Fuel Type: Diesel

New Light Commercial Vehicle (LCV) Market February 2021

The new light commercial vehicle market grew by 22.0% in February. This positive high-level figure includes delayed pipeline orders and is set against the typically quiet month preceding the new March plate. Year-to-date, the light commercial vehicle market is 9.5% up overall versus 2020, with large increases in all sectors except those vans under 2.0 tonnes.

SMMT data indicates that the 17,205 February registration total is 3,102 units more than in February 2020 and is the strongest February on record since 1998 (18,044).

Breaking down the results reveals the only disappointment was a 25.3% registration decline for vans under 2.0 tonnes. Registrations for vans between 2.0-2.5 tonnes increased 9.0% whilst demand from construction and online deliveries saw the between 2.5-3.5 tonne sector improve by 30.0%. The Pickup sector also recorded a 26.8% increase.

The Ford Transit Custom failed to hold on to the number one position, deposed by its big brother, the Ford Transit. Nevertheless, Ford still managed to place four of its product ranges in the top ten.  The Ford Transit in top spot followed by the Ford Transit Custom in second, the Ford Ranger in seventh place and Ford Transit Connect in eighth.

Top five LCV registrations

Top Five LCV Registrations

Capitalising on this registration momentum will be vital as the UK emerges from lockdown with an economic plan that encourages LCV growth and gives businesses confidence to upgrade to cleaner and more sustainable fleets.

The March Budget froze fuel duty rates for an eleventh consecutive year. This is likely to be the last year fleets can expect a freeze, as the Treasury commits to a net-zero emissions target by 2050. The ambitious targets set to address climate change and meet air quality goals mean the fastest way to achieve these goals is to instil business confidence and encourage the take-up of the latest low emission vehicles.

February used Light Commercial Vehicle (LCV) overview

  • LCV used market buoyant in February
  • Easing lockdown likely to determine how quickly the economy recovers
  • New stock shortages forcing franchised dealers to source late-plate stock

February has seen the used market in buoyant form overall, with prices remaining strong for anything that can easily be turned around quickly. Even the minibus sector that has struggled over the last 12 months due to COVID restrictions is seeing values firm as buyers look to stock up in readiness for the easing of lockdown regulations. Forward Control vehicles and 4×4 Pick-ups have also seen a performance improvement.

First-time conversion rates remain high for ready-to-retail panel vans, driven mainly by the expanding home shopping market. There has been a noticeable increase in damaged vehicles on offer, with the number of provisional sales increasing as well. With many of these turned into sales after the event, it is only those with damage now avoided by the trade. Demand remained strong for the small numbers of clean, late-year retail stock, forcing those prices ever higher. With a lack of new de-fleet stock to ease supply and demand issues, prices look set to remain high for at least the first half of 2021.

The severe shortage of new stock at dealerships is not only forcing fleets to run their vehicles for longer but is forcing franchised dealers into the used market to source late-year stock. This extra layer of competition for the trade is pushing prices ever higher. On the plus side, the recent lifting of government restrictions on the sale of repossessed vehicles should benefit the used market with an increase in volume over the next few months.

With global vaccinations on the increase, the easing of lockdown measures will determine how quickly the new market recovers, in turn, increasing volume in the used market.

Although sales at auction in February increased by just under 13% compared to January 2021, sales over the same month last year decreased by over 17%. Only 8.5% of those sales were less than 2 years old, whilst nearly a third of all sales were in the 2-4yr old age bracket.

Medium-sized vans again proved the most versatile and popular in the used market, increasing market share in February by 3.5% to 38.5% of all sales, followed by Small vans with 28%.

February in detail

Glass’s auction data shows the overall number of LCV sales in February declined by 12.9% versus January 2021, whilst first-time conversion rates decreased 1.5% to 84.2%.

Average sales prices paid in February increased by a dramatic 5.5% versus January and are now a staggering 36% higher than the same point last year. The average age of sold stock increased slightly from 68.8 months in January to 69 months in February and was 6.8 months younger than the same point last year.

Average mileages also increased from 75,532 miles in January to 79,936 miles in February and was just 311 miles lower than at the same point last year.

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

Only battery and hydrogen cars to be sold in the UK from 2035

The UK government has published the results of a consultation on banning new fossil-fuel vehicles. The document confirms a phased approach to zero-carbon-only registrations beginning in 2030.

The first step will see new petrol and diesel models banned from sale. Vehicles that can travel a ‘significant’ distance on zero-emission technology, including some hybrids and plug-in hybrids (PHEVs), will be sold until 2035. After this point, only zero-carbon technologies, such as battery-electric (BEV) and hydrogen fuel-cell electric vehicles (FCEVs), will be available.

Another consultation later this year will determine what constitutes a ‘significant’ distance that hybrid vehicles need to travel emission-free.

The consultation around the advancement of dates reviewed four key areas of concern over the plans. These included the readiness of the chargepoint infrastructure, the preparedness of the vehicle-manufacturing industry, inadequate battery supply, and the impact on consumers.

Some vehicle manufacturers raised concerns that hydrogen-fuel infrastructure provision had not yet been rolled out to an extent that would stimulate the uptake of FCEVs. These respondents stated that this is particularly important for ensuring all car and van market segments can transition to zero-emission, especially those that may not be suitable for BEVs.

However, in response to these concerns, the government highlighted the various funding schemes in place to increase infrastructure and support manufacturing. It pointed towards a report by the Faraday Institution that suggested 1.6 million BEVs a year would be built in the UK by 2040, with an additional 40,000 jobs created in the sector by 2030.

UK manufacturing

There is a mixed response amongst manufacturers over the future of their UK plants. Nissan and Jaguar Land Rover are dedicated to building BEVs in the country, with the Japanese carmaker bringing battery production to the UK. However, Stellantis is concerned about the UK’s 2030 ban and is in talks with the government to secure funding for the future of Ellesmere Port.

‘As soon as you say that we are going to ban the sales of this kind of car, we will stop investing,’ Stellantis CEO Carlos Tavares commented at the launch of the merged automotive group. ‘If we are told that in 2030, internal combustion engines cannot be sold in the UK, which we respect as a decision from the country, then we are not going to invest in ICE anymore because that makes no sense.’

In response to concerns over hydrogen, the consultation response document states: ‘The FCEV and hydrogen refuelling market is in its infancy and government has taken steps to support its growth in the UK. The transport decarbonisation plan will discuss the potential role for hydrogen in decarbonising the transport sector, including road transport.

‘In addition, we have announced plans to publish a hydrogen strategy, which will set out a whole system view of developing the UK hydrogen economy, including how we will work with industry to create 5GW of low-carbon hydrogen production for use across the economy by 2030.’

There was also discussion around eFuels, which can significantly lower the emissions from internal combustion engines. However, the consultation response highlights the unknown nature of emissions from this technology. ‘By 2035, zero must mean zero,’ it states.

Funding round

The UK government is launching a research and development competition for electrically-chargeable vehicle (EV) innovations. Those entering could benefit from a share of £20 million (€23 million) in funding. This comes following the publication of consultation results surrounding a ban on fossil-fuel vehicles from 2030.

The investment fund is part of the government’s drive to ‘build back greener’ following the economic damage inflicted by COVID-19. Technologies that could benefit include zero-emission emergency vehicles, charging technology or battery-recycling schemes. It hopes that the EV design and manufacturing sector could create around 6,000 skilled jobs.

‘Investing in innovation is crucial in decarbonising transport, which is why I’m delighted to see creative zero-emission projects across the UK come to life,’ commented transport secretary Grant Shapps.

‘The funding announced today will help harness some of the brightest talents in the UK tech industry, encouraging businesses to become global leaders in EV innovation, creating jobs and accelerating us towards our net-zero ambitions.’

Innovative ideas

Previous winners of government research investment include a zero-emission ambulance prototype. Designed by ULEMCo, it can reach speeds of 90mph and travel an average of 200 miles a day with zero-emissions. Another successful entrant was Urban Foresight, which used its £3 million share to develop ‘pop-up’ street chargers. These are located in pavements and provide discreet access to charging infrastructure for those without off-street parking.

The uptake of EVs is increasing in the UK. As the technology also plays a crucial role in the government’s ‘Road to Zero’ plans, more needs to be done to support the sale of the technology with new innovations and ease-of-access to infrastructure.

By releasing this latest funding now, the government also hopes to have new ideas and technologies in place in time for its ban on new fossil-fuel vehicles coming into action in 2030.

Video: Europe’s registrations struggle in February but improvements to come

Autovista Group Daily Brief editor Phil Curry discusses the registration figures from Europe’s big five automotive markets. While numbers may be down, the outlook for the whole year is more positive…

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel.

