Fuel Type: Diesel

Monthly Market Update: Pressure mounts on RVs as supply outweighs demand in March

In absolute terms, residual values (RVs) of three-year-old used cars rose year-on-year across European markets last month. While values represented as a retained percentage of the original list price (%RV) also grew, it was to a lesser extent across the board.

Austria saw the greatest increase in %RV at 13.6%, with Italy and Germany following closely behind, posting 11.4% and 10.7% respectively. Meanwhile, the UK was the outlier with a growth of just 0.5% in %RV terms compared to March 2022.

This was not the only instance where the UK went against a larger market trend. Alongside Italy, both countries saw demand outstrip supply. Other European markets experienced the reverse with a greater number of used-car adverts than sales, putting more pressure on RVs.

The %RV of battery-electric vehicles (BEVs) increased across markets, except in the UK where a 9.6% decline was recorded. However, some carmakers recently lowered new-BEV prices to attract consumers outside the early-adopter sphere.

This will most heavily impact the absolute RVs of directly comparable used cars, including very-young used models, demonstrators, and rental vehicles. While older models will also be affected, it will take longer for this effect to cascade.

More broadly, the continual acceleration of electric vehicle (EV) technology means consumers of both new and used cars may hold out for longer as they wait for the latest technological developments and improved ranges. This could mean both lower supply and demand for the used-BEV market.

Click here to open the interactive dashboard

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

Scenario analysis

The base-case scenario of low supply and falling demand comes with positives and negatives. If the economic situation in Europe continues to diminish, used-car prices will experience greater pressure as demand drops. Big improvements to supply would only serve to compound this effect.

For example, the automotive industry is still struggling with supply-chain constraints and semiconductor shortages remain. However, a sudden reversal caused by lower demand for consumer electronics could mean a faster solution for carmakers.

VNC Automotive pointed out that the ‘semiconductor drought could soon become a flood of chips.’ If that were the case then supply would likely increase while demand continues to drag, weighing down RVs.

Any increased disruption of new-car supply would benefit used-car prices. This could happen if automotive suppliers suffer from increased costs and economic difficulties. The possibility of the war in Ukraine escalating further also remains. This could damage Europe’s already fragile supply chains. RVs might also climb if there is an unexpected improvement in used-model demand. If new-car deliveries take a hit, more consumers might veer away from the market and buy used cars instead.

RV pressure expected in Austria

Living costs continue to rise in Austria and used-car transactions are slowing compared to 2022. The sales-volume index highlights the weakening demand with a 27.4% decline compared to March last year. Hybrid-electric vehicles (HEVs) were hit hardest once again, suffering a 32.4% year-on-year drop.

Meanwhile, the supply of two-to-four-year-old passenger cars was 28% higher in March 2023 than a year earlier. Yet supply was lower in 2022 than prior to the COVID-19 pandemic, which started affecting the market at the beginning of 2020.

After a slow February, average days to sell decreased to a total of 68.5, confirming the weakening in used-car demand. HEVs and plug-in hybrids (PHEVs) sold the fastest, averaging around 48 days, followed by diesel cars with 67.8 days, then petrol models and BEVs with around 71.7 days.

‘Despite weakening demand and improving supply, residual values of 36-month-old cars have remained stable,’ explained Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland. ‘The %RV remained almost unchanged in March with cars retaining 55.4% on average. This marked a 13.6% year-on-year gain.’

HEVs currently have the highest %RV trade value at 60.2%, followed by petrol (55.8%), diesel (55.3%) and PHEVs (55.1%). Meanwhile, 36-month-old BEVs retained the lowest value at 52.2%. While supply recovers, demand is expected to weaken. Therefore, pressure on RVs can be expected. Prices of three-year-old cars will remain relatively high, with just a slightly decreasing trend.

‘The %RV is forecast to end 2023 approximately 2.6% down compared to December 2022. For the year 2024, %RV is expected to decrease further by around 3.4% year on year due to weakening demand and increasing supply,’ Madas added.

BEVs shaken in France

The used-car market was stable in France last month, with slightly lower absolute residual values but marginally higher values in %RV terms. Climbing prices have not influenced RVs as increases have been too steep in recent months.

Fewer private buyers purchased a used vehicle in March. Those who did focused on older models or a lower segment, mainly led by budget. Cars above the 12-year age bracket suffered the least, highlighting that consumers are not following list-price increases.

‘BEV residual values decreased in March. The market has been shaken by lower Tesla list prices, as the brand acts as a BEV reference point,’ said Ludovic Percier, Autovista Group residual value and market analyst for France. ‘Big list price decreases have been followed by drops in %RV, although this has been more severe in absolute terms. Some manufacturers are already following the trend and lowering prices to stay competitive.’

Compared to February, petrol followed the marginally declining market trend in March, while diesel was stable in list price and residual value terms. As new-car buyers have been switching from internal-combustion engine (ICE) models to other powertrains in recent years, used-car market availability is lower.

Despite the implementation of low-emission zones (ZFE) and the diesel’s blemished reputation, their RVs did not drop by much compared to February. ZFEs only impact cities with 150,000 inhabitants or more and does not affect drivers covering high mileages. However, from late 2024 and into 2025, diesel will be more heavily impacted.

