottles, combining wool with recycled polyester. It is also involved in pilot projects focused on reusing end-of-life glass from cars in the manufacturing process. In its paint shop, Skoda deploys ground limestone, which absorbs residual paint particles, thus eliminating the need for water in a process known as ‘dry separation’.

Moving away from a linear economy – which involves taking raw materials, manufacturing a product only for it to be thrown away at the end – is not an outlandish idea although it is still largely the norm in the automotive industry. One of the carmakers hoping to change this is BMW, which aims to ‘become the most sustainable car company in the world.’

BMW’s ‘holistic’ approach

The Munich-based manufacturer raised an eyebrow or two at last year’s IAA Mobility event when it presented a fully-recyclable BEV – the i Vision Circular. While this concept car will not be launched until 2040, it shows what a circular car could look like.

The design relies on 100% recyclable materials, both old and renewable, and BMW purposefully created the four-seater with the circular economy in mind. The surface, for instance, is made from secondary aluminium while the tyres are created from certified natural rubber. BMW said the interior is 100% sustainable, with the dashboard being 3D-printed and produced from recycled plastic. Wood powder, again 3D printed, can be found in the steering wheel. The design has been described as ‘disruptive’.

Benedikt Fischer, spokesperson for BMW Group, explained to Autovista24 how the company is aiming to cut the use of primary materials in car manufacturing. ‘We are working to achieve holistic sustainability in every regard by gradually making a significant increase to the share of secondary materials in vehicles,’ he said. ‘At the moment, vehicles are made from almost 30% recycled and reused materials. With our “Secondary First” approach, the share of recycled and reused materials is expected to steadily increase to 50%.’

In the production process, he added, key material groups are increasingly being separated and recycled while BMW is also trying to use more secondary materials in the supply chain, depending on market availability. A pilot project the company has initiated with chemicals company BASF and recycling firm Alba Group aims to reduce the use of primary plastics.

Circular design concept

‘Alba Group analyses end-of-life BMW Group vehicles to establish whether a car-to-car reuse of the plastic is possible,’ Fischer said. ‘In a second step, BASF assesses whether chemical recycling of the pre-sorted waste can be used in order to obtain pyrolysis oil. This can then be used as a basis for new products made of plastic. In the future, a new door trim or other components could be manufactured from a used instrument panel.’

Fischer added BMW has shifted its focus to a ‘circular design’ concept, which he explains would guarantee the economical dismantling capacity of vehicles. ‘It is essential that disassembly of the vehicle and its individual components is fast and cost-efficient. It all starts with the construction of the vehicle, which must be done in such a way that allows materials to be removed at the end of the vehicle’s service life without different types of material being mixed with each other.’

The Bavarian carmaker is also looking at increasing circularity around steel, one of the materials that is highly emissions-intensive but also 100% recyclable. BMW recently signed a deal with one of Europe’s largest steel producers, Salzgitter AG, to increase the use of low-carbon steel at its European plants, calling it an important step to substantially reduce CO2 emissions in the supplier network – the key to making the industry truly sustainable.  

Transparency in the car-manufacturing supply chain

The supply chain is responsible for 80% of a company’s overall greenhouse gas emissions, and more carmakers nowadays demand proof that the material they use is sustainable. Dutch startup Circularise supports that mission. It helps businesses trace materials and products, with the aim of verifying their origins, certificates, and CO2 footprints – all via blockchain.

The young business is part of an EU-funded certification scheme for rare-earth materials, found in electric vehicle (EV) drivetrains, which are known to be extremely emissions-intensive. The three-year project, dubbed Circular System for Assessing Rare Earth Sustainability, will increase transparency around sustainable practices throughout supply chains. Founder and CEO of Circularise, Jordi de Vos, told Autovista24 there is an increasing demand for traceable materials, especially batteries.

But when de Vos founded the startup in 2016, he realised there was seemingly no organisation at the time that could close all the loops when it comes to tracing and tracking the origins of materials. ‘We actually found that the key blocker today is information [and] if you do not have the right information, you obviously cannot make the right choice,’ he said.

Digitising materials

So how does the company ensure the right data is shared with all stakeholders across the supply network? By setting up a system that, in this case, tracks rare-earths using blockchain tokens, or digital passports, through the supply network from mining to end-of-life. Blockchain enables parties to record information securely, and in a certifiable way. It allows suppliers to describe materials and products, with Circularise believing it to have great potential for the manufacturing industry.

De Vos emphasised the startup is collaborating with independent third parties to audit the materials to ensure verification. ‘We are closely working together with auditors, to make sure that data input at the beginning is correct. Because that is the only way you can guarantee the integrity of the insights you can get out of it. I think it is also important to understand that blockchain is not a solution to everything. It is just a tool.’

Source: Circularise

The company is working with various carmakers, including Porsche. In a past project, Circularise helped the German brand establish traceability of plastics, using blockchain while guaranteeing the use of sustainable materials in Porsche cars. De Vos revealed the company also experimented with other materials, including aluminium, some steel products, paints, as well as coatings. As a blockchain supply-chain transparency provider, Circularise’s main mission is to trace materials from source to product, without endangering confidentiality.

Consultancy firm McKinsey estimates a sharp increase of material emissions from 18% of vehicles’ life-cycle emissions to more than 60% by 2040. While this surge represents a challenge, it can also bring in new opportunities on the path to the zero-carbon car.