Show notes

Lockdown drives German new-car registrations down by 19% in February

February UK new-car registrations plunge to level of 1959

Significant downturns in European registrations in February

Conditional reopening of German car showrooms

England’s car showrooms to remain closed until 12 April

Podcast: How is European automotive adapting to pandemic and climate-change fallout?

Daily Brief editor Phil Curry and journalist Tom Geggus discuss key activities and developments in the European automotive sector from the past fortnight. These include COVID-19’s effect on the uptake of mobility-as-a-service (MAAS), different fuel types, and autonomous technology.

https://soundcloud.com/autovistagroup/consumers-post-covid-automotive-outlook

Show notes

Cazoo buys Cluno as CaaS options increase

Significant downturns in European registrations in February

Lockdown drives German new-car registrations down by 19% in February

February UK new-car registrations plunge to level of 1959

VW accelerates towards electric and digital future

VW aims for commercialised autonomous systems in 2025

Is it too early to go ‘EV-only’?

Ford to be zero-emission capable in Europe by 2026

Jaguar makes BEV and hydrogen changes on path to net zero

Volvo to go all electric and online by 2030

E-fuels gain awareness as Mazda joins alliance

February UK new-car registrations plunge to level of 1959

The ongoing restrictions on dealership activity resulted in a 35.5% year-on-year decline in new-car registrations in the UK in February 2021. Autovista Group senior data journalist Neil King explores the latest figures and the market outlook.

A total of 51,312 new cars were registered in the UK in January, according to data released by the Society of Motor Manufacturers and Traders (SMMT). The association highlighted that ‘the industry recorded its lowest February uptake since 1959.’

The UK emerged from its second lockdown on 2 December, only to see new regional restrictions imposed from 16 December. Subsequently, national lockdowns in England and Scotland were announced on 5 January, with ongoing restrictions in effect across the rest of the UK too.

There was a modest improvement in the market contraction in February, compared to the 39.5% year-on-year downturn in January. However, there were two fewer working days in the month than in January 2020 and, on an adjusted basis, the decline was therefore greater.

The UK registration figures continue to align with the Autovista Group expectation of a return to year-on-year declines of about 30% in countries where dealers are closed for physical car sales. The downturn in the UK during February, however, is larger than the 19% fall in Germany, where car showrooms are also closed. The contraction is also greater than in France and Italy, although dealers were open in these markets.

The only major European market to suffer more than the UK in February was Spain. Although dealers are open, the country is in a perfect storm, enduring a third wave of the pandemic, a weak economy and a fall in consumer confidence, in addition to the end of the RENOVE scrappage scheme and an increase in car-registration taxes.

EVs challenge diesels

UK registrations of petrol and diesel cars fell by 44.5% and 61.0% respectively, but still held a combined 65.3% share of the market. Registrations of standard hybrids (HEVs) also declined, by 22.8%, but the upward trend for plug-in hybrids (PHEVs) continued, with a 52.1% rise. Moreover, demand for battery-electric vehicles (BEVs) grew by 40.2% and electrically-chargeable vehicles (EVs) accounted for 13.0% of registrations, challenging diesel cars, which gained a 13.2% share.

February 2021 new car registrations SMMT

Source: SMMT

‘However, increasing uptake of these new technologies to the levels required by 2030 remains a mammoth task, with yesterday’s budget proving a missed opportunity given the lack of measures to support the market overall and notably the transition away from pure petrol and diesel cars and vans,’ the SMMT emphasised.

Delayed recovery

On 22 February, UK prime minister Boris Johnson outlined the roadmap for easing restrictions in England, with non-essential retail, including car showrooms, able to reopen no earlier than 12 April. In Scotland, this is expected from the last week of April. The next review of restrictions in Wales is on 12 March, with non-essential retail possibly able to reopen as soon as 15 March. A timetable for easing restrictions in Northern Ireland has not been announced, although a review is planned for 16 March.

Accordingly, Autovista Group’s latest base-case forecast has been lowered to 1.86 million units, equating to 14% improvement in new-car registrations in 2021, with further growth of 11% predicted in 2022. This is predicated upon vaccination progress preventing any further lockdowns in 2021 and new-car deliveries being largely unimpaired by semiconductor shortages and/or post-Brexit border delays. Similarly, the SMMT has revised its market outlook to 1.83 million new-car registrations in 2021, down from the 1.89 million units predicted in January.

In a downside scenario, however, greater disruption to new-car registrations (and supply) is assumed for 2021, further reducing the opportunity to recover losses later in the year. The forecast for this worst-case scenario is for UK new-car registrations to recover by only 10% in 2021, to about 1.79 million units, with further growth of only 9% in 2022.

In a more positive upside scenario, the UK automotive sector will emerge more positively, with dealers quickly returning to full operational capacity to meet increased demand. A less-severe impact on the wider economy would also bolster new-car registrations in 2021 and beyond. In this scenario, the UK new-car market is forecast to grow by 18% in 2021, to over 1.9 million units, and expand by 13% in 2022.

Dealers stifled

Mike Hawes, chief executive of the SMMT, commented; ‘these closures have stifled dealers’ preparations for March with the expectation that this will now be a third, successive dismal ‘new plate month’. Although we have a pathway out of restrictions with rapid vaccine rollout, and proven experience in operating click-and-collect, it is essential that showrooms reopen as soon as possible so the industry can start to build back better, and recover the £23 billion (€26.7 billion) loss from the past year.’

With car showrooms closed in most (and likely all) of the UK until at least 12 April, order intake will continue to be suppressed, further delaying the automotive recovery. An improvement in orders is expected in April, especially with the release of pent-up demand, but is unlikely to translate into significantly healthier registration volumes until May. Autovista Group estimates that the extended lockdown in the UK will result in the loss of approximately 200,000 new-car registrations between January and April, most of which will not rematerialise later in the year.

The Van’s Headlights: The Life and Times of a British Conglomerate

Successive UK politicians continue a generational battle to keep Britain’s homegrown manufacturing alive, even while pure economics would have consigned them to history many times over.

One particular manufacturing company that had more problems than many over the years, with name changes, mergers and buyouts rarely improving its profit forecast was the British powerhouse of British Leyland Motor Corporation Ltd (BLMC). In this article, Glass’s Chief Commercial Vehicle Editor, Andy Picton, takes a potted look at BLMC’s struggles with light commercial vehicles (LCVs).

History

BLMC formed in 1968 with the merger of British Motor Holdings (BMH) and Leyland Motor Corporation (LMC) and encouraged by the Wilson Labour Government (1964–1970), created an automotive group with a 40% UK market share. At its peak, BLMC owned nearly 40 different manufacturing plants across the UK.

Even before the merger, the BMH stable of marques competed with “badge engineered” cars and LCVs. The merger added more internal competition from the LMC marques. What followed was a story of ineffectual management, poor product design and quality, serious industrial relations problems and the 1973 oil crisis. Combined, this resulted in an unmanageable, financially crippled behemoth heading towards bankruptcy. The company’s 1970’s legacy created an infamous monument to the industrial turmoil of the period.

Many vehicles including LCVs were badge-engineering exercises offered under different brand names including Austin and Morris. For LCVs, this policy remained until 1970 when the Morris J4 and Austin 250JU became Austin-Morris products.

By the early 1970s, the outdated vans were rapidly losing ground to the Ford Transit and Bedford CF. Plans were put in motion to build and launch a new van that would equal the competition. The all-new Sherpa launched in late 1974, with both Leyland and Austin Morris badging.

Despite containing profitable marques such as Jaguar, Rover and Land Rover, as well as the best-selling Mini, British Leyland had a troubled history, leading to its eventual bankruptcy in 1975 and subsequent part-nationalisation.

The Wilson/Callaghan Labour Government (1974–1979) took control, creating a new holding company named British Leyland Limited (BL) of which the government was the major shareholder. The company was now organised into the following three divisions:

  • Leyland Cars
    • The largest UK car manufacturer
    • 128,000 employees
    • 36 locations
    • Production capacity one million vehicles per year
  • Leyland Truck and Bus
    • The largest commercial and passenger vehicle manufacturer in the UK
    • 31,000 employees
    • 12 locations
    • Production 38,000 trucks, 8,000 buses and 19,000 tractors per year
  • Leyland Special Products
    • A miscellaneous collection of acquired businesses

By 1977, all vans were sold under the Morris brand. A further change saw the Sherpa move into the Land Rover division in 1981, under the newly created Freight Rover brand.

By this time the Sherpa van was unsurprisingly dating quickly against the competition. Sales of the Transit far outstripped the Sherpa, whilst imported vehicles from Volkswagen, Fiat, Citroen, Renault and Iveco were gaining a foothold in the market.

Freight Rover

With the Sherpa under its wing. Freight Rover commissioned the K2 facelift in 1982 renaming it the 200. In 1986 the company introduced the wider bodied 300 van and chassis derivatives opening previously untapped sales opportunities.

