Fuel Type: Electric Vehicle (BEV)

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.

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.

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.

https://soundcloud.com/autovistagroup/has-the-automotive-industry-become-driven-by-regulations

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.

Launch Report: Skoda Enyaq offers quality and range at competitive prices

The new Enyaq benefits from Skoda’s well-perceived brand image, representing high quality at competitive prices. As a mixture between a SUV and an estate car, it is an attractive vehicle concept for families, with a comparatively high boot volume of 585 litres and a long range of over 500 kilometres/300 miles with the higher-capacity battery. The Enyaq also has a small turning circle – even better than its Volkswagen ID.4 sibling – meaning it is very well suited for inner-city use.

The interior has a clean and appealing dashboard with a 13-inch touchscreen, and is spacious, with practical storage compartments. Options like rear blinds, electric boot opening, electric seats with massage and memory functions, and a panoramic roof are available on all versions.

The entry-level model is offered at a very competitive price, especially compared to Korean rivals with less powerful engines. An ‘RS’ version is coming later this year, with higher power output and a more dynamic exterior, which will attract sportier drivers. At least for a while, the Enyaq will be in high demand as one of the best-value models in its class.

Click here or on the image above to read Autovista Group’s benchmarking of the Skoda Enyaq in Germany, Spain, and the UK. The interactive launch report presents new prices, forecast RVs and SWOT (strengths, weaknesses, opportunities and threats) analysis.

The Van’s Headlights: What the future looks like

LCV Van sales – The Future


The Past

The pandemic hit the light commercial vehicle (LCV) industry like a bolt out of the blue. Production lines ground to a halt with limited volumes of new vehicles entering the country whilst the sale of used stock in the UK ceased. The first time the industry had come to a complete standstill since the Second World War.

Whilst dealerships and auction houses remained closed, there were minimal numbers of new registrations during April 2020.  ‘Click and collect’ was the only way to get essential new and used LCVs to the NHS and the wider buyer base. To move items efficiently and in bulk, LCVs were needed and plenty of them. The shortage of new stock meant that there was a huge spike in demand for used LCVs, both from the wholesale market and from rental companies.

A year later and the UK is beginning to see a light at the end of a very long tunnel. The vaccination rollout has been quick and effective in easing personal restrictions. Due to lockdowns across Europe, the supply of parts to manufacturers and the production of finished vehicles, has been slow and at time intermittent. This in turn has forced fleets to retain their current fleets longer than expected, creating a shortage of used LCVs in the market. 

The mainstay of used LCV supply in the UK market has always been the auction houses. Over the last twelve months, they have adapted quickly to a new way of remarketing vehicles.

Historically, it was possible to tell what day of the week it was by the auction centre you were attending. The vans would be lined up in rows and each van would be driven into the auction hall and sold physically, with the sale relayed to online buyers to bid on. Fast forward to April 2020 and the pandemic had locked down the country. No public gatherings were permitted and the sale of used LCVs had all but stopped, although demand was sky-high.

The Future

Online auctions for used LCVs started in 2002, always playing a supporting role to physical auctions. Each year, online popularity has increased and before the pandemic made up nearly 50% of all sales. The change to 100% online sales during the pandemic proved an instant success. With images and inspection reports used to support vehicle sales, the vehicles themselves no longer needed to be at the sale site. The gradual increase in online sales would have continued over the coming years if there had been no pandemic, but the restriction on movement and demand for vehicles has accelerated this change. 

There are so many positives to 100% online sales:

  • Reduced vehicle movements at auction – better for the environment
  • Buyers no longer need to be at auction – better for the environment, reduction in costs
  • Vendor movement of vehicles to auction site eliminated – better for the environment, cost savings
  • Trade buyers able to view multiple online sales at the same time
  • More relaxed buying/selling experience
  • Vendor representation at most online sales – quicker decisions on bids

Understandably, some aspects of online sales will take time to adjust to as buyers fully embrace this change. These are mainly:

  • Buyers not being able to meet up in the halls to discuss the market
  • Buyers not being able to touch, see and hear the vehicles as they are driven through the hall
  • Not being able to assess any damage in real-time

Other important concerns, but easily remedied aspects relate to:

  • Inadequate or poor quality images
  • Incomplete mechanical inspection reports
  • Incorrectly described vehicles

As the UK starts to ease lockdown restrictions, the change in buying habits due to the pandemic has been noticeable. Production of new vans is struggling to keep up with demand forcing buyers into the used market. The lack of a normal supply of de-fleeted vans into the used market has meant that later year stock is at a premium. This has meant that there has been a significant upward realignment of used van values as demand continues to outstrip supply.

The used light commercial vehicle sales arena has changed and this is the future.

Carmakers successfully pooled emissions to meet 2020 EU targets

Autovista Group senior data journalist Neil King investigates the emissions performance of major carmakers in the EU in 2020. In this first part, King discusses pooling and focuses on manufacturers that successfully spread their emissions over a larger fleet average.