‘I am quite certain that there is going to be more of a push for legislation on these topics,’ said de Vos. ‘We know there is more demand coming from consumers and automotive brands. Nothing is stopping you from tracing what you put on the market today, and it might not have a real benefit in the short term,’ he said. ‘But it is a way to build up a stockpile for the future, at least data-wise, and hopefully, in 20 or 30 years from now, we can make better recycling choices than we do today.’

With most carmakers striving to become carbon-neutral by the middle of this century, if not earlier, a circular economy provides a framework to make those better choices – hopefully, we will not have to wait 20 years for these automotive companies to pick better recycling options.

Monthly Market Update: Modest residual-value growth in European car markets in February

Used-car sales were greater in February than a year ago in most automotive markets, although this compares to a low base as COVID-19 restrictions were in effect. In conjunction with ongoing car-supply constraints, residual values (RVs) enjoyed modest growth, except for stability in the Spanish car market and lower car prices in the UK.

Autovista Group’s used-car coverage in the monthly market dashboard features Austria, France, 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.

Ukraine jeopardises supply improvements

Following Russia’s launch of military action in Ukraine on 24 February, fuel and gas prices have risen sharply, which is adding to the inflationary pressure on household budgets across Europe. Furthermore, the sanctions imposed on Russia will also have economic implications, which will put pressure on new-car markets and may entice more automotive consumers to switch to used cars.

The situation is already disrupting automotive supply chains, with several car manufacturers announcing plans to suspend or halt production. This threatens to derail the anticipated recovery of new-car supply and, in turn, stock levels of used cars. RVs could therefore rise further, but this also assumes used-car demand is unaffected.

Greatest RV growth in Austria

The Austrian used-car market continues to be underpinned by stable demand and low supply. On average across all passenger cars aged two-to-four years, last month’s supply volume was 8.6% lower than in February 2021, highlights Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland. This also compares to a low base in 2021, when vehicle supply was already significantly lower than in 2020.

Diesel cars in particular are missing from the market, with a drop of almost 20% compared to February 2021. The supply of petrol cars has increased year on year but remains on a low level compared to market activity. The supply of all hybrid types and battery-electric vehicles (BEVs) has increased as well, but market activity shows strong demand for these vehicles, leaving the supply somewhat short.

As used-car demand continues to outstrip supply, average days to sell increased slightly compared to January, to an average of 70.6 days. Hybrid-electric vehicles (HEVs) are selling the fastest, averaging 63.2 days, followed by petrol cars with 65 days. Plug-in hybrids (PHEVs) are selling the slowest, averaging 91.7 days.

This environment has led to the greatest growth in RVs of 36-month-old cars among the seven countries covered in the monthly market dashboard. They have risen by 11.9% year on year, with cars retaining 47.9% of their list price on average. Petrol cars are currently leading with a trade value of 49.1%, followed by HEVs (48.4%) and diesel cars (47.6%). 36-month-old BEVs are the lowest with 40.8% value retention.

Madas assumes that the market parameters will not change in the medium term, because new-car registrations are still markedly lower than before the COVID-19 crisis (2021 was down 27% compared to 2019). Due to this undersupply, RVs for three-year-old passenger cars are forecast to rise again this year and the RV outlook has been upgraded to 3.5% growth. Only when the new-car market picks up significantly, and volumes on the used-car market also increase, are values likely to come under pressure. This will probably not be the case before 2023.

List prices boost RVs in France

There was a significant increase in the sales-volume index in France in February, with growth of over 25% compared to a year ago. In sharp contrast, the market-volume index reveals that supply was 20% lower than in February 2021. Furthermore, list prices are 2.3% higher due to the introduction of a weight-based car-registration tax and changes to the malus (penalty) on 1 January, which now applies to all cars with CO2 emissions over 128g/km.

These factors combined to result in higher RVs, which average 6.5% higher in value than a year ago and are up 4.1% in terms of value retention (RV%). ‘The healthy month-on-month increase in BEV RVs in February goes against the trend of recent months and suggests a better acceptance of BEVs on the used-car market, which may be confirmed in the coming months,’ noted Ludovic Percier, RV and market analyst, Autovista Group France.

RVs of PHEVs also rose, linked to the increase in car list prices, and sales volumes are growing every month too, although they remain low in absolute terms. HEV RVs were stable last month but are at a high level, especially in absolute car-price terms. Toyota, which sells mostly to private car customers, dominates the sector. Buyers are favouring hybrids over petrol cars so they can access city centres, but at significantly lower prices than for PHEVs. Despite the higher selling prices on the used-car market, HEVs are also selling slightly faster than petrol cars.

Nevertheless, RVs of petrol cars remain stable, albeit following rises in previous months. Diesel-car values increased slightly compared to last month as the fuel type is still popular on the used-car market, with reduced supply, but this is also related to the hike in list prices.

Given the latest developments, the RV outlook for France has been revised upwards, with 1% growth forecast for 2022 and a modest uptick expected in 2023 too.

‘Favourable pricing power’ in Germany

Despite hardly any COVID-19-related restrictions, January was the worst month for fleet and tactical new-car registrations in Germany for at least 20 years, and was comparable to lockdown-driven January 2021, highlights Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

‘Due to the ongoing supply crisis, undersupply in the used-car market will continue, which will determine the available volumes of cars of different ages and thus cause favourable car-pricing power in the coming years,’ Geilenbruegge surmised.