‘Hybrid RVs remained stable with a very slight increase in absolute terms,’ Percier said. ‘PHEVs experienced an increase month on month, as there were a lower number of vehicles compared with February. There were also more premium models present on the used-car market, with higher ranges in full-electric mode. A major decrease is still expected in mid-2023.’

Market sensitivity in Germany

Looking back at new-vehicle registrations over the past six months from February, production capacity appears to be slowly recovering. Compared to the previous year, more than 200,000 additional units were registered, which was driven in no small part by the expiry or reduction of PHEV and BEV subsidies.

‘Tactical registrations are also picking up speed again, growing by 13% over the same period. At least 60% of this growth is due to electrified powertrains and foreshadows growing price pressure on the young-used-car market,’ said explained Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

The consequences are already visible with stronger price corrections for PHEVs and BEVs, while registrations of ICE models are up slightly again. However, this should not obscure the fact that the total number is still well below the pre-COVID-19 level and will contribute to the stability of RVs in the long term.

‘Overall, offer prices across all ages and drive types remain high, but increasing stock days will encourage some sellers to lower prices,’ Geilenbruegge said. ‘The used-car market’s usually strong summer months are set to follow. Inexpensive mobility seems to be in particularly high demand, considering the continuous positive developments in the small and mini segment.’

In general, classic body types are doing better than their SUV counterparts thanks to their usually lower price. This highlights the market’s current sensitivity and level of consumer exhaustion in terms of purchasing power and willingness to buy.

Stability indicated in Italy

Last month’s new-car market sales volumes confirmed the recovery observed in January, with an increase of 18.4% compared to the first two months of 2022. However, the sales-volume index highlights that transactions on the used-car market are still not declining, with a growth of 1.4% compared to February, and even 25.7% compared to a year ago. In general, almost all fuel types are seeing sales up compared to February or are at least relatively stable.

‘The only exceptions are HEVs and PHEVs, down 10.3% and 5.4% month-on-month respectively. Meanwhile, CNG suffered the biggest drop at 56.4%. The fact that most manufacturers have abandoned this fuel type, alongside its rising cost per kilogramme, is certainly influencing this trend,’ commented Marco Pasquetti, head of valuations, Autovista Group Italy.

‘In %RV terms there was weak growth (up 0.3%), indicating a more stable situation. This is probably the prelude to a trend reversal that has not yet materialised, but which some remarketing professionals are beginning to detect and report,’ Pasquetti said.

From Q4 2022 onwards, however, the price has been falling sharply. This trend is likely to have a positive influence on %RVs, which currently stand at 44.3% compared to an average of 55.6%, down 4.4% compared to March 2022.

Breathing space for Spain

With more caution than optimism, the first quarter of 2023 gave Spain’s automotive sector a little breathing space. New-vehicle registrations were up 20% year on year in February. Although some of these deliveries come from orders placed in 2022, supply capacity has improved. This increase helps fulfil demand from fleet operators, enabling renewals and injecting young used vehicles into the market.

‘In this respect, used-vehicle transactions improved month on month and year on year. Although the overall variation is slight – up 3% in both cases – the age of these vehicles is significant. Sales of used models less than a year old and those between one- and three-years-old grew more than 20% and over 10% respectively,’ said Ana Azofra, Autovista Group head of valuations and insights, Spain.

‘This rejuvenation of supply is a relief to professionals who have capitalised on most of these sales. In any case, the market has quickly absorbed these young vehicles and the active supply of used models is again down by 20%, so the outlook remains optimistic,’ she added.

The month saw almost imperceptibly small negative adjustments to the transaction prices of petrol and diesel vehicles compared to February 2023. BEVs saw a slightly positive correction, more related to the change in the mix, with an increasing share of premium models featuring better performance.

The winners continue to be HEVs, with a growth of 2.3% compared to the previous month. Toyota led the ranking of models but this was not only among hybrids, where it is more logical to find them due to the weight of the brand, but also in the general ranking of all fuels. The five fastest-selling models in March were the Toyota RAV-4, Yaris, C-HR, Aygo and Citroën C4.

Meanwhile, the volume of used PHEVs on offer rose 75% compared to 2022. But they are not performing well in terms of turnover, with the number of days needed to sell increasing and transaction values showing a negative trend.

Transactions slow in Switzerland

The Swiss used-car market continued to see rising supply, with young used cars the only exception compared with the pre-COVID-19 period. The active-market volume index was 1.8% higher for two-to-four-year-old passenger cars in March compared to February, and 40.7% higher year on year.

‘With the rising costs of living, used-car transactions continued slowing compared to 2022,’ said Hans-Peter Annen, head of valuations and insights, Eurotax Switzerland (part of Autovista Group). ‘The sales-volume index remains on the growth path with a 4.2% increase compared to February, and a 3.2% increase year on year.’

As supply rose and demand sank slightly, the average value retention of 36-month-old passenger cars decreased to 51.3% in March, down 0.8% month on month, but still up 7.5% year on year.