Success followed and Freight Rover was moved into the Leyland Trucks Division. With improving profitability, the Freight Rover business caught the eye of General Motors in 1986. At this point, they made a bid to buy both the truck division and Land Rover from BL. The deal was vetoed by the British Government because they did not want to sell the iconic Land Rover brand to the American company. Although the truck division was still available for sale, GM’s interest waned and Dutch company, DAF Trucks, secured the purchase the following year.

DAF Trucks/Leyland DAF

The trucks were manufactured in Eindhoven, Holland and Leyland, Lancashire whilst the 200 and renamed 400 Series continued production in Washwood Heath, Birmingham. Both the trucks and vans were sold under the Leyland DAF banner in the UK.

By early 1988 planning for a much-needed replacement for the ageing 200/400 Series was progressing. With limited product development capabilities in-house, the styling of the new standard width and the wide-bodied van was outsourced to the Bertone design house in Italy.

The management team were not convinced the Bertone styling worked, with Leyland DAF wanting more of a family look between the vehicles. The work was outsourced again, this time to MGA, the designers who had worked on the K2 facelift and high roof versions. By the summer of 1988, with sketches completed, MGA produced clay models and then full-size prototypes codenamed LDV201 and LDV202

An overall lack of finances at Leyland DAF at this time, combined with strong sales of the 200/400 series  – 13,234 sales and a 15.6% market share in 1992 – meant the company was under pressure to launch the new van range. Increasing costs meant the new project would be mothballed until Renault was brought in to partner the programme in 1989. Sadly, a lack of direction saw the whole project cancelled by Leyland DAF in 1993, deciding to develop the existing Sherpa models instead.

The proposed facelift did not see the light of day, as continued financial difficulties forced Leyland DAF to file for bankruptcy later that year.

Renault

With agreement sought from DAF, Renault took over the entire development. Recognising that their current Master van was ageing, the LDV201/202 programme was abandoned in favour of a single model that would be the basis for their new Master range of light commercials.

In 1995, Renault signed an agreement with Iveco to help develop a cab for the second generation Master, Mascott and third-generation Daily models. However, due to rising costs, General Motors Europe was brought in as another partner. The second-generation Master was launched in 1997, with rebadged GM versions of the Opel/Vauxhall Movano and alliance partner, the Nissan Interstar launching the following year. The third generation Iveco Daily also shared many panels and cab components, including the doors. Named International Van of the Year (IVOTY) in 1998, a facelift followed in 2003, with an all-new model debuting in 2010. It too was sold by Vauxhall and Nissan, with the latter promoted as the NV400.

GAZ Group

At the same time, the collapse of the project also allowed the International Automotive Design (IAD) Group, which had been engineering the vehicle for LDV, to join forces with Gorkovsky Avtomobilny Zavod (GAZ) Group of Russia. IAD used many of the existing features to develop the bodywork design and new independent front axle suspension of the old LDV201 for the all-new GAZ Gazelle van, pick-up and minibus range.

The GAZ Gazelle went into production on the 20th July 1994, with the first vehicles rolling off the production line on the 26th of August 1994. The Gazelle has gone on to be synonymous with light commercial vehicles in Russia and other Eastern European countries selling over one million units by August 2005.

Popularity has continued to grow, with GAZ now employing over 40,000 staff and operating 13 production sites in Russia as well as assembly facilities in Turkey and Kazakhstan. The Gazelle is now sold in 40 countries across Europe, Scandinavia, Latin America, Africa, Asia and the Middle East. By 2015, annual production had increased to nearly 69,000 units.

LDV Limited

Back in the UK, the Leyland DAF van business was sold off in 1996 and LDV Limited was formed. Both the 200 and the 400 were given facelifts and renamed the Pilot and the Convoy respectively. The Pilot was available in 1.9t, 2.2t and 2.6t gross vehicle weights, while the Convoy was available in 2.8t, 3.1t and 3.5t low roof (City), high roof (Hi-Loader) and Chassis variants.

The easy to maintain vehicles made them popular with operators such as Royal Mail, the Police and local authorities, with the Convoy achieving a market share of 10.5% by the end of 1998.

Although selling well, it was clear that the Pilot and Convoy origins which harked back to 1974 were completely out of date and out of tune with the current marketplace. A joint development programme was signed with Daewoo in 1998 with a plan to quadruple output to 80,000 units by 2005.

The Asian financial crisis of 1997-1998 hit Daewoo hard and the partnership with LDV ended in November 2000, when the Korean car manufacturer went into receivership. The replacements for Convoy, codenamed LD100 and the Pilot BD100 replacement, were dead in the water before they had started.

Not to be deterred, LDV dropped the BD100 and purchased the rights to the LD100 from Daewoo moving 6,000 tons of tooling by road and rail from Daewoo’s factory in Lublin, Poland to the Washwood Heath and the LDV Maxus was born.

Available in two wheelbases and three roof heights at either 2.8t, 3.2t or 3.5t GVW, the VM Motori powered 2.5TD engine with outputs of 95bhp, 120bhp and 135bhp, launched in February 2005.

The front-wheel-drive LDV Maxus received good reviews and was a regular sight in National grid, Royal Mail, AA and British police force liveries, being awarded Professional Van and Light Truck Magazine “Van of the Year 2005”.

However, the additional costs of ‘going it alone’ put LDV under further financial pressure, eventually going into administration later in 2005. US investors Sun Capital bought the company, only to sell them on to the Russian van maker, GAZ Group in July 2006.

Plans to expand production in Birmingham, add new product lines and enter new markets were announced. GAZ also planned to produce vehicles in Russia and sell an additional 50,000 units annually worldwide. However, due to the global financial crisis in 2008 and a lack of investment, these plans never materialised.

Production ceased at the Birmingham factory in December 2008 when a last-ditch attempt to save LDV by the British Government and WestStar Corporation failed.

Shanghai Automotive Industry Corporation (SAIC)

LDV continued to sell its existing stock and the entity was sold in 2010 to the Shanghai Automotive Industry Corporation (SAIC).

The van continued in production and was manufactured under the MAXUS name for the Chinese market and selected left-hand drive markets in Europe, whilst with help of distributors The Harris Group, the same range was launched in late 2015 as the LDV V80 and EV80 for the UK, Ireland and right hand drive Europe.

As the MAXUS brand has grown globally and as its products became more established, the decision was made to realign the companies. As a result, LDV rebranded as MAXUS in 2020, coinciding with the launch of two new models; the all-new Deliver 9 diesel range replacing the V80/EV80 and the all-new small electric van, the e-Deliver 3. The e-Deliver 9 electric van launched at the end of 2020.

Used Car Market Update January 2021

Used Car Auction Wholesale Market

Whilst online shopping has become increasingly popular in the UK over the last few years, 2020 substantially accelerated this to the point that some households have been making most, or even all of their purchases via the internet. This has extended to the buying of cars, both new and used, with several companies launching operations offering this service. Because the sale of used cars has changed from being a largely “physical” process to a “virtual” one, the used car market has not suffered as drastically as may have been feared when lockdown was first introduced in March 2020.

As a result of this, the used car auction market had a relatively positive start to 2021 despite Lockdown-3, with improvements in both the first time conversion rate and sales volume. A first time conversion rate of 77.8% was 7.5% higher than in December, whilst sales volume was significantly higher – not that unusual given December is traditionally quiet, but a good result given it was not clear how long the current lockdown would continue.

First time conversion rate graph Jan 2021

The Glass’s Editorial team reported that buyer trends were similar to those observed in December, with lower graded cars continuing to struggle to achieve decent prices, or to even receive any bids at all. One interesting development was that the hammer prices of convertibles improved as the month progressed, even though much of the country was under snow!

Used Car Retail Market

With the country being in lockdown, and with no clear indication how long it would last, it was reasonable to expect used car retail sales for January to be relatively steady, and the figures suggest they generally were. The number of sales and their average value were very close to December’s results, at 100.2% and 99.1% respectively, and whilst the number of observations was generally lower in 2020, the overall trend for the average sale price was upwards. Remarkably, the average age of the cars was also virtually the same as for December – 49.5 months for January versus 49.4 months for December.

Used Car Retail Market Observations Graph - January 2020 to January 2021
Used car market average sale price graph January 2021

Glass’s live retail pricing tool GlassNet Radar includes data on the length of time cars spend on the forecourt before selling, and it reported that the average duration for January 2021 was 51.7 days. This was six days longer than in December, but that degree of increase is not unusual given the delays caused by the festive season and is only a little higher than the 49.9 days reported for January 2020.

Used car market average days to sell graph January 2021

Outlook

It is likely that the current lockdown will continue through to the beginning of March at least, so it is reasonable to expect that February’s used car wholesale and retail markets will perform in a similar fashion to January. Should there be an announcement of an easing of restrictions towards the end of the month, it may promote a surge in activity, especially in the auction market, but it is unlikely to lift the retail sector much, if at all, until those changes come into effect.