The availability of three-year-old petrol cars is comparatively stable in Germany due to the strong fleet year of 2019. This ensures less pronounced price increases than for diesel cars, supply of which is well below demand.

In the case of PHEVs, there has recently been a ‘stabilising adjustment’ in the online car-retail prices of dealers. ‘Offer prices for older cars exceeded sales prices to such an extent that the dealer’s desired price could increasingly no longer be achieved by potential buyers. We expect a similar levelling effect on young used PHEVs. This is a situation that has not been seen for a long time with internal- combustion-engine vehicles,’ commented Geilenbruegge.

The first half of 2022 is likely to remain a seller’s market for most used cars, with further slightly weakening tendencies for PHEVs and a ‘wait-and-see scepticism’ for the further development of BEV prices.

RV stability in Italy

As the country awaits information about when and how incentives for the purchase of new cars will be reintroduced, RV growth slowed in Italy in February, remaining broadly stable compared to last month, explains Marco Pasquetti, forecast and data specialist, Autovista Group Italy.

This situation applies to all car fuel types, except for BEVs, RVs of which grew by 2.5% last month compared to January. Sales volumes of BEVs are up 150% year-on-year, far exceeding the growth in the volume of advertised vehicles, which rose by 46.1%. Accordingly, stock days remain high – at 89 days compared to a market average of 51.8 days – and have increased by 10 days compared to last month. Pasquetti expects this trend to continue throughout 2022.

HEVs are the fastest-selling cars in the country. At less than 48 days, this is almost three days fewer than a month ago and broadly in line with 2021. The situation is different for PHEVs, however, which remain in stock for an average of 71 days, up 34 days on last year.

Diesel engines are still very popular on the used-car market, retaining an average 52% of their value after 36 months and 60,000 km. ‘It is worth highlighting that the volume of adverts for diesel cars has decreased considerably, with 24.5% fewer last month than in February 2021,’ Pasquetti added.

Spanish registration taxes accelerate RV growth

2021 closed with a further uplift in used car prices, which has accelerated since the beginning of 2022 due to price inflation caused by the end of the six-month moratorium on car-registration taxes. The higher car-registration tax has increased list prices of new cars by 4.5% on average, affecting almost half of the models on the market, explains Ana Azofra, Autovista Group head of valuations and insights, Spain.

This price inflation is also reflected in the used-car market, whereby the average purchase price of a three-year-old car stood at €17,381 in February. This is almost 7% higher than a year ago, with large differences depending on the powertrain. ‘The biggest beneficiaries in this maelstrom have been petrol cars, which are 13% higher. They have also continued to see their stocks dwindle but not as much as diesel cars, of which the volume of adverts is almost half of what it was in February 2021,’ Azofra commented.

HEVs, which were more stable in 2021, have made a strong start to 2022 too, with the highest month-on-month RV growth. Three of the five fastest-selling cars in February were Toyota hybrid models, representing different segments.

The lack of car stock continues to cause an improvement in selling days, which averaged 1.2 days fewer last month than in January. Although RVs continue to rise, they appear to have peaked showing signs of a tendency towards stability. ‘Many car dealers are starting to have difficulties, having bought at a high price during the maelstrom, and are now finding it difficult to maintain a high retail-price level,’ Azofra concluded.

Switzerland BEV demand outweighs supply

For one and a half years, the Swiss used-car market has been characterised by stable demand and low supply and, therefore, rising used-car prices. On average across all two-to-four-year-old passenger cars, the supply volume in February was 9.2% below the level compared to a year earlier, emphasises Hans-Peter Annen, Autovista Group head of valuations and insights, Switzerland. Annen adds that the supply was already significantly lower early in 2021 than at the beginning of 2020.

Diesel cars are especially missing from the market, with supply 29.1% down compared to February 2021. For petrol cars, there are currently 1.6% more two-to-four-year-old examples offered than a year ago, and for hybrids of all types, market activity is particularly high in relation to the supply available. For BEVs, supply is far higher than a year ago (up 21.7%) but still significantly lower than demand, notes Hans-Peter Annen, Autovista Group head of valuations and insights, Switzerland.

The average days to sell rose slightly last month: a passenger car aged two to four years is currently in stock for 62 days. Petrol cars are selling quickest with an average of 59 days, followed by HEVs with 63 days, diesels with 66 days, BEVs with 73 days, and PHEVs with 86 days.

This market environment has led to a further increase in the average RV% of 36-month-old passenger cars, to 47% (up 15.6% compared to February 2021). Petrol cars posted strong year-on-year gains of 15.9%, to 48.1%, as too did diesel cars (up 14% to 45%).

Car supply will be a key factor in the future development of RVs. As new-car registrations are markedly lower than before the crisis (2021 was down 23.4% compared to 2019), Annen assumes that market parameters will not change in the medium term. RVs of three-year-old used cars are forecast to rise 4.7% this year, before eventually stabilising and declining over the years 2023 and 2024.