HEVs posted a particularly strong year-on-year %RV gain of 20%, retaining 54.7% of their list price value. This was followed by petrol (52.1%), diesel (50%) and BEVs (49.4%). Meanwhile, 36-month-old PHEVs retained the lowest value, at 48.9% of their original list price.

The average days to sell remained unchanged in March, two-to-four-year-old passenger cars in stock for 76.5 days. HEVs sold the quickest, after an average of 66.7 days, followed by BEVs after 73.7 days and PHEVs at 75.2 days, then petrol and diesel cars after 76.5 and 77.4 days respectively.

‘Used-car demand is expected to weaken amid stable supply, a further decreasing trend is to be expected although values of three-year-old used cars remain relatively high,’ Annen said. ‘The %RV is forecast to finish 2023 around 3.1% down on December 2022. For 2024, RVs are expected to fall by around 3.7% year on year due to increasing supply and weakening demand.’

Mixed electric fortunes in UK

The UK’s used-car market was buoyant in March, with the number of days to sell falling by 4.8 days compared to February. At just 39.3 days, this was 15.9 fewer than last year. The sales-volume index confirms that strong retail demand was present, with 17.3% more cars sold compared to March 2022. At the same time, supply slowed, as confirmed by the active-market volume index which shows 25.1% fewer cars were available compared to March 2022.

‘As a result of increased demand and diminished supply, the average residual value of a three-year-old car grew by 2.4% compared with February,’ explained Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles. ‘Although a proportion of the uplift is due to March’s registration plate change effect, a direct comparison with the same plate last year still shows an increase of 0.5%.’

Petrol cars experienced a %RVincrease of 1.8% year on year, meanwhile, diesel models fell by 1.3%. HEVs were down by 0.3% and PHEVs increased by 0.5%. BEVs experienced the largest movement, falling 9.6% in %RV terms compared to March 2022.

All-electric models remain under serious pressure in wholesale channels, with RVs expected to continue to decline in the short term. But BEVs do continue to see very good retail demand. The sales-volume index shows a massive 386.6% year-on-year increase in sales. However, demand is failing to keep pace with the increase in supply.

‘One factor of concern for dealers is the length of time it takes to sell a BEV, which is currently 52.5 days on average, versus the general average of just 39.3. Therefore, with the potential risk of two costly book drops before retailing a BEV, it is easy to understand why dealers have become cautious and auction hammer prices have been in decline,’ Whittington added.

This content is brought to you by Autovista24.

Monthly Market Update: European used-car prices resilient in January amid challenges for BEVs

The average residual value (RV) of a three-year-old used car increased across most European markets in January, except for modest corrections in France and Switzerland.

Used-car prices outpaced list-price developments in most markets. Accordingly, values of three-year-old used cars, represented as a retained percentage of their original list price (%RV), either held firm or gained last month, except in Austria and France. This aligns with double-digit year-on-year declines in the sales-volume index in the two markets.

Although there are grounds for cautious economic optimism, the cost-of-living crisis will invariably erode consumer demand for used cars, which would ordinarily put pressure on RVs. However, in addition to new-car supply challenges, the COVID-19 pandemic significantly derailed the European new-car market from March 2020 onwards. This will acutely reduce the volume of cars de-fleeting after three years.

So, undersupply into the used-car market is expected to persist, which will compensate for diminishing demand. Accordingly, Autovista Group forecasts that the %RV will not decline significantly across European markets in 2023 and 2024.

Battery-electric vehicles (BEVs) face unique challenges. On one hand, the surge in registrations in Germany at the end of 2022 does not bode well for RVs in the short term. Furthermore, Tesla has reduced list prices, which is having a ripple effect across the prices of its used models and BEVs in general. On the other hand, values stand to gain with lower incentives available in France and Germany and as countries introduce more low-emission zones.

Nevertheless, their low share in new-car markets such as Italy and Spain, and even weaker used-car presence, limits their potential, along with concerns over charging infrastructure.

Click to open the interactive dashboard

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

Scenario analysis

There are upsides and downsides to this base-case scenario of undersupply and diminishing demand. Used-car prices will come under greater pressure if the economic situation deteriorates in Europe, with a greater negative impact on demand. This would be compounded if there are significant supply improvements.

For example, lower demand for consumer electronics could see a quicker resolution to the semiconductor shortages in the automotive industry. According to VNC Automotive, the ‘semiconductor drought could soon become a flood of chips.’

Conversely, there are risks of greater disruption to new-car supply, which would benefit used-car prices. Automotive suppliers could succumb to mounting costs and economic headwinds. The risk of the war in Ukraine escalating remains too, with potential consequences for Europe’s fragile supply chains. Any unforeseen improvement in used-car demand, either if fewer new models can be delivered or consumers defect to buying used instead of new, would also push RVs higher.

Modest pricing decline in Austria

Living costs are rising in Austria and used-car transactions are slowing down compared to 2022. The sales-volume index clearly shows weakening demand in January, with a year-on-year decline of 20.5%. Conversely, the supply volume of passenger cars aged two-to-four years was 22.2% higher year on year. Average days to sell have increased to 73.5 days.