Launch Report: Hyundai Tucson – bolder and roomier

The new Hyundai Tucson has an assertive and bold design, with its front face combining the headlights and grille. The 3D rear-light signature echoes the progressive triangular headlight design and two-tone colour personalisation is now possible. As the new Tucson is longer and wider, it is roomier and more practical than its predecessor and has a large boot.

The modern and refined digital cockpit, featuring a flush-fitting 10-inch screen, is standard across the range and there is also a digital TFT screen directly in front of the driver. The materials, trim and build quality are all good and there are numerous ADAS and safety features, including a central airbag between the two front seats. A neat touch is the blind-spot monitoring system, which shows a digital feed from the left or right side of the car, depending on which direction is indicated.

The Tucson is offered with mild-hybrid (MHEV) petrol and diesel engines or as a full hybrid-electric vehicle (HEV), and a plug-in hybrid (PHEV) version will be available too. The trim lines are well composed and there are relatively few options, leading to well-equipped used cars.

With the leap forward in quality and roominess compared to its predecessor, the Tucson has the potential to attract a wider selection of consumers. The HEV version may present an attractive business proposition for buyers who are not yet ready to plug in.

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

Launch Report Hyundai Tucson February 2021

January 2021: New car registrations

With Lockdown-3 in full force dampening the spread of COVID-19, inevitably January new car registrations suffered. Although retailers have created ‘click and collect’ processes to maintain a level of sales, customers still prefer to see vehicles before they buy. It came as no surprise to see registrations falling 39.5% versus January 2020 (already down 7.3% versus January 2019). According to the Society of Motor Manufacturers and Traders (SMMT), total registrations for January stood at 90,249 cars, the worst start to a new car market for 51 years.

Demand was subdued for both the private and fleet sectors, with registrations down 38.5% to 37,946 and 39.7% to 51,002 respectively, while the small business sector was down 56% to just 1,301.

January 2020-2021 sector split graph

Data courtesy of SMMT

Pure diesel registrations fell 62.1% compared to last year to just 11,083 units. This is a collapse of 86% from their peak January 2016 figure of 82,311, even when you add the mild-hybrid diesel registrations of 6,221, a total of 17,304 is a decline of 79% from the high point.                                                                                                                                             

Despite the gloomy picture, there are some bright points. The SMMT reports that new emissions figures show 2020 registrations are the cleanest vehicles in history, with average CO2 emissions falling by 11.8% on the previous year. January registration figures also show battery electric vehicles (BEVs) increasing by 54.4% to 6,260 with a market share of 6.9%. Plug-in hybrid (PHEV) registrations also rose in January by 28% to 6,124 units.

The chart below compares the alternative fuel vehicle (AFV) volume in January 2021 with the prior year.

AFV Registration Comparison Graph

Data courtesy of SMMT

Looking ahead, February is usually the quietest month of the year for registrations with consumers preferring to wait until the new plate in March. This February will be no different, with an expectation for another fall in registrations as the nationwide lockdown will not be lifted until the beginning of March at the earliest. If the vaccine roll-out success continues and COVID-19 cases continue their rapid decline, then showrooms will reopen improving consumer confidence, translating into an upswing in business in the second quarter and beyond.   

New Light Commercial Vehicle (LCV) Market January 2021

The results for January show an overall positive start for 2021. However, this positivity masks large declines in all sectors except large vans. This sector single-handedly drove demand during January.

SMMT registration data indicates the LCV market grew by 2.0% in January. The 24,029 registrations, was 472 units more than in January 2020 and was the highest January volume since 1990 (24,094).

Breaking down the results reveals the only highlight was a 25.4% registration increase for vans between 2.5-3.5 tonnes. Registrations for vans under 2.0 tonnes declined 50.1% whilst vans between 2.0-2.5 tonnes declined 16.2%. Whilst pickup registrations declined by 25.8%, 533 new plug-in battery-electric LCVs joining UK roads, increasing the BEV market fuel type share to 2.22%.

Top five LCV registrations

Top five LCV registrations table Jan 2021

Brexit

The pandemic continues to affect the whole UK economy. While the UK automotive industry avoided tariffs following Brexit, the Rules of Origin (RoO) requirements hidden within the new legislation are creating new barriers to trade.

Before 1 January 2021, automotive products legally made in the UK could be sold anywhere in the UK and the EU. From 1 January 2021, automotive manufacturers must provide proof that at least 40% of the value of the parts in a finished vehicle exported to the EU originated in the UK. This threshold climbs to 45% in 2023 and 55% in 2027.

With increasing battery-electric vehicle production, the need for domestic battery production is vitally important. Without this, OEMs are less likely to invest in the UK.

The future must involve measures that can deliver long-term changes in the industry. With ambitious targets set to address climate change and air quality goals, the fastest way to achieve these goals is to instil business confidence and encourage the take-up of the latest low emission vehicles.

January used Light Commercial Vehicle (LCV) overview

The first half of January saw the usual seasonal slowdown, with conversion rates and prices easing in line with some of the older and higher mileage stock on offer. Demand remained strong for the cleanest retail stock, with the shortage of later plate Euro 6 vehicles forcing prices ever higher. With a lack of new de-fleet stock to ease supply and demand issues, prices look set to remain high for at least the first half of 2021.

With new vehicle production still below pre-pandemic levels, there is a severe shortage of stock, which is forcing fleets to run their vehicles for longer. As we move through the year, the rollout of the global vaccination programme and the easing of lockdown measures will determine how quickly the new market recovers, in turn, increasing volume in the used market.

With the recent lifting of government restrictions on the sale of repossessed vehicles, the used market should benefit from an increase in volume over the next few months.

Although sales at auction in January decreased compared to January 2020, conversion rates over the period increased by 2.7%. To highlight the shortage of late-year stock in the marketplace at present, only 6.5% of all vehicles sold during the month were less than 2 years old, whilst Euro 5 stock made up just under 31%.

Medium-sized vans again proved the most versatile and popular in the used market, accounting for over 35% of all sales, followed by Small vans with 30%.

January in detail

Glass’s auction data shows the overall number of LCV sales in January declined by 30.5% versus December 2020, whilst first-time conversions remained steady at 85.7% (85.9% – December).

Average sales prices paid in January increased by 8.2% versus December and were over 33% higher than the same point last year. January’s prices were the highest in the last twelve months and 3.5% higher than the previous best recorded in October. The average age of sold stock decreased from 72 months in December to 68.8 months in January and was 6.6 months younger than the same point last year.

In line with sales of younger vehicles, average mileages also decreased from 78,005 miles in December to 75,532 miles in January and were nearly 6,200 miles lower than at the same point last year.

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

Glass’s predictions for 2021

The Automotive Industry might have thought they’d seen it all in 2020. But the market fluctuations were merely a preview of what’s to come in 2021.

Just to take a quick look back, the car and LCV markets gave everyone a scare in 2020 when they bottomed during the first lockdown. But then the market reopened and surged forward until the year-end. Glass’s Predictions video for 2021 discusses the car and LCV markets and what our expectations are for both the new and used vehicles. Anthony Machin, Glass’s Head of Content and Product, hosts the video and discusses the way forward for automotive over the course of this year.

This video includes:

  • New and used car Predictions for 2021
  • New and used LCV Predictions for 2021

Germany: new-car registrations down 31% in January

New-car registrations fell by 31.1% in Germany during January compared with the same month in 2020. A total of 169,754 passenger cars were registered according to the latest figures from the country’s automotive authority, the Kraftfahrt-Bundesamt (KBA).

This aligns with the Autovista Group expectation of a return to year-on-year declines of about 30% in countries where dealers were closed for physical sales. Germany is the largest European market affected in January, with the restrictions currently in place until 14 February.

The German market was also hampered by the return to a 19% VAT rate since 1 January 2021, which had been reduced to 16% from 1 July to 31 December 2020. Autovista Group estimates that this change advanced about 40,000 new-car registrations into December 2020, when the market rose 9.9% compared to the previous reporting period. Furthermore, the shortage of semiconductors will have invariably disrupted some new cars’ deliveries in the country last month.

New-car registrations, Germany, y-o-y % change, January 2020 to January 2021

Germany registrations 2020-2021 so far

Source: KBA

There were two fewer working days in January 2021 than in January last year. On a comparable working-day basis, Autovista Group estimates that registrations fell by about 23% in the last month, and annualised new-car demand was at 2.94 million units. As in France, Spain and Italy, the start to 2021 of Germany’s new-car market has been deceptively shaky.