Lacklustre UK used-car activity

The average RV of a three-year-old car in the UK was 1.4% lower last month than in January yet remained 41.9% higher than in 2021. ‘As Glass’s predicted last year, car values in the UK are stabilising, no longer experiencing demand-driven monthly increases. In fact, whilst the UK’s car-auction market continues to achieve strong hammer prices, sales are converting at a much lower rate than vendors would normally expect in February,’ explained Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

Whittington added that subdued activity of this nature ordinarily points to a change in the supply and demand dynamic. There has not been a noticeable influx of used cars into the market recently, as reinforced by the active-market volume index, which shows that the volume advertised for sale on dealer forecourts in February was about 20% lower than a year ago.

It also took dealers over one week longer on average to sell a used car in February than in January. ‘Dealers could sell a car 4.5 days quicker than in February 2021, but we need to remember that the UK was enduring a period of lockdown then. It seems a fall in retail demand is the likely cause of lacklustre used-car activity,’ Whittington concludes.

The outlook for RVs remains positive despite the subdued start to the year. They will need to fall significantly to lose the ground made throughout 2021, and that seems extremely unlikely with the ongoing prospect of restricted used-car stock supply.

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

What is an automotive over-the-air update?

Cars are becoming increasingly digital, with new software capabilities redefining what was once a feat of engineering. This creates an opportunity for continual development as system updates provide fresh features, while also squashing bugs long after a model leaves the showroom. But what are over-the-air (OTA) updates, how do they work, and perhaps most importantly, what do they mean for the future of cars? Autovista24 journalist Tom Geggus explains in the latest ‘What is?’ video.

Make sure to subscribe to the Autovista24 YouTube channel and sign up for notifications. If you enjoy a video, make sure to like and share it too. Let the Autovista24 team know if there are any other automotive terms you would like defined. Reach out in the comments, on Twitter or LinkedIn. Previous ‘What is?’ videos have explained bi-directional charging, electrically-chargeable vehicles (EVs), type approval, autonomous technology, seasonally-adjusted annualised rate (SAAR), total cost of ownership (TCO), and residual values (RVs).

All up in the air

The automotive industry is surging with OTA software updates. For example, Volkswagen (VW) passenger cars hopes to update its ID. model range of battery-electric vehicles (BEVs) every 12 weeks.

‘Volkswagen combines the best of two worlds – safe, appealing hardware and intelligent software,’ said Klaus Zellmer, member of the VW brand board of management for sales, marketing and after-sales. ‘We will exploit the potential of this fusion more than ever before through continuous over-the-air updates.’

Meanwhile, Jaguar Land Rover (JLR) recently confirmed it would roll out Amazon’s Alexa voice assistant to over 200,000 existing owners via an OTA update. ‘The seamless integration of Amazon Alexa with our Pivi Pro infotainment system gives customers simple, intuitive voice control of regularly-used features, making the driving experience even more enjoyable,’ said Alex Heslop, director of electrical and electronic engineering at JLR. ‘The fact we can also offer this new feature to existing customers proves the value of our software over-the-air-updates.’

In October, Volvo’s offshoot Polestar unveiled its P1.7, update which was mapped out to improve performance. It sported an in-car range-assistant app for improving efficiency, an eco-climate mode that allows the driver to reduce power demand, and battery-preconditioning improvements. ‘The connected nature of Polestar 2 means we can continue developing new features and improving existing attributes on a continual basis,’ said Polestar CEO Thomas Ingenlath. ‘Since our first update late in 2020, we have released several upgrades that have improved range, efficiency, connectivity and the driving experience.’

In September last year, Renault explained its take on firmware over-the-air (FOTA). Firmware is a digital package that is stored on a hardware device to ensure it runs properly, whereas software describes a program or piece of data with which the user interacts, but both can be updated OTA. Edouard Valenciennes, FOTA project manager at Renault explained that ‘the new technology means 85% to 90% of vehicles will have up-to-date software, compared to the previous levels of 60%, at best, through our dealerships.’


Battery-electric, vehicle-based tax deficit could lead to UK road-pricing scheme

The UK could look to introduce road-pricing schemes in order to avoid a £35 billion (€41.4 billion) black hole in motoring-taxation income by 2050.

Currently, most of the tax the UK government receives through vehicle usage comes via fuel duty and vehicle-excise duty (VED). The latter is an annual payment to use a vehicle on the country’s roads, based on its emissions. However, with battery-electric vehicles (BEVs) not requiring fuel, and being zero emission, the Transport Committee is calling for an urgent reform in motoring taxation.

The new report, Road Pricing, sees the committee warn that it has not seen a viable alternative to a road-charging system, based on technology that measures road use. There are currently limited forms of local road-pricing schemes in the UK, including toll roads, bridges and crossings, congestion charging and ultra-low emission zones (ULEZ) in major cities.

Low-tax expectations

The report warns that if zero-emission vehicle (ZEV) drivers become accustomed to low-tax motoring, it may be socially and politically difficult for the government to levy higher rates of motoring taxation from them in the future.

A similar situation was seen in Norway during 2017. The government, wanting to lessen the impact of subsidies and tax breaks for ZEVs on the country’s budget, suggested introducing a one-off tax on vehicles weighing more than two tonnes. This would have seen an additional €8,800 in tax placed on the price of a BEV over the minimum weight limit. This would have helped lessen the exemption of the 25% VAT the country offers purchasers of new BEV models. Following an outcry over the plans, they were quietly dropped.

Therefore, the Transport Committee believes that introducing road pricing sooner, rather than later, would prevent a similar outcry in the UK while increasing the amount of taxation generated.