Hybrid-electric vehicles (HEVs) are currently selling the fastest, averaging 50.6 days, followed by BEVs with 59.7 days, petrol cars with 73.2 days and diesel cars with 73.6 days. Plug-in hybrids (PHEVs) are selling the slowest, averaging around 104 days.

Despite weakening demand and improving supply, RVs of 36-month-old cars have remained relatively stable. The average %RV decreased by 0.6% month on month in January, with cars retaining 54.9% of their list price on average. This marks a solid 17.7% year-on-year gain.

HEVs are currently leading with a trade value of 58.4% of their original list price, followed by PHEVs (55.8%), then diesel cars and petrol cars (both 54.9%). 36-month-old BEVs retain the lowest value, at 53.6% of list price.

As demand is expected to weaken while supply recovers, pressure on RVs is anticipated. Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland, forecasts that the %RV will end 2023 approximately 3% down on December 2022. Nevertheless, prices of three-year-old used cars will remain relatively high. For 2024, Madas predicts that the %RV will decrease by a further 3.6% year on year due to weakening demand and increasing supply.

Buyers await lower prices in France

The French used-car market has seen drastic changes since 2021, with rising RVs amid list-price increases and limited availability of new and, in turn, used cars. The market stabilisation since the end of 2022 was confirmed in January 2023 with the %RV falling 1.5% month on month.

‘Higher list prices are no longer influencing used prices, which is reflected in the poor development of the sales-volume index as buyers are holding back, expecting lower sales prices. Private buyers are focused on older vehicles or lower segments than usual, mainly led by budget. Accordingly, values of used cars aged over 12 years are suffering the least,’ explained Ludovic Percier, residual value and market analyst, France, at Autovista Group.

The %RV of all fuel types is either stable or in decline, except for healthy price growth for BEVs. ‘Vehicles available on the used-car market now offer a higher range, which previously limited the usability of vehicles and the number of customers,’ Percier commented. Nevertheless, BEVs still have the lowest values in both absolute and value-retention terms.

RVs of petrol and diesel cars are subtly declining after ongoing increases in recent months due to new-car shortages, long delivery times, and higher list prices. Furthermore, as new-car buyers have been switching from internal-combustion engines (ICE) to other fuel types over the last two years, this reduced their availability on the used-car market and drove prices higher.

Even with the rollout of low-emission zones (ZFEs) and a tarnished image, RVs of diesel engine cars are falling slowly. ZFEs are only in towns and cities with at least 150,000 inhabitants and do not target high-mileage drivers, but will have a bigger impact on diesel from late 2024 and into 2025.

PHEV values should remain stable for the time being but they already decreased slightly at the end of last year and Percier anticipates further declines from mid-2023 onwards.

EVs under pressure in Germany

The high volume of new-car registrations in December ‘is a prime example of how extraordinarily the German new-car market has been distorted by external influences in recent years and how the implicit mechanisms of supply and demand are being undermined,’ explained Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

The prospect of a lower environmental bonus for BEVs and the end of incentives for PHEVs from 1 January meant every eligible car coming off the production line with registration papers, was taken to registration offices to receive the subsidy. January is therefore expected to be a well below-average month, due to the huge number of registrations that were brought forward.

‘For used electric vehicles, this means that the high price level will come under increasing pressure but experience a strong rebound in the coming months. However, residual values for most vehicles continue to stabilise at a high level and show only slight signs of fatigue due to the loss of purchasing power and reluctance to buy. Stock days are also still in a moderate to favourable range,’ Geilenbruegge noted.

Since January is not known for unusual activity from a used-car point of view, it will only become clear from the spring onwards how far values may decline. This will depend not least on the recovery of production and supply before prices presumably take another slight upturn later in the year.

ICE cars will continue to become increasingly rare and the absence of incentives for used electric vehicles (EVs) will maintain stable prices. The soaring prices of new cars will also keep used cars very attractive.

Meanwhile, Tesla has recently caused quite a stir in the industry with a move in the opposite direction. ‘Ultimately, this does a disservice to value retention and not only of the company’s own models,’ Geilenbruegge concluded.

‘Awareness of BEVs is growing’ in Italy

The new year started in the same way 2022 ended in Italy, with RVs increasing sharply, especially compared to a year ago. ‘Suffice to say that a 36-month-old used car with 60,000km on the clock has an average residual value of around €18,900, i.e. almost €2,000 more than in January 2022,’ commented Marco Pasquetti, head of valuations, Autovista Group Italy.

The volume of sales recorded through the main portals, represented by the sales-volume index, also indicates a growing used-car market (up 9.5% compared to December), even though vehicles remain in stock 24 days longer than a year ago.

Used BEVs enjoyed especially strong value growth in January, up 14.8% year-on-year, with the sales-volume index rising by a phenomenal 160.5% year on year. ‘Awareness of BEVs is certainly growing in Italy, but it is still advisable to remain cautious as their share remains very low in the new-car market, at 3.7% in 2022, and especially in the used-car market,’ said Pasquetti.

Pasquetti expects RVs to be higher at the end of 2023 than in December 2022 due to inflation and supply problems, albeit with significantly slower growth than last year.