Given the mitigating factors in January, this bodes relatively well for the German market, which Autovista Group currently forecasts will recover to 3.15 million units in 2021, 8% up on 2020. This is at the same level as the German automotive industry association VDA forecasts. However, the VDA rightly highlighted that 2021 will still be ‘significantly lower than the approximately 3.5 million new registrations of the years 2017 to 2019.’

‘We assume that the second half of 2021 will bring an improvement, if the progress in vaccination is so great that the pandemic can be noticeably contained in everyday life,’ commented VDA president Hildegard Müller. This echoes the EU-wide sentiment expressed by the European Automobile Manufacturers’ Association (ACEA). ‘The year 2021 will decide the future of the industry in Germany and Europe. We are at a turning point that will set the direction for the following decades,’ Müller added.

Brands and segments

German brands reflected January’s negative performance. Audi (down 47.4%), Mini (down 41.5%), and Ford (down 41.1%) saw the most significant declines. Meanwhile, Porsche posted the smallest losses, with a drop of 3.9%. Volkswagen maintained the largest market share, of 20.1%.

Among the imported brands, Tesla and Volvo exceeded their registration results for the same reporting period in 2020, up 23.4% and 9.4% respectively. In contrast, declines of more than 70% were seen at Jaguar and Honda (down 77.9% and 70.1% respectively), while Fiat recorded the smallest decrease of 14.8%. Skoda was the strongest imported brand for market share, with 6.7% of registrations.

Motorhomes were the only segment to achieve growth, of 5%, to capture a market share of 1.9%. Meanwhile, small MPVs saw the most severe decline at 63.6%, and full-size MPVs fell 55.3%, sports cars slumped by 43.2% and utility vehicles dropped by 42%. SUVs were the strongest segment with 21.9% of the market, despite a decrease of 26.4%, followed by the compact segment with a 19.1% share, down 32.2%.

Fuel types

Registrations of petrol-powered cars fell by half (50.3%) in January 2021 compared to the previous reporting period, taking 37.1% of the market. Diesel also dropped by 44.8%, representing just over a quarter of new cars (26.1%). In contrast, electrically-chargeable vehicles (EVs) saw year-on-year growth of 117.8%, with a total of 16,315 new units registered, taking their share to 9.6%.

Some 45,449 hybrids were registered in January, up 47.5%, while securing 26.8% of the market. A total of 20,588 plug-in hybrid units were registered in January, up 138.3%, with a 12.1% share. Natural gas (259) and liquefied gas (340) only accounted for 0.2% of the market last month, recording a combined decrease of 35.5%. The average CO2 emissions of newly registered cars was 125.9 g/km, representing a decrease of 16.9%.

The tipping balance towards EVs, and away from internal combustion engines (ICE), follows on from a trend recorded last year. In 2020, alternative drives made up of hybrid, fuel-cell, gas, hydrogen, and battery-electric vehicles (BEVs), claimed approximately a quarter of all new-car registrations. The German government set out COVID-19 recovery plans as a springboard towards a greener economy, with a greater emphasis on electromobility. In November, it committed a €4 billion stimulus package to the automotive sector, with funds channelled into the adaptation of production lines and incentivising the purchase of EVs.

Automatic Revolution Update

The automatic revolution

Historically, automatic gearboxes were a rare beast on cars in the UK, usually reserved for the larger prestigious cars of the day, like a Jaguar or Rolls Royce. They were expensive options and did not suit smaller, low power vehicles.  Often considered sluggish, they usually had three gears and delivered poor fuel economy compared to a manual. They also tended to be expensive to repair, and had a reputation of being labelled as ‘not a true driver’s car’.

Times have changed, now automatics frequently have more gears than their manual counterparts, can be more economical, and many have racing-style steering wheel paddle shifters delivering a sportier more dynamic drive, when and if required.

Improving technology – increasing registrations

The chart below displays new car registration data from the Society of Motor Manufacturers and Traders (SMMT). The data shows registrations before 2018 favouring manual over automatic transmissions with registrations of automatic transmissions gradually increasing in market share from the start of the millennium to one in four cars by 2012. Since then the growth has been much faster, to the point where more than half of the cars registered in 2020 were automatic.

Automatic transmissions have gained ground against manual transmissions as technology has improved. Additionally, battery electric vehicles (BEVs) and hybrids are generally only offered with automatic transmissions. Taking account of electrified vehicle registrations and their year-on-year market share increases, the trend towards automatic transmissions will continue to grow.

UK car registration share by gearbox type graph

How have residual values fared over a similar timeframe?

The chart below shows the average residual value of three-year-old cars split by manual and automatic gearboxes, displayed as a percentage of original cost new price.

3 year old residual value % of cost new graph

Throughout the time frame in the chart above, there has nearly always been a premium for automatics. However, over recent years this RV premium has grown from around 2% to 4%, the exception being the Global Financial Crisis where markets including used cars were in turmoil. This trend is also seen in older cars, as shown in the chart below.

7 year old residual value percentage of cost new graph

Why has there been an increase?

Over the last twenty years, the sophistication and quality of automatic gearboxes continue to improve. These gearboxes are now available across almost all makes and models, and this improved choice has helped fuel the increase in registrations.  Indeed, as mentioned before some automatics are more efficient and produce less CO2 than their manual counterparts, meaning lower Benefit-In-Kind taxation. In recent years, the increasing popularity and supply of alternative fuel vehicles (AFVs) such as BEVs and hybrids also supports the switch from manual gearboxes.

Another reason automatics are increasing in popularity is the cost. The expense of an automatic option is now lower in percentage terms, against cost new price, compared to 20 years ago. This, therefore, boosts residual value percentages, especially when in high demand as they are today.

Underlining the increase in demand for automatics, driving habits continue to change. According to data published by the DVLA, under 4% of automatic-only driving tests were taken 13 years ago, this has now increased to nearly 10%.

More choice, improved technology, increasing penetration of Alternative Fueled Vehicles, combined with increasing traffic congestion, makes choosing an automatic more compelling than ever. Taking account of limited used wholesale supply, the Glass’s team believes automatic values will remain strong.

The Van’s Headlights: The Rise Of The MAXUS Brand

This month the Van’s Headlights looks at a commercial vehicle brand that is relatively new in its current form to the UK. It is catching the eye, not only with its latest vehicles but also with what is in the pipeline.

Although the name MAXUS may be new to a lot of people, its origins are deeply rooted in UK manufacturing history with links that can be traced back to 1896.

Background

In 1896, two local families founded the Lancashire Steam Motor Company in the town of Leyland, Lancashire. The company was renamed Leyland Motors in 1907 and later became the Leyland Motor Corporation (LMC), as they diversified into the manufacture of petrol-driven trucks, buses and electric trolleybuses. The company expanded further into car manufacturing, acquiring Triumph and Rover in 1960 and 1967. In 1968 LMC merged with British Motor Holdings to become British Leyland Motor Corporation (BLMC) with the company holding a 40% market share.

Although BLMC held household marques such as Mini, Jaguar, Rover and Land Rover within the group, management was poor, leading to its eventual collapse and part nationalisation in 1975. It was at this time that BLMC was restructured and renamed British Leyland. The company went through further name changes to BL Plc in 1978 and then The Rover Group Plc in 1986. By this time, marques including Austin, MG, Freight Rover and Leyland Trucks were part of the group as well as the dormant trademarks of Triumph, Morris, Wolseley, Riley and Alvis.

In 1987, Freight Rover and the Leyland Trucks division were sold to Dutch company DAF Trucks which was renamed DAF NV in 1989. The trucks were manufactured in Eindhoven and Leyland and the vans in Washwood Heath, Birmingham and sold under the Leyland DAF banner in the UK.

Following a management buyout in 1993, the Leyland DAF Van (LDV) company was formed. LDV produced the 200 and 400 Series and then the Pilot and Convoy until 2004 when, after several years in the making, the production of the all-new Maxus started. The new project was originally meant to be a joint venture between LDV and Daewoo, however, Daewoo went into liquidation in 2000.

MAXUS LDV pilot van green
MAXUS LDV Convoy van black

LDV soldiered on moving 6,000 tons of tooling from the Daewoo plant in Poland transferring it to Birmingham by road and rail to reduce costs. The Maxus eventually launched in 2004, but with the additional costs, LDV came under further financial pressure and went into administration briefly the following year. The company was saved in 2005 when US investors Sun Capital bought them.

LDV MAXUS range 3 vans

In July 2006, Sun Capital sold LDV to the Russian van maker, Gorkovsky Avtomobilny Zavod (GAZ) Group with a plan to expand production in Birmingham by adding new product lines and entering new markets. GAZ also planned to produce vehicles in Russia and sell an additional 50,000 units annually worldwide. However, due to the global financial crisis in 2008 and a lack of investment, GAZs plans never materialised.

Production ceased at the Birmingham factory in December 2008 when a last-ditch attempt to save LDV by the British Government and WestStar Corporation failed. LDV continued to sell its existing stock but was sold in 2010 to the Shanghai Automotive Industry Corporation (SAIC).