Yet the scheme could have the opposite effect. Drivers of internal-combustion engine (ICE) vehicles would end up paying a third tax, on top of VED and fuel duty. While it could be argued that this would enhance the opportunity for drivers to switch to BEVs, the currently higher costs of new models, the lack of incentives, and the patchy infrastructure in the UK, means there are still significant barriers to entry for much of the population.

Therefore, the report recommends that should a scheme be introduced, it is applied to all drivers in a fair manner, with the abolition of current taxation methods.

Recommended routes

The committee states that technology to help introduce road pricing is already available, through telematics – currently used in the insurance industry. This would allow for a ‘price-per-mile’ charging system to be introduced.

Its report makes four recommendations that the UK government must act on as soon as possible to avoid both a funding crisis and alienating the population:

  • Introduce an ‘honest’ conversation with the public on how to maintain funding roads and other essential public services once revenue from fuel duty and VED declines;
  • Ensure that any new motoring taxes entirely replace fuel duty and VED, rather than being added alongside these taxes;
  • Examine the role that telematics technology can play in a new road-pricing mechanism that sets the cost of motoring based on duration and the time of day the journey takes place, alongside vehicle type and size; and
  • Set up an ‘arms-length’ body tasked with recommending alternative road-charging mechanisms to replace fuel duty and VED by the end of 2022.

‘The government’s plans to reach net zero by 2050 are ambitious,’ stated Huw Merriman MP, chair of the Transport Committee. ‘Zero-emission vehicles are part of that plan. However, the resulting loss of two major sources of motor taxation will leave a £35 billion black hole in finances unless the Government acts now – that’s 4% of the entire tax-take. Only £7 billion of this goes back to the roads; schools and hospitals could be impacted if motorists don’t continue to pay.   

‘Work should begin without delay. The situation is urgent. New taxes, which rely on new technology, take years to introduce. A national road-pricing scheme would avoid a confusing and potentially unfair and contradictory patchwork of local schemes but would be impossible to deliver if this patchwork becomes too vast. However, net-zero emissions should not mean zero-tax revenue.’


Monthly Market Update: Used-car pricing boom across Europe extends into 2022

Sales of used cars in a number of European markets grew in January 2022 compared to a year ago. In the UK, activity was stable and Italy and Spain experienced downturns. However, the ongoing issues in the automotive supply chain dictate that residual values (RVs) of three-year-old models rose further in January 2022, compared to December, and remain firmly higher than a year ago.

Autovista Group’s coverage of used-car markets in the monthly market dashboard features Austria, France, 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.

The upward trend in the prices of cars with internal-combustion engines (ICE) and hybrid-electric vehicles (HEVs) is forecast to continue in Europe in 2022, but not in the UK. The outlook also points to ongoing RV rises for plug-in hybrids (PHEVs), except in France and the UK, as they make up for the lack of ICE cars and HEVs. However, transaction prices of battery-electric vehicles (BEVs), especially those with a limited range, will continue to struggle as there is not enough demand from private used-car buyers to absorb the growing supply.

Austria supply down 10% year on year

The Austrian used-car market continues to be underpinned by stable demand and low supply. On average across all passenger cars aged two-to-four years, the supply volume in January was 10.7% lower than a year ago, highlights Robert Madas, Eurotax (part of Autovista Group) valuations and insights manager, Austria and Switzerland.

Diesel cars and BEVs are especially missing from the market, with drops of almost 20% compared to January 2021. The supply of petrol cars and PHEVs has increased year on year, but standard hybrids are slightly down.

In the ongoing context of used-car demand outstripping supply, average days to sell decreased by 5.6 days compared to December, to an average of 69.9 days. HEVs are selling the fastest, averaging 62.1 days, followed by petrol cars with 62.8 days. PHEVs are selling the slowest, averaging 88.6 days.

This market environment has led to a further increase in RVs of 36-month-old cars. They have risen by 10.4% year on year in value terms, with cars retaining 46.6% of their list price on average. Petrol cars are currently leading with a trade value of 47.5%, followed by HEVs (47.2%) and diesel cars (46.4%).

Madas assumes that 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). Due to this undersupply, RVs for three-year-old passenger cars will probably continue to rise this year. 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.

New regulations inflate prices in France

January saw new regulations come into effect in France, with an increase in the malus (penalty) for registering cars with CO2 emissions of 128g/km or more, up to a maximum of €40,000 for cars with emissions higher than 224g/km. This means that list prices of many new cars have artificially increased.

This also comes at a time when there is lower supply than usual and consumers are postponing their purchase of new cars and young used cars due to the price increases and indecision as to which fuel type to opt for, explains Ludovic Percier, residual value and market analyst, Autovista Group France.

Furthermore, OEMs are offering new cars with a lack of options due to the semiconductor crisis, which is also deterring customers from buying, even when the car itself is available. The combination of price increases and the restricted availability on the new-car market has driven RVs higher, even for 24-month-old cars. However, customers that opt for a new car with a lack of required equipment will lead to a decrease in RVs in 36-48 months, Percier adds.

The increase in list prices also largely explains the 1% decrease in RVs, in value-retention terms (RV%) compared to December. Higher prices are raising buyers’ expectations and, in turn, the number of stock days, especially as there is an increasing number of vehicles with configurations that do not fit with demand.