Lack of stock ‘weighing down’ Spain

The Spanish new-car market closed 2022 with 813,396 registrations and a year-on-year decline of 5.4%. In addition to established supply issues, transport problems constrained the sector further. In 2023, registrations are expected to improve but this depends on what happens to inflation, interest rates, energy prices and, ultimately, how the war in Ukraine develops.

ICE vehicles account for 64% of new-car registrations in Spain. Of the remaining 36%, HEVs capture the largest share (25%). BEVs and PHEVs account for only 9% of the market, in line with Italy, which is clearly below the European average (19%) and neighbouring countries such as Portugal, where they already have a 21% share.

The used-car market also finished 2022 below forecasts, with a string of declines throughout the year. In total, 1,885,553 units were transacted according to the Spanish dealers’ association GANVAM, resulting in a ratio of 2.3 used cars for each new car registered.

‘The lack of stock is weighing down the possibilities of a market that tends to benefit in times of crisis. The limited availability of product mainly applies to younger vehicles, which tend to be in the hands of the dealer network, while the weight of vehicles over 10 years old continues to increase considerably,’ explained Ana Azofra, Autovista Group head of valuations and insights, Spain.

With regard to average RVs, after the usual adjustments at the end and beginning of each year, Azofra expects stability in the coming months. ‘There is a modest downward trend for petrol cars but HEVs are escaping this fate as they are in high demand, with quick turnaround times, as they will benefit from the implementation of zero-emission zones in almost 150 Spanish cities.’

‘It would be expected that BEVs could also benefit from this development but, for the time being, they do not even command a 1% share of the used-car market. As long as the charging infrastructure does not improve, the chances of developing a second-hand electric market are slim,’ Azofra concluded.

RVs stable in Switzerland despite demand

‘The Swiss used-car market has experienced increasing supply for several months, but it is still lower than before the pandemic, especially for younger used cars. Moreover, with rising costs of living, used-car transactions continue to slow down compared to the first half of 2022,’ noted Hans-Peter Annen, head of valuations and insights, Eurotax Switzerland (part of Autovista Group).

Across all two-to-four-year-old passenger cars, the active-market volume in January was 1.8% higher than a month earlier, and 39.2% higher than in January 2022. On the other hand, the sales-volume index has retreated further, with a 10.5% decrease compared to December, albeit with only a small 0.2% decline year on year.

Despite cooling demand, the average value retention of 36-month-old passenger cars grew slightly to 52.6% in January (up 1% month on month and up 13.5% year on year). BEVs posted particularly strong year-on-year %RV gains of 21.4%. Nevertheless, petrol cars are currently leading, retaining 53.4% of their original list price, followed by HEVs (52.0%), BEVs and diesel cars (both 51.2%). 36-month-old PHEVs retain the lowest value, at 49.8% of their original list price.

The average days to sell clearly increased in January, with a passenger car aged two to four years in stock for 73 days. Petrol cars are selling the quickest, after an average of 72 days, followed by diesel cars after 73 days, PHEVs after 79 days, BEVs after 81 days, and HEVs after 84 days.

As used-car demand is expected to weaken amid recovering supply, Annen foresees a slightly decreasing trend but values of three-year-old used cars will remain relatively high. He forecasts that the %RV will finish 2023 around 3% down on December 2022. For 2024, Annen expects RVs to fall by around 3.7% year on year due to weakening demand and increasing supply.

RVs strengthen in UK, except for BEVs

‘The UK’s used-car market returned to seasonal norms in January, with an uptick in demand. Although the month began slowly, wholesale activity ramped up as the month progressed. The Glass’s editorial team observed auction conversion rates approaching 80%, something not seen regularly throughout 2022,’ explained Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles.

RVs for all fuel types strengthened in January, except for BEVs. There has been an especially sharp increase in available volumes of used BEVs according to the active-market volume index, which shows a rise of 41.7% compared to December. BEVs also performed poorly in the last quarter of 2022 and, as a result, values have fallen sharply in recent weeks. The average value of a three-year-old BEV now sits at 59% of the original list price, a fall of 6.6% compared to December.

‘As values have fallen sharply, there is a risk that dealers may become reluctant to buy BEVs speculatively, in fear that prices will continue falling and wipe out any profit margin. This will of course affect demand further. Tesla’s recent move to reduce new-car prices is also likely to affect used values and may lead to other brands suffering more depreciation as consumers evaluate what they can now get for their money,’ commented Whittington.

However, it is worth remembering that used BEV values were reasonably high throughout 2022, the result of a spike in interest from retail consumers and businesses looking to avoid waiting up to a year for a new one. At three years of age, used BEV prices are 4.9% higher than in January last year.

‘Although BEV values are potentially facing a correction, they are only narrowly behind other fuel types when expressed as a percentage of their original list price,’ Whittington concluded.

The January 2023 monthly market dashboard provides the latest pricing, volume and selling-days data.

This content is brought to you by Autovista24.

Will there be enough e-fuels to save the internal-combustion engine?

E-fuels could prolong the life of the internal-combustion engine (ICE), keeping the technology relevant in a world that requires more sustainable transportation. But will there be enough of these synthetic fuels to go around?