Renamed as the MAXUS V80 for the Chinese market and selected left-hand drive markets in Europe, the range was re-launched with only minor cosmetic upgrades.

LDV MAXUS V80 front side union jack

In 2015, The Dublin-based Harris Group secured the distribution rights to the MAXUS in the UK, Ireland, Channel Islands, Isle of Man, Malta and Cyprus. Utilising the strong historical links with the brand in these markets, the V80 diesel range and the EV80 electric variant were sold as LDV badged products.

Acclaim for LDV grew over the next five years, winning the Greenfleet LCV Manufacturer of the Year Award last year, whilst the EV80 also won the Motor Transport Clean Fleet Van of the Year.

It was also last year that SAIC revitalised the brand. Now distributing their products to almost 50 countries and regions across the globe, LDV was rebranded as MAXUS across right-hand drive Europe in a global realignment with the rest of the group. This change coincided with the launch of two new ranges that MAXUS hope will underpin the brand’s future.

If further proof was needed, Harris has confirmed its commitment to growing MAXUS operations in the UK by announcing its plans to open a headquarters during 2021.  Housing MAXUS’S UK employees, the new head office in Birchwood Park, Warrington will offer warehousing and a parts depot as well as office space.

The current offering

SAIC MAXUS Deliver 9 white van
MAXUS LDV EV30h van

The all-new Deliver 9 van range replaces the outgoing V80 and EV80 models, with both diesel and eDeliver 9 electric van and chassis variants available as part of the range. The smaller eDeliver 3 all-electric van range is available as a van and platform cab and designed to compete in the urban delivery market.

Huge investments in development, technology, specification and quality secures the MAXUS range as a genuine challenger to the established brands.

eDeliver 3Deliver 9eDeliver 9
– Vans and platform cab
– Short and long wheelbases
– Aluminium and polymer composite construction
– Two battery options – 35kWh and 52.5kWh
– Up to 151-mile range – WLTP combined
– 5-80% rapid charge in 45 minutes
– 7kW home charger gives 80% charge in 10 hours
– Maximum 6.3cu.m. load space
– Cruise control
– Infotainment system
– Comprehensive comfort and safety features
– Payloads up to 1,200kg
– 5yr/60,000-mile vehicle warranty
– 8yr battery warranty
– Priced from £24,000 plus VAT, after Plug-in Van Grant (PiVG)		– Short, Medium and long wheelbases at 3,500kg GVW
– Vans and derivatives plus custom vehicle conversions
– Two trim levels
– New 2.0-litre 163bhp Euro 6d compliant diesel engines
– Comprehensive comfort and safety features
– Infotainment system
– Ample storage, cup holders
– Load volume between 8.1cu.m.-12.3cu.m.
– Payloads up to 1,520kg
– 5yr/125,000-mile warranty
– Priced from £27,150 plus VAT		– Medium and long wheelbases at 3,500kg GVW (optional 4,050kg upgrade)
– Vans and derivatives plus custom vehicle conversions
– Choice of three battery options – 51.5kWh, 72kWh and 88.55kWh
– Range between 112 miles and 185 miles – WLTP combined
– AC and DC charging as standard
– 5-80% rapid charge in 45 minutes. 100% in 80 mins.
– 7kW home charger gives 80% charge in 10 hours
– Maximum 11cu.m. load space
– Payloads up to 1,200kg
– 5yr/60,000-mile vehicle warranty
– 8yr battery warranty
– Priced from £55,000 plus VAT, after Plug-in Van Grant (PiVG)

The Future

The future looks bright for SAIC. The largest automotive group in China, they currently employ almost 100,000 staff and produce almost seven million cars, vans, pickups, motorhomes and trucks each year.

The next vehicle to be brought in under the MAXUS banner is muted to be the T70 2.0TCDI diesel pickup, which again will be supported by a 5yr/125,000-mile warranty. There is also a T70 electric pickup available in home markets with a stated range of 535km (330 miles) and an 80% charging time of 36 minutes.

The 2020 Chengdu Auto Show saw the new MAXUS pickup officially revealed. Powered not only by a twin bi-turbo diesel engine generating 510Nm of torque, the aggressively styled pickup will also be powered by pure electric, hybrid, and fuel cell technology. The interior will feature twin screens with multimedia and 5G technology and a high level of specification.

In September last year, SAIC announced that they had created Jieqing Technology Co to provide fuel cells and engineering services for the automotive industry. The plan is to research, develop and sell in the region of 10,000 hydrogen vehicles per year and to exceed 30,000 units globally by 2025. The world’s first hydrogen fuel cell MPV called the MAXUS EUNIQ 7 has been launched in China, with its third-generation autonomous fuel cell technology being applied to future light and heavy trucks, buses and other commercial vehicles.

SAIC has the vision to be at the forefront of the automotive industry promoting new energy vehicles and technologies and is currently work closely with the Chinese Government, Shanghai Municipal Government and Shanghai Airport Group to improve the economic efficiency of hydrogen fuel production, storage and transportation. There are also plans for a new hydrogen infrastructure that will include over 1,000 hydrogen filling stations by 2030.

Vendor opportunities at online sales

One of the biggest step-changes in vehicle remarketing happened in 2020 as a result of COVID-19. To keep the used car market moving throughout lockdown, auction companies switched to an online-only sales model. Whilst nothing new for some companies in the sector, for most auctions, online business only accounted for a part of their sales. Whilst online buyer numbers have grown in recent years, full engagement was not predicted in the short term, with a significant hardcore of buyers still preferring to attend physically so they could touch and personally inspect the stock on offer for themselves.    

The result was surprising, strong online buyer engagement from the start. This grew quickly to the point where some auction groups are not planning to recommence physical auctions, as online-only has proved so successful. In the current climate with the COVID-19 pandemic dominating the way we live our lives, it is perhaps understandable that buyers will not want to mix with others in auction halls. Additionally many have seen the benefit of being able to access multiple sales across the country on the same day, increasing the pool of stock they can choose from, rather than committing to attend one physical site. Not to mention buyers no longer need to travel and stand in what can be at times very cold auction halls. That said, some auctions will continue to operate traditional physical auctions and these are likely to remain well attended.

The rapid increase in online engagement has also changed the way that trade buyers assess stock condition. No longer able to physically inspect vehicles for themselves, they now rely on photography, condition reports and auction grading.  As a result, vehicles with condition issues are easily highlighted, impacting hammer prices.

Many buyers shy away from vehicles towards the higher end of auction grades with condition issues, as it delays the time taken to get them on the forecourt, with grades 4 and 5 often achieving disproportionately lower bids. Most buyers appear content to bid in line with Glass’s trade value for grade 3’s and even more for grade 2 and 1. The question here is the potential opportunity for vendors to refurbish vehicles before a sale, to maximise their returns.

Analysis conducted by Glass’s shows the average price gap between a grade 4 and grade 3 condition car in 2020 was £510 as shown in the chart below, with the gap increasing in the second half of the year once the major auction groups switched to online-only.

Grade comparison graph 2019-2020

The analysis is based on auction observations gathered throughout 2020 but excludes the lockdown months of April and May. Glass’s analysed typical Fleet aged cars between 2.5 and 4.5 years of age. It is clear to see the opportunity is there for vendors to maximise their returns by refurbishing cars from grade 4 to grade 3.

 It is also evident that there is an opportunity to turn grade 3’s into grade 2’s, although in 2020 that was more pronounced following the end of Lockdown-1 and throughout the second half of the year. Whereas the gap between grade 4 and 3 is consistent throughout the year. Of course, refurbishment is an investment and costs vendors in terms of money and time. However, it is worth serious consideration as not only does it increase hammer prices it also enhances a vendor’s brand reputation, as buyers become used to improved condition standards being consistently offered.

Used Car Market Update December 2020

Used Car Auction Wholesale Market

Finally over, 2020 will be remembered above all for a certain virus that wreaked havoc around the world and across our global industry. For a whole year, COVID-19 has affected every aspect of our lives and it will have a clear effect on 2021. Lockdowns, mask-wearing and travel restrictions, unimaginable this time last year, have become part of our life and have unsurprisingly impacted the UK’s car markets.

New car registrations were down almost 30% due to reduced demand and severely impacted new car supply. Used car sales were also down, although it was good to see how quickly the used car retail sales switched to safely distanced online sales processes. Due to the various travel and gathering restrictions, auction providers suspended physical sales and now rely entirely on online auction portals. Fortunately, buyers adapted quickly and whilst overall sales volume for 2020 was down from 2019, first-time conversion rates and average sales prices were both up versus 2019 (3.6% and 20.6% respectively).