Diverse fuel-type impact

Diesels RVs have risen further in value terms, compared to both January and December 2021, but petrol cars and PHEVs have seen greater gains. PHEVs are especially dynamic in terms of RVs as de-fleeting has been limited, although this will increase in 2023. Nevertheless, prices are high on the used-car market and stock days are much higher than last year too.

There is a broad decline in RVs of BEVs, although Percier notes that vehicles such as the Tesla Model 3, Mini Electric, and Korean contenders like the Hyundai Ioniq 5 are less impacted. BEVs offering a higher range are in greater demand and therefore perform far better than those with a low range. Too many incentives and discounts on the new-car market and weak demand on the used car-market is generating more advertisements in France. Furthermore, the lower new prices have contributed to the decrease in RVs, as well as a rise in stock days as demand on the used-car market is simply insufficient.

Unstoppable RV growth in Italy

The growth in RVs seems to be unstoppable in Italy. During January 2022, a 36-month-old used car with a mileage of approximately 60,000 km was purchased at an average of 49.7% of its list price, an increase of 13.5% compared to a year ago, notes Marco Pasquetti, forecast and data specialist, Autovista Group Italy.

This is the result of the balance of supply and demand, which has been radically changed by the impact of the COVID-19 pandemic on the automotive sector. Among other effects, this has also considerably speeded up the time it takes to sell a used car. In January, an average of just 51.5 days passed between a model being advertised online and its sale, two days faster than last year.

There are no signs of a change in the trend in the short term, although Pasquetti expects the growth curve to gradually stabilise over the course of 2022. By the end of the year, he foresees a slight increase in RVs of around 0.7% compared to 2021. A slight fall in RVs, of just 0.1%, is envisaged for 2023, which is expected to mark the start of a slow descent towards pre-crisis values from 2024 onwards.

There has been an especially sharp increase in the RVs of HEVs in January, which grew by 25% compared to December. Toyota is a key player in this segment, accounting for the three fastest-selling models in Italy. Premium brands, on the other hand, dominate when it comes to PHEVs, which, with an average list price of €62,000 (compared to €31,000 for HEVs), are more oriented towards wealthier consumers.

In absolute value terms, RVs of BEVs have fallen by 25.4% year on year, although the sales-volume index has increased by almost 150% and a BEV is now sold after 89 days. The sales process is 14 days faster than a year ago, but this is still high compared to ICE vehicles.

Used cars up 9% in Spain

Spain was marked in 2021 by a shortage of both new and used cars. Registration figures for new cars were at a similar level in 2021 as in 2020, but used-car transactions were 9% higher, although they did not exceed pre-pandemic levels, says Ana Azofra, Autovista Group head of valuations and insights, Spain.

The shortage of supply is especially pronounced in younger cars up to a year old. This is partly due to the lack of new cars because of production stoppages, which transferred some demand to young used cars. Furthermore, there was a shortage of cars coming from the rental channel (down 26% in 2021), which is one of the main entry channels for young used cars in the Spanish market.

A small part of used-car demand has been met by used imports, which increased by 30% in 2021, but the most direct impact of the supply shortage has been the growth in RVs. Although milder than the impact on young used cars, average transaction prices for cars aged three years increased significantly in 2021. Azofra expects the growth trend to slow during 2022 as the problems caused by the semiconductor crisis are resolved.

All this is reshaping the profile of the used-car market in Spain, mainly in terms of the age and weighting of each brand, with an impact on average prices. The strongest increases in RVs occurred in the oldest vehicles, i.e. those aged 10 years or more. Their effect on pricing is significant as they still account for 60% of used-vehicle transactions, Azofra emphasised.

EV demand exceeds supply in Switzerland

For more than a year now, demand has exceeded supply in the Swiss used-car market. On average across all two-to-four-year-old passenger cars, the supply volume in January was 9.3% below the level at the beginning of 2021.

Diesel cars are particularly lacking, with supply 29.2% down compared to a year ago. There are also fewer HEV offers on the market than in January 2021 (down 14.8%), and sales activity is particularly high in relation to stock availability. The supply of plug-in hybrids and especially BEVs has increased compared to the beginning of 2021, but even demand for used examples of the two EV powertrains is exceeding supply, notes Hans-Peter Annen, Autovista Group head of valuations and insights, Switzerland.

The average days to sell rose slightly for a short time but are now declining again: a passenger car aged two to four years is currently in stock for 58 days only. PHEVs are selling the quickest, with an average of 52 days, followed by HEVs with 53 days, petrol cars with 55 days, and diesel with 65 days.

Stubborn demand and supply shortages have led to a further increase in the average residual-value percentage (RV%) of 36-month-old passenger cars, to 46.3% (up 12.3% compared to January 2021). Petrol cars posted strong year-on-year RV gains of 12.6%, to 47.4%, as too did diesel cars (up 10.8% to 44.3%).

Supply will be a key factor in the future development of RVs. As new-car registrations are markedly lower than before the crisis (2021 was down 23.4% compared to 2019), Annen assumes that market parameters will not change in the medium term. RVs for three-year-old used cars will continue to rise this year, before eventually stabilising and declining over the year 2023.