Armed with new analysis, green group Transport and Environment (T&E) claims there will only be enough e-fuels to power roughly 2% of all the cars on Europe’s roads come 2035. However, the eFuel Alliance, an organisation committed to carbon-neutral fuels, points to a higher percentage being available sooner.

A fraction of the fleet

Combining hydrogen and CO2, the power-to-liquid process produces synthetic hydrocarbons, an artificial version of the chemicals found in fossil fuels. A refinery process then separates out different e-fuels for specific applications, including automotive and aviation.

Proponents claim there e-fuels can be used in new and used vehicles as either a drop-in solution to be combined with fossil fuels or as a stand-alone power source. With the impending 2035 100% carbon-emission reduction target set for new cars in Europe, these synthetic fuels hold the potential to keep ICE models on the road.

But using data from Concawe, the refining industry’s research unit, T&E forecasts that only five million of the 287 million cars on Europe’s roads in 2035 will be able to take advantage of e-fuels. This 2% figure would only rise to 3% if the existing car fleet switched to plug-in hybrids (PHEVs).

Source: T&E

‘Trojan horse’

The environmental group used this forecast to evidence its belief that e-fuels are a stalling tactic deployed by oil companies and engine makers to avoid the transmission to zero-emission technology. It urged EU lawmakers to resist the temptation of a synthetic-fuel loophole in emissions targets rules.

‘E-fuels are presented as a carbon-neutral way to prolong the life of combustion-engine technology,’ said Yoann Gimbert, e-mobility analyst at T&E. ‘But the industry’s own data shows there will only be enough for a tiny fraction of cars on the road. Lawmakers should close the door to this Trojan Horse for the fossil-fuel industry.’

T&E explained the industry’s forecast was based on e-fuel production in the EU but included carbon captured from industrial emitters. Synthetic fuels created with carbon from fossil-fuel sources could potentially lock in investment into fossil sources, slowing down decarbonisation. It said the projections also fail to clearly define how much renewable energy would be used during the creation of the e-fuels.

The group also pointed out that industry plans to import e-fuels are unrealistic as the production sites and standards required for certification do not exist. Taking synthetic fuels from other countries might also delay decarbonisation efforts in less developed economies.

‘In Europe, e-fuels for cars would suck up renewable electricity needed for the rest of the economy,’ said Gimbert. ‘Synthetic fuels that are made in Europe should be prioritised for planes and ships, most of which cannot use batteries to decarbonise.’

‘Clear intentions’

But Dr Tobias Block, head of strategy and content at the eFuel Alliance told Autovista24 that T&E’s intentions were clear. ‘Their position is an all-electric road sector without any role for climate-neutral combustion engines,’ he said.

Block went on to level a collection of criticisms at T&E’s 13-page publication. He pointed to eFuel Alliance analysis, which found that a mix of at least 5% synthetic fuels will be possible in the European market come 2030. ‘5% e-fuels are enough to power 40 million vehicles and to avoid 60 million tonnes of CO2 emissions,’ he said. This higher level is also backed by members of the alliance, who claim to be capable of increasing production capacities to meet the goal.

Block also pointed out that the Concawe study does not include the import of e-fuels to Europe. ‘E-fuels will be mainly produced in regions, in which renewable electricity generation is cheap and potentially abundant. For that reason, first projects are announced in Chile, Australia or the Middle East,’ he said. So, if these production locations are ignored, the availability of synthetic fuels would be much lower.

Furthermore, the Concawe study does not exist in isolation. There are many other pieces of research that have considered the global production of e-fuels. ‘For example, the Finnish LUT university foresees a huge potential of e-fuels already in 2030,’ Block said.

He explained that if synthetic fuels are not available, existing vehicles will continue to rely on those derived from fossils. To secure a place among the mobility systems of the future, e-fuels will continue to be dependent upon a supportive political framework, one which is not always present. So, the future of synthetic fuels appears undecided as arguments over supply, sustainability, and simple potential rumble on.

This content is brought to you by Autovista24.

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

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

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

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

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

Advantages and opportunities for stakeholders include:

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

Not all items qualify for features on demand

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

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

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

Viability of FOD depends on demand and hardware investment

Source: Autovista Group Consulting

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

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

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

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

Pitfalls for features on demand

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

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

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

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

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

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

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

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

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

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

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

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

Not fully aligned

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

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

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

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

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

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

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

Unprecedented change

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

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

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

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

Shake-up

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

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

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

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

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

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

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

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

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

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

Click to open the interactive dashboard

Not all similarities are pleasing

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

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

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

Is brand awareness enough?

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

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

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

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

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

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

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

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

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

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

High price positioning

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

Open the interactive dashboard

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

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

City cars in jeopardy

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

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

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

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

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. 