Overall sale volume 2020 versus 2019 December 2020

Specifically analysing December with Glass’s key metrics of first-time conversion rate and percentage of original cost new: the conversion rate of 72.4% was 5.2% higher than in November but almost 13% lower than the 85.3% achieved in December 2019. The average percentage of the original cost new was up 3.0% and 7.4% against November 2020 and December 2019 respectively. These results reflect the trends seen throughout the year, fewer cars selling with values holding up well. Given the circumstances, this is more positive than the expectations suggested.

First time conversion rate graph December 2020
Percentage original cost new graph December 2020

Despite their increasing popularity in the new car market, demand for HEVs (Hybrid Electric Vehicles) and BEVs (Battery Electric Vehicles) at auction continues to be lower than their ICE (Internal Combustion Engine) equivalents. Additionally, cars that require preparation work or are lack specification are also proving less desirable. This trend became more apparent as 2020 progressed. It appears buyers will still pay good money for the “right” stock, however, as times are more challenging, buyers are less keen to buy cars requiring additional preparation or that are outside of their comfort zones.

The graph below shows first-time conversion rate by fuel type and indicates that buyers are still more comfortable buying petrol and diesel cars rather than alternative fuel types. Petrol and diesel-powered cars achieve virtually the same conversion rates, with hybrids scoring a lower value and BEVs most susceptible to changes in supply and demand.

First time conversion rate graph split by fuel type December 2020

Used Car Retail Market

December is traditionally a three-week month due to the festive break. With the challenges of the November lockdown in England and other restrictions across the UK, the number of used car retail sales was 7.9% lower than December 2019 and increased 9.4% versus November 2020. Interestingly, whilst the average sale price was not too dissimilar to the averages for November 2020 and December 2019 – 1.5% higher and 0.8% lower – the average age of the cars sold, at 49.4 months, was 1.8 months younger than November but a notable 9.4 months older than in December 2019.

Used car retail market observations December 2020
Average sale price graph December 2020

Glass’s Live Retail pricing tool measures the length of time a car spends on the forecourt. This is a useful barometer of the state of the used car retail market – the days to sell are lower when there is good demand and higher when times are tougher.

The average in December was 45.5 days to sell. This was 7.6 days longer than in November, but only 0.8 days longer than in December 2019, so in keeping with the time of the year. To achieve these sales, the average discount required was also higher in December than in the previous month, up from 2.5% to 3.1%, but still favourable when compared to the 3.7% average discount for December 2019.

Average days to sell graph December 2020

Used car sales outlook

With the UK once again in a state of lockdown, the UK’s used car market has got off to a subdued start. The rollout of the vaccination programme and the agreement of a Brexit deal will help promote a degree of positivity and should translate into a recovery of the markets, although this will not be truly apparent until the second quarter of the year.

New car registrations were 29.4% down in 2020 from the total achieved in 2019 and whilst volumes will recover through 2021, registrations are unlikely to achieve “normal” levels this year. There are concerns that the significant reduction of registrations in 2020 will decrease the supply of sub 24-month-old “nearly new” vehicles, particularly diesel-powered cars. This concern is illustrated by the 2020 market share for diesel. The diesel market share decreased from 25.2% in 2019 to 16.0% in 2020 and equated to a 55% drop in volume. Petrol-power also saw large drops – although not to the same scale – which will also lead to a shortage of supply.

Alternative fuel vehicles

New car registrations in 2019 were primarily driven by availability rather than demand. Therefore the apparent swing towards alternative fuel should be viewed with a degree of caution. It is true to say that the market is undoubtedly moving away from pure ICE to alternative fuel vehicles, but 2020 was not a normal year and makes valid conclusions difficult to make. Indeed, 2021 may see supply distorted again, potentially in favour of ICE as manufacturers attempt to catch up on deliveries delayed from last year. However, with the increasing availability of PHEVs, HEVs and BEVs these powertrains will likely continue to take market share from traditional ICE variants over the coming months and years and continue to change the availability of fuel types at auction.

Moving forward, what can be said with a fair degree of certainty is that 2021 is going to be another “fascinating” year for both new and used car sales, with a much higher percentage of online sales than ever before.

Upbeat outlook but not without challenges

1.63 million new cars hit UK roads in 2020 according to figures released by the Society of Motor Manufacturers and Traders (SMMT). With over 680,000 fewer cars registered, 2020 produced the lowest annual registration total since 1992.

The national lockdown between March 23rd and June 1st accounted for a significant proportion of the losses, with the market down over 615,000 units by the end of June. A further lockdown in England in November, together with enhanced restrictions periodically affecting the other three nations of the UK, added to an already challenging new car market. Dealers introduced ‘click and collect’ services part way through Lockdown-1, and enhanced online sales solutions enabled dealers to satisfy pent-up demand. These developments will already be paying dividends as the UK once again finds itself in a national lockdown, expected to last until the beginning of March at the earliest.

The wholesale used car market was somewhat subdued in December, with little evidence of a serious bounce-back following November’s lockdown. That was not surprising as December tends to be one of the weaker used car retail months, with Christmas shopping higher on the public’s priority list. The first-time conversion rate was slightly better than November’s at 72.4%, although that was almost 13 percentage points lower than December 2019.

As we look to the year ahead and consider what is in store for the new and used car markets, COVID-19 remains the biggest challenge. Thankfully, the UK Government achieved an 11th hour Brexit trade deal, averting import tariffs, so that is one less problem for the new car market to contend with.

It is encouraging to see the rapid roll-out of COVID-19 vaccines, however, it is likely to be several months before the UK sees significant coverage, making further restrictions likely. The identification of a new, more easily transmissible variant of COVID-19 is a worrying development and has led to the latest national lockdown. This will undoubtedly affect new car registrations in at least January and February, and the impact will be considerable when compared to last year’s numbers, as the effects of COVID-19 did not impact that period. As we move through March and into the second quarter, which last year was badly affected due to Lockdown-1, registration totals should begin catching back lost ground and by year-end could reach around the 2 million mark.

The used car market should burst back into life once the Government gives a firm indication that the latest lockdown is to end. Until then, Glass’s expects continuing lack-lustre activity. Despite the challenges that lay ahead, the outlook for the used car market remains upbeat, with no crash in used car values expected.

Used-car markets and RVs under limited pressure in 2021

Senior data journalist Neil King explains Autovista Group’s key predictions for the year ahead, focusing on used-car demand and residual values in this second part.

Europe’s big five markets all suffered double-digit declines in new-car registrations in 2020, but used-car transactions exhibited more resilience. The exception is Italy, which suffered the same year-on-year in used-car transactions in Italy as new-car registrations, 27.9%, according to industry association ANFIA.

In contrast to the dramatic 29% decline in new-car registrations, used-car transactions in Spain declined by 12.8% in 2020, to 1,963,053 transactions, according to GANVAM, the Spanish dealers’ association.

‘The used-car market in Spain is always more favoured than the new-car market in times of crisis. Sales fell by only 13% in 2020, and the age structure of these sales has changed substantially in recent months and will continue to do so throughout 2021. The most notable change is undoubtedly the lower prevalence of young used cars in the market, caused by the standstill in tourism and the lack of renewal of rental fleets. In 2021, we also expect a greater share of electric vehicles in the used-car market, which accounted for just 0.2% of total sales in 2020,’ explained Azofra.

In the UK, used-car sales data are not yet available for full-year 2020, but the country’s used-car market contracted by 17.5% year-on-year in the first three quarters. Autovista Group estimates that used-car transactions were 15% lower in the year as a whole. This is only about half the contraction suffered by the new-car market. Used-car transactions are naturally expected to improve in 2021, but with a lower growth rate than new-car registrations.

Used-car transactions in France declined by a modest 3.8% in 2020, compared to a 25.5% fall in the new-car market, according to industry association CCFA. ‘The demand for diesel cars on the used-car market is still high while the supply is lower and lower, but petrol sales, which account for about 40% of total used-car sales, reached a maximum in 2020,’ explained Yoann Taitz, Autovista Group head of valuations and insights, France and Benelux. Limited growth, if any, is therefore expected in 2021.

Slight improvement for Germany

Even in Germany, where the used-car market declined by only 2.4% in 2020, according to the KBA. Schwacke expects a slight improvement in used-car sales compared to 2020. ‘The used-car business was quite successful over the past 12 months under the circumstances and sold slightly more than seven million cars by the end of the year. The forecast for 2021 is the same – around seven million cars,’ commented Andreas Geilenbrügge, head of valuations and insights at Schwacke.

Europe: new-car registrations and used-car transactions, year-on-year % change, 2020

Sales in EU 2020

Source: CCFA, KBA, ANFIA, GANVAM, SMMT

(Note: UK is estimated, based on the latest data)

RVs grow in 2020, face limited pressure in 2021

Autovista Group’s COVID-19 tracker shows that the index of residual values (RVs) finished 2020 at or above pre-crisis levels in all of Europe’s major markets. The measurements began in February, with an index value of 100.