Lull in UK wholesale activity

Auction activity in the UK was subdued in December 2021, which is not uncommon in the run-up to the festive period. Auction hammer prices were in line with Glass’s trade values, confirming that dealers were still prepared to pay strong prices, but poor conversion rates, which rarely rose above 50%, suggest they did not need to buy in bulk to fill forecourts, surmises Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

Activity throughout January 2022 has been similar, and it took dealers on average 1.4 days fewer than last year to retail a used car, suggesting that dealer stock remains high. Despite the lull in wholesale activity, RVs remain eye-wateringly high, with the average RV of a three-year-old car over 40% higher than in January last year, Whittington notes. The average RV increased by 5.7% compared to December, based on the mix of three-year-old used cars sold to consumers.

Nevertheless, the UK’s used-car market does not appear to be firing on all cylinders. Although the sales-volume index shows that a similar number of 24-to-48-month-old cars were sold in the 30 days to 26 January, as last year, it is worth remembering that the UK was in lockdown last January. Supply constraints in the new-car market are disrupting the flow of used cars, so there is less choice for consumers, which may account for the comparatively low sales rate according to Whittington. The active-market volume index supports this view, showing that only 75% of last year’s volume is being advertised for sale.       

The outlook is still healthy for RVs in the UK by historic standards, however, as used-car supply issues are expected throughout this year, giving vendors the confidence to hold out for strong reserve prices. Glass’s expects values to lose some of the impressive gains made in 2021, albeit only falling by around 4-5%.

View the January 2022 monthly market dashboard for the latest pricing, volume and stock-days data.

CATL rolls out ‘one minute’ EV battery-swap service in China

Contemporary Amperex Technology Co. Ltd. (CATL), one of China’s fastest-growing companies, has rolled out a battery-swap service in its home market, allowing consumers to change batteries of electrically-chargeable vehicles (EVs) in one minute.

The company announced the news at a launch event, where it presented the new service under the name EVOGO. The modular battery-swap solution is made up of battery blocks, fast battery-swap stations, and an app. It will initially be rolled out in 10 cities across China, which keeps promoting infrastructure-related facilities such as charging and battery-swapping stations.

Battery-swapping is more prevalent in China than elsewhere in the world, with carmaker Nio planning to add an additional 100 battery-swapping stations to its network of 700 in the country by 2025. But the service is gaining traction elsewhere, with the manufacturer recently partnering with Shell to introduce battery-swapping stations in Europe in a pilot project from 2022.

Battery as a shared product

‘We consider the battery as a shared product, instead of a consumer product for personal use,’ said Chen Weifeng, general manager of CATL’s subsidiary Contemporary Amperex Energy Service Technology Ltd. He added that the new product would help EV drivers beat range anxiety while also getting rid of the ‘inconvenience’ to recharge batteries, as well as high purchasing and driving costs.

Its mass-produced battery, designed to look like a bar of chocolate, has especially been developed for EV battery-sharing. It can achieve a weight-energy density of over 160 Wh/kg and a volume energy density of 325 Wh/L, enabling a single block to provide a driving range of 200km.

CATL gives customers the opportunity to rent one to three blocks to meet different range requirements at swap stations. One block is typically sufficient for inner-city commuting, while the battery maker recommends two to three blocks for longer journeys.

The batteries are compatible with many battery-electric vehicles (BEVs) from different OEMs, suiting a range of vehicles, from Class-A00, Class-B, and Class-C passenger cars to logistics vehicles.

Compatibility and competition

‘The battery-swap station highlights high compatibility, need-based battery rental, and complementarity with charging services. With a footprint equivalent to three parking spaces, a standard EVOGO battery-swap station can house up to 48 Choco-SEBs and allows one-minute swapping for a single battery block, ensuring fully-charged batteries for customers at any time without a long wait. Moreover, EVOGO offers a variety of swap stations to suit the climates of different regions,’ CATL said.

The company launched 10 years ago and has quickly become a darling of investors, helping to give China a lead in EV batteries. It supplies batteries to most of the world’s carmakers, including Volkswagen, BMW, and Tesla. The New York Times found it holds one third of the global EV-battery market, with its biggest competitor being LG. Elsewhere, competition is heating up as carmakers keep pushing into the battery business by building their own batteries or investing in a range of companies to diversify the supply chain.

Last year, Geely, the parent company of Volvo Cars, announced plans to set up 5,000 battery-swapping stations globally by 2025. The company showcased the technology behind this service at the 2021 Wuzhen Internet Conference, with the process taking less than a minute. Tesla at one point explored battery swapping, but withdrew its plan to focus on its network of fast chargers instead.

Battery recycling builds momentum in Germany and UK

As the automotive industry strives to go green, electromobility has become synonymous with sustainability. The aim is for environmentally-friendly factories to build electrified models that will eventually run on renewable energy. But what happens when an electrically-chargeable vehicle (EV) comes to the end of its lifecycle? Companies are considering how an EV’s battery can be re-used, recycled and repurposed.

In Germany, RWE brought a new energy-storage facility online which uses lithium-ion batteries from electric Audi models. The pumped-storage power plant on Lake Hengstey in Herdecke employs 60 battery systems and will be able to temporarily store roughly 4.5MWh of electricity. Meanwhile, in the UK, Veolia announced its first battery-recycling facility. The resource-management company predicts it will have the capacity to process 20% of the country’s end-of-life EV batteries by 2024.

Carry-over capacity

Decommissioned batteries from Audi’s e-tron development cars are the focus of RWE’s project. After primary use, the battery-electric vehicles’ (BEVs) power-storage components maintained a residual capacity of more than 80%. Depending on specific applications, these units can go on to have 10 years of service life. All this for a significantly cheaper amount than new cells.