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

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


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

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

Austria supply down 15%, sales up 5%

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

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

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

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

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

Higher list prices ultimately detrimental to RVs in France

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

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

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

Mismatched configurations

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

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

High tactical registrations, low BEV demand

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

No supply relief in Germany

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

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

Renewed positive momentum in Italy

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

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

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

Spain running out of steam

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

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

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

Swiss supply volume down 25%

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

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

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

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

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

UK retail activity slowing

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

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

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

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

This content is brought to you by Autovista24

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

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

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

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

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

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

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

Source: Autovista Group’s Residual Values Intelligence

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

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

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

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

Diesel power

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

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

Monthly market dashboard October 2021, diesel passenger cars

Source: Autovista Group

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

This content is brought to you by Autovista24

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

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

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

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

Austria supplies 10% below pre-pandemic

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

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

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

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

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

Used-car switch in France

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

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

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

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

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

Electrified vehicles under mounting pressure

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

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

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

Diesel impacted in Germany

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

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

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

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

Seasonal adjustment in Italy

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

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

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

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

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

Upward trend in Spain

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

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

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

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

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

Swiss supply volume 20% lower

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

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

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

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

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

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

UK consumers impatient

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

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

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

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

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

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

This content is brought to you by Autovista24

Glass’s One Minute Market Update – May 2021

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

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

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

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

New Car Market Update May 2021

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

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

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

New car market sector split YTD graph May 2021

                                                                        Data courtesy of SMMT

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

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

New car registrations fuel split graph May 2021

                                                                        Data courtesy of SMMT

Outlook

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

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

A strong market for both new and used LCVs

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

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

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

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

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

Top five LCV registrations

Top LCV registrations table may 2021

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

May used Light Commercial Vehicle (LCV) overview

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

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

May in detail

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

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

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

Originally written for Commercial Fleet.

Renault, Stellantis and VW charged over diesel emissions in France

French prosecutors have charged Renault, Stellantis and Volkswagen Group (VW) with allegedly defrauding customers over diesel emissions, as the controversy surrounding the technology rumbles on.

The three carmakers have been issued varying levels of ‘bail’ depending on the prosecutor’s findings. Each is currently exploring options for their defence. The French charges come from a judicial investigation opened in early 2017, following the Dieselgate scandal that broke in 2015.

Alongside their bail payments, each company also has to provide a bank guarantee. Should they be found guilty, compensation will be taken from this amount. Fines will be extracted from the initial payment required by the carmakers.

Domestic diesel despair

‘In the context of the judicial investigation opened on 12 January 2017 relating to older generations of diesel vehicles, Renault s.a.s. was placed under examination on 8 June 2021 on the charge of deceit,’ the carmaker said. ‘Renault will have to pay a bail of €20 million, €18 million of which will be dedicated to the potential payment of damages and fines, and will have to provide a bank guarantee of €60 million dedicated to the potential compensation for losses.’

For Stellantis, the issue is more complicated. The start of investigations in January 2017 saw both PSA Group and Fiat Chrysler Automobiles (FCA) involved. Now, prosecutors have charged the company’s Peugeot brand with deceit. However, its Citroën marque has been summoned to appear in court, as has Fiat. Should they also be charged, it is unclear whether the courts will consider the merged company as one when it comes to fines, especially as the ‘offences’ took place when both were trading separately. This could possibly leave Stellantis facing two bail and bank-guarantee payments.

‘As part of the judicial investigations of several automakers commenced in 2016 and 2017, Automobiles Peugeot S.A., a wholly-owned subsidiary of Stellantis N.V., was placed today under examination by the Judicial Court of Paris on allegations of consumer fraud in connection with the sale of Euro 5 diesel vehicles in France between 2009 and 2015,’ the company stated.

‘As typical in a French criminal inquiry, Automobiles Peugeot S.A. will have to pay a bail of €10 million (of which €8 million for the potential payment of damages and fines and €2 million to ensure the company’s representation in court) and will have to provide a bank guarantee of €30 million for the potential compensation for losses.

Differing defence

VW was ordered to pay a bail bond of €10 million, with a bank guarantee of €60 million. For the German carmaker, the news is bittersweet. The company had just announced an agreement with former management members Martin Winterkorn and Rupert Stadler. They will pay the carmaker €11.2 million and €4.1 million in compensation in connection with the ‘diesel issue’. VW also reached terms with insurance company D&O, which will see the carmaker receive a payout of €270 million.

‘The payments relate to the investigation started by the Supervisory Board in October 2015 into the causes of the diesel crisis and who was responsible for this,’ the company said. ‘Ultimately, the Board resolved in March to assert claims for damages against Winterkorn and Stadler on account of breaches of the duties of care under stock corporation law. No breaches of duty by other members of the Group Board of Management were identified.’

Having faced legal challenges from across Europe over the Dieselgate saga, VW is preparing a robust defence against the French charges.

‘Proceedings against VW AG have been concluded in Germany in 2018 with the payment of a fine in the amount of €1 billion for the same alleged facts, including vehicles sold in France. The payment of this fine does not imply any admission of these facts or of its responsibility,’ the carmaker told Autovista Group.

‘Therefore, VW AG remains convinced that double sentence for the same alleged facts should be prohibited in this case according to the applicable ”ne bis in idem” principle. This fundamental issue is currently pending before the Court of Appeal of Paris. In any event, it is VW AG’s position that French customers have not suffered any compensable loss in connection with the purchase of a VW vehicle.’