COVID-19 Tracker index of RV 2020 graph

Source: Autovista Group, Residual Value Intelligence, COVID-19 tracker

Residual values have peaked, however, and have declined in recent weeks. Looking to 2021, ongoing COVID-19 restrictions and the economic impact, as well as the aversion to public transport, will support used-car demand. Autovista Group therefore predicts that residual values will only come under limited pressure.

Spain: difficult year

The tax rise in Spain, with the introduction of WLTP-based emissions figures, and the end to the RENOVE scrappage scheme will hinder new-car demand and means RVs may increase slightly in value terms in Spain, but a 1.1% decline is forecast in terms of trade percentage, i.e. value retention, in the standard 36-month/60,000km scenario.

‘We foresee a difficult year for the sector, especially in terms of new-car sales. However, used-car sales will resist the onslaught of the crisis better and only their average residual values will be slightly affected.’ Azofra emphasised.

‘Electric vehicles will experience greater pressure on their transaction prices in the used-car market. On the one hand, their price is still very high, which is an important market barrier, even more so in crisis circumstances such as the present. On the other hand, demand is trying to be stimulated through incentive schemes, so it will be difficult to maintain their used-car price. In addition, the recharging infrastructure is still insufficient, the poorest in the big five European countries, which reduces their development space in the used-car market. With regard to the rest of the engines, we estimate small negative adjustments in petrol and diesel vehicles and greater stability for hybrid engines, which are in increasing demand.’

The end to Brexit uncertainty could serve as a positive for the UK’s new-car market, but deliveries may be affected and price rises are expected as the share of components in some engines will invariably exceed the ‘locally-sourced’ threshold. It is an incredibly difficult call but Glass’s, the UK arm of Autovista Group, forecasts a 1.4% decline in the RVs, in trade percentage terms.

Schwacke points out that fleet registrations from 2017/2018 declined somewhat in Germany and there were also almost 400,000 tactical registrations less from 2020, of which usually two thirds are sold to end customers as young used vehicles in the year after first registration.

Stable demand

‘In view of the expected stable demand, this is definitely a plus point for price development in the coming year, but supply volume will probably struggle,’ said Geilenbrügge. The return to a 19% VAT rate on new cars will also affect RVs, but a modest decline of 0.7%, in trade percentage terms, is forecast for used cars in the 36-month/60,000km scenario.

The tax changes in France, which penalise petrol cars more than diesels, and incentives for EVs present a mixed picture. ‘In 2021, there is a clear risk of having a new-car market in contradiction with the used-car market. For CO2 reasons, the fuel types that are driving the new-car market are not the most attractive ones on the used-car market. Lower supply will reduce the RV pressure on petrol cars, and the sales stop of powerful diesel engines, which are well demanded on the used-car market will especially support RVs of these specific vehicles. The high prices and bonus for EVs still impacts RVs, especially at 12 months, but the €1,000€ bonus reduction in July 2021 will support RVs more positively,’ explained Taitz. Overall, the latest RV outlook for France calls for a minimal drop of 0.4% in the prices, in trade percentage terms, of used cars.

The poorest RV outlook is in Italy, where used cars have not weathered the COVID-19 storm better than new cars and the introduction of additional incentives for new cars will apply more pressure on used-car demand and residual values. RVs of used cars in the 36-month/60,000km scenario are currently forecast to fall by 3.9% in trade percentage terms.

In a first part, King discussed Autovista Group’s predictions for new-car registrations in Europe’s major markets in 2021.

New Light Commercial Vehicle (LCV) Market December 2020

December is recognised as a quieter registration month, but with delayed pipeline orders now being delivered, the month proved stronger than expected. Registration data from the SMMT indicates the LCV market declined just 1% in December. The 27,283 vehicles registered brought the total year-end volume for 2020 up to 292,657 units compared to 365,778 units in 2019, a deficit of 20%. However, this result did allow LCV registrations for 2020 to exceed the quarter four SMMT forecast of 288,000 units.

In what has been an extraordinary and testing year for the commercial vehicle sector, with the backdrop of countrywide lockdowns, social distancing measures, redundancies, Brexit and the year-long concern of looming no-deal vehicle tariffs has all affected LCV demand during 2020.

Annual new LCV registrations 2016-2019 graph

The December segment breakdown reveals a 7.3% registration increase in vans between 2.5-3.5 tonnes sector was the only bright light. Registrations for vans under 2.0 tonnes and vans between 2.0-2.5 tonnes declined by 17.7% and 2.6% respectively. Unsettling times for the Pickup sector continue, with December registrations declining a further 29.9%. Pickup registrations for the full year were 35,691 units, down 32.7% on the 53,055 total in 2019.

Top five LCV registrations

Top LCV registrations table December 2020

Throughout 2020 the pandemic affected the whole UK economy and will continue to do so into 2021. Although a Brexit deal with Europe is now agreed, clarity over UK-EU trading relations coupled to the rollout of vaccinations is paramount to driving recovery and offering hope to both the van industry and the economy as a whole.

December Used Light Commercial Vehicle (LCV) Overview

The first half of December remained busy with auction houses confirming high levels of online sale activity with healthy conversion rates. In the run-up towards Christmas, the number of sales reduced but performance remained strong. Prices held steady in the majority of sectors with high bids continuing for retail-ready stock in the busy home delivery run-up to Christmas.

Some dealers took this as an opportunity to stock up on additional vehicles ahead of a possible shortage of quality stock, driven by adverse effects on the supply chain due to further lockdowns and the implications of a Brexit ‘no deal’.

Although sales at auction in December decreased compared to December 2019, conversion rates over the period increased by 3.9%. At the same time, Euro 5 stock made up over 60% of sales, highlighting the shortage of quality later year stock in the marketplace.

As we move through another period of lockdown, the outlook suggests further stock shortages through the first quarter of 2021. Demand for home delivery shows little sign of abating and as a result, prices in most sectors look set to remain high.

December in detail

Glass’s auction data shows the overall number of LCV sales in December declined by 33.3% versus November 2020 and by 4.6% over the past twelve months. First-time conversions decreased 1.8% on the previous month, with the 4×4 sector again most heavily affected.

December also saw average sales prices increase by 5.2% versus November and were 11% higher than the same point last year – the third highest in the last twelve months. The average age of sold stock decreased from 73.5 months in November to 72 months in December and was 2.1 months younger than the same point last year.

In line with sales of younger vehicles, average mileages also decreased from 78,205 miles in November to 78,005 miles in December. However, December’s average mileage is 560 miles higher than at the same point last year.

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

New Car Market Update December 2020

New car registrations fell by 10.9% in December 2020, according to figures released by the Society of Motor Manufacturers and Traders (SMMT), marking the eleventh monthly deficit compared to 2019. The full-year total was 29.4% lower than 2019 at 1.63 million cars, due to challenging market conditions brought about by the UK’s battle with COVID-19.

Total new car registrations monthly graph December 2020

The fleet market fared slightly better than retail in December, recording an 8.3% drop in registrations, whereas private retail fell by 13.9%. However, full-year results show that whilst fleet registrations accounted for the lion’s share at 52.1% of the market, compared to 2019 they were over 31% lower. Private retail gained 1.7% market share but registrations fell by 26.6%, underlining the effect that COVID-19 has had on the new car market throughout 2020. 

Despite the challenges thrown at the new car market, there remained some positivity, with alternative fuel vehicles (AFVs) continuing to grow. In December alone, almost 22,000 battery electric vehicles (BEVs) were registered with December’s top-selling car the Tesla Model 3, pushing Volkswagen’s Golf and Ford’s Fiesta into second and third places respectively.

Self-charging hybrids maintained the biggest share of the full-year AFV pot, growing by 12.1% to just over 110,000 units, with plug-in hybrids growing 91.2% to almost 67,000. However, the biggest turnaround has been in BEVs, which grew by 185.9% to 108,205 units, helped by increased demand from the fleet sector due to very attractive benefit in kind tax rates for company car users.

Petrol and petrol mild-hybrid remain the most popular fuel type, but understandably suffered falling volumes of nearly 33%. Although the bulk of the fall is attributable to COVID-19, its market share has fallen as AFVs continue to grow. Diesel and diesel mild-hybrid volume almost halved to 322,715 cars, which is only 13.1% ahead of AFV registrations. 

Looking ahead to the first quarter of 2021, the new car market faces challenges. A national lockdown instigated in response to spiking COVID-19 cases and the identification of a new, more transmissible disease variant began on January 5th. This will certainly hamper new car sales. Whilst ‘click and collect’ services should help, demand will be subdued badly affecting registration activity. Should ‘Lockdown-3’ end at the beginning of March as has been intimated, we should expect a bounce-back with registrations recovering throughout quarter two.