Oliver Hoffmann, member of the board for technical development, explained that while Audi plans to launch more than 20 BEVs by 2025, its carbon-neutral goals stretch beyond the vehicle. This creates a potential for collaboration with companies from the energy industry.

‘This partnership with RWE is intended to demonstrate the possibilities that exist for the resource-friendly use of second-life high-voltage batteries and their intelligent integration into the power grid of the future,’ said Hoffmann. ‘In addition, we are already thinking about the time after this utilisation phase and are stepping up our efforts to ensure that batteries are recycled effectively.’

RWE expects to start marketing the capacity of the storage system early this year. Initially, it will look towards supporting the grid as part of frequency maintenance. Long-term, findings from the project will help the company build and operate larger facilities in the future.

‘Powerful battery storage plays an essential role in the energy revolution. Flexible storage technologies are needed to compensate for short-term fluctuations in renewable energy and to stabilise the grid. Battery-storage systems are ideally suited for this purpose,’ Roger Miesen, CEO of RWE Generation commented.

‘Together with Audi, in Herdecke we are testing how end-of-life high-voltage batteries from electric cars behave as stationary energy-storage devices when connected together. The continued use of such ‘second-life’ storage is a sustainable alternative to brand-new batteries. The experience gained from this project will help us identify the applications in which we can most cost-effectively operate such battery systems.’

UK processing

Veolia’s new Minworth facility is the company’s first step towards developing its recycling technology and treatment capacity in the UK. Given that the country is estimated to have 350,000 tonnes of end-of-life EV batteries by 2040, this approach could turn potential waste into a valuable resource.

Initially, the site will discharge and dismantle batteries before the completion of mechanical and chemical separation stages. Veolia also plans to establish a circular economy in the next five years to produce battery precursors in Europe.

‘We will not reach carbon neutrality without increasing our investment and development of new technologies and recycling opportunities,’ said Gavin Graveson, Veolia senior executive vice-president for the northern Europe zone. ‘As the demand for electric vehicles increases, we will need this facility – and more like it in the UK – to ensure we don’t hit a resource crisis in the next decade.’

‘Alongside other projects across the globe, bringing Veolia’s expertise to the UK recognises the size of the national market and appetite to recycle locally and responsibly. Urban mining is essential if we are to protect raw materials and will, in turn, create a new, high-skilled industry,’ he concluded.

ALD buys LeasePlan in €5 billion deal

ALD Automotive, the car-leasing business of French bank Société Générale (SocGen), plans to acquire its Dutch rival LeasePlan for €4.9 billion in cash and shares. The purchase will create Europe’s biggest car-leasing group, dubbed NewALD.

Once established, the new company would manage the biggest fleet of electrically-chargeable vehicles (EVs) in Europe. The businesses expect to close the deal by the end of the year, with SocGen holding a 53% stake in the new entity.

Based in France, NewALD will have a combined fleet of 3.5 million vehicles. ALD manages around 1.7 million cars while LeasePlan has a fleet of 1.8 million in more than 29 countries. Both companies said the acquisition would allow them to build a leading global mobility player as they hope to profit from trends, such as the shift to zero-emission vehicles and changing patterns of ownership.

New chapter

‘Today marks the beginning of a new chapter in our history as a first step towards creating NewALD,’ said ALD CEO Tim Albertsen. ‘By combining the multiple strengths of ALD and LeasePlan, we would transform our industry and value propositions to our enlarged client base. This transaction would create multiple opportunities to the joint management teams and talents of both companies, across geographies, underpin our focus on sustainability with a clear path to zero-emissions mobility.’

One of LeasePlan’s previous majority shareholders was Volkswagen (VW) Group. The German carmaker sold its 50% stake in the business in 2016 as part of cost-cutting measures. Since then, it has been held by a group of investors that includes TDR Capital.

With the planned acquisition, SocGen is betting on the electromobility boom. Amid the shift to EVs, more consumers and companies are expected to opt for flexible arrangements, such as renting and leasing, to try out different vehicles, including electric ones.

NewALD aims to provide increased services to meet future market needs and client expectations. It plans to invest and develop new mobility products to build digital business models. The company wants to focus on sustainable mobility, aiming to support the transition to EVs by creating global partnerships around electromobility.

Synergies

‘The combined business would be instrumental in moving the automotive industry from ownership to subscription models and zero-emission mobility,’ said Tex Gunning, LeasePlan CEO. ‘NewALD would be operating one of the largest fleets of electric vehicles and will continue to set the standard for ESG (Environmental, Social, and Governance) in the mobility industry.’

The deal shows how European banks are branching out activities to cash in on profitable business opportunities. For SocGen, the leasing business is particularly lucrative as the French bank plans to make vehicle leasing a major pillar of its operations alongside retail and investment banking. It added the transaction would generate operational synergies amounting to €380 million of annual profits before tax. SocGen also said it is committed to remaining the long-term majority shareholder of NewALD.

Other banks are also showing growing interest in leasing operations. Last month, Stellantis said it was in exclusive talks with BNP Paribas, Crédit Agricole and Santander over the reorganisation of the carmaker’s leasing and financing operations in Europe. The deal is subject to approval from the relevant authorities.