Innocence presumed

Both Renault and Stellantis also stated that while the proceedings develop, their innocence is presumed. The carmakers have also said that they never fitted ‘defeat devices’ – which would recognise test conditions and adjust emissions output to more favourable levels. These devices were at the heart of the original Dieselgate scandal.

‘Renault denies having committed any offence and reminds that its vehicles are not equipped with any rigging software for pollution control devices,’ the company concluded. ‘Renault has always complied with French and European regulations. Renault vehicles have all and always been type-approved in accordance with applicable laws and regulations.’

‘[Stellantis] firmly believes that their emission-control systems met all applicable requirements at the relevant times and continue to do so and look forward to the opportunity to demonstrate that,’ the manufacturing group added.

‘The Stellantis Group, which was established in January 2021, will continue its predecessors’ policies and cooperate fully with the justice system in order to resolve this matter expeditiously.’

It is not yet known when the cases will be brought to trial. However, Stellantis has made reference to a decision over FCA’s charges coming in July this year. Therefore, it may be some time before this chapter of the Dieselgate saga is brought to a close.

Fiat to go all electric by 2030

Fiat will phase out internal-combustion engine (ICE) vehicles from 2025, aiming to go all electric by the end of the decade. The move was confirmed in an environmental discussion between Fiat CEO and Stellantis CMO, Olivier François, and environmental architect and urban planner Stefano Boeri.

As one of the 14 subsidiary brands making up the newly-formed Stellantis group, this move towards electrification will put Fiat on course to lead the charge. Fiat Chrysler Automobiles (FCA) and PSA Group merged at the beginning of this year and in April set a new electrification target. By the end of this decade, the group is aiming to generate 70% of its European passenger-car sales from electrically-chargeable vehicles (EVs). This is a significant increase on the 14% EV-share target for the current year.

Other carmakers have set similar goals. For example, Jaguar will go electric only by 2025, and Ford wants its entire European passenger-vehicle range to be zero-emissions capable by mid-2026. In the same year, Bentley hopes to become the first Volkswagen (VW) Group brand to commit to complete electrification. In March, both Volvo and Mini confirmed they would go electric-only by 2030.

New Renaissance

François and Boeri sat down in front of a camera for World Environment Day 2021 to discuss urban mobility and sustainable architecture. An automotive company and an architect might seem like a strange combination. But societal trends, increasing concern over environmental issues, and the fallout from COVID-19 had the pair considering a ‘New Renaissance.’ Combining green architecture like Boeri’s Bosco Verticale building, which holds 27,000 C02-absorbing plants, and battery-electric vehicles (BEVs) like the Fiat 500 Electric holds the potential for greener cities.

François said that ‘the decision to launch the New 500 – electric and electric alone – was actually taken before COVID-19. Even then, we were already aware that the world could not take any more “compromises.” In fact, lockdown was only the latest of the warnings we have received.’ He explained that the pandemic was yet another reminder of the urgent need to act, and do something for the planet.

Another transformation

This has led the carmaker and its iconic 500 to add an important new word to its ‘mobility for all’ mission statement: ‘sustainable mobility for all.’ So, Fiat is looking to bring more affordable EVs to the market, ones with a price tag no bigger than an ICE-powered model. It hopes to do this as soon as possible, in line with the falling cost of batteries. ‘Between 2025 and 2030, our product line-up will gradually become electric-only. This will be a radical change for Fiat,’ François said.

To ensure that sustainable mobility can be accessed by all, Fiat will need to look beyond the vehicle itself. The carmaker has already recognised the need to make electric models more accessible through ‘innovation and new financial products.’ Given the larger price tags that accompany new EVs, shared mobility is an option many OEMs are exploring. Urban centres, where air pollution is a particular environmental issue, hold the potential for a new take on transport, with consumers paying for the mode they need when they need it. Why own a car when you can pay to access an EV, clean public transport, or a micro-mobility solution?

Whether owned by the consumer or not, these EVs will also need access to infrastructure. Fiat points out that private charging points at apartment buildings, as well as the penetration of fast-charging stations, must increase. Beyond adapting what already exists, thought must go into the buildings of the future to ensure they are capable of supporting this move towards electromobility. This means reassessing urban planning, and considering how designing buildings today might impact the roads tomorrow.

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

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

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

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

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

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

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

Just missing out

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

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

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

Plans in place

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

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

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

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

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

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

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

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

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

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

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

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

Forecast on track

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

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

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

EV encouragement

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

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

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

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

Podcast: Has the automotive industry become driven by regulations?

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

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

Show notes

Carmakers successfully pooled emissions to meet 2020 EU targets

Hitting the target: Lone carmakers that successfully reduced their emissions

Swedish ICE ban would not drastically aid climate targets

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

Are EVs as green as they seem?

Germany paves the way for adoption of autonomous vehicles

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

The Strength of the LCV Market

The Strength of the LCV Market

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

New Market

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

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

Used Market

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

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

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

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

Overall used market strength

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

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

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

Euro 6 and Pre-Euro 6 split

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

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

By sector

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

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

Residual Values

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

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

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

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