The issue of CO2 targets has given many carmakers a headache in recent years. Until 2016, many relied on diesel engines to help them achieve their goals. Yet, the collapse in trust and sales of this technology left manufacturers scrambling for alternatives, especially as consumers switched to the higher CO2-emitting petrol cars and SUVs.

The best option was to push ahead with plans for both hybrid and electrically-chargeable vehicles (EVs). Some carmakers were more advanced in developing these technologies, which led to several manufacturers combining their fleets into pools, spreading out CO2-emission figures over a larger area and reducing the chances of a fine.

Manufacturers established a number of pools to help meet their 2020 and 2021 targets, and all but one was successful last year. Volkswagen Group, part of the biggest pool by market share, missed its projection by a small margin, just 0.5g. However, every carmaker managed to reduce their average fleet emissions, compared to 2019.

Running the numbers

From 2021, the average emissions target for new cars registered in the EU is set at 95g/km CO2. For every 1g/km of CO2 a manufacturer exceeds its average emissions target by, it is fined €95, multiplied by its volume of new-car registrations in the preceding year.

However, the highest-polluting 5% of new cars registered in 2020 are excluded from the 2021 fines calculations, which serves as a transitional phase for carmakers. Based on analysis of data distribution, Autovista Group calculates that this reduced average CO2-emissions figures by about 7%. From 2022 onwards, however, full compliance of all new cars is required (i.e. new cars registered in 2021 onwards).

Pool party

The idea of a pool is simple. A carmaker struggling to meet targets reaches out for help to those who are more successfully managing their CO2 output. Once in the pool, both sets of emissions figures are combined and spread out over an expanded fleet, reducing the average and, in most cases, helping the struggling company achieve its target and avoid a fine. The compliant manufacturer will likely receive financial compensation for its help.

Infographic

Of all the major manufacturers in Europe, Toyota was in the strongest position to meet its emissions target in 2020. Compared to their 2017 level, the Japanese group only had to reduce their average fleet emissions by 9g CO2/km (9%). The manufacturer has not revealed detailed emissions figures but has confirmed it met its target, supported by strong demand for its hybrid-electric vehicles. Therefore, the OEM was able to help fellow Japanese manufacturer Mazda, which only launched its first BEV, the MX-30, in 2020.

Similarly, Renault, Nissan and Mitsubishi pooled their emissions. The Renault Group itself benefitted from the Zoe BEV and its extended range of E-Tech hybrid and plug-in hybrid (PHEV) variants of models such as the Clio, Captur and Megane. Nissan’s fleet-average emissions were aided by the Leaf BEV and, combined, Renault-Nissan was only 2g/km short of its target in the first half of 2020.

In order to comply with European emissions targets going forward, Mitsubishi Motors will source models from Renault that meet regulatory requirements. ‘Starting 2023, Mitsubishi Motors will sell two “sister models” produced in Groupe Renault plants, which are based on the same platforms but with differentiations, reflecting the Mitsubishi brand’s DNA,’ Renault revealed.

Recall issues

As an example of the fine lines that manufacturers walk to meet their emissions targets, Ford was forced to consider pooling towards the end of 2020. The carmaker issued a recall of its Kuga plug-in hybrid (PHEV) in August of last year. As the carmaker did not have a battery-electric vehicle (BEV) in its fleet, it was heavily reliant on the PHEV to lower CO2 levels.

Ford had already faced a higher mountain to climb, with its 2017 emissions figures showing it needed to reduce CO2 output across its fleet by 26g/km (21%). The recall led the manufacturer to announce it was considering pooling, in order to meet its targets.

‘The current issues with the Kuga PHEV, resulting in a stop-ship and stop-sale have affected our plan to meet the EU’s 2020 emissions regulations for passenger vehicles on our own,’ Ford said to Autovista Group at the time. ‘Therefore, just as many other OEMs have done in Europe, we now intend to join an open pool with other OEMs for passenger vehicles.’

Ford entered into an agreement with Volvo in November. Although the US carmaker has not provided detailed figures, it did meet its 2020 target, likely thanks to this pool.

Sought after

Fiat Chrysler Automobiles (FCA) faced the biggest challenge to comply with European emissions targets. The US-Italian group needed to lower their emissions by 29g/km (24%) compared to 2017 levels. This largely explains why FCA pooled its emissions figures with US BEV manufacturer Tesla.

The move brought FCA’s average CO2 emissions down by offsetting the company’s petrol and diesel vehicles from Fiat, Jeep, Alfa Romeo and Maserati against the zero-emission outputs of Tesla’s BEVs. CEO Mike Manley already suggested in August 2019 that the Italian carmaker would be compliant because of the regulatory credit deal with Tesla. Honda was subsequently brought into this pool too.

Tesla is the largest BEV-only carmaker in Europe, having entered the market in 2008 with its limited production Roadster, before launching its first BEV sedan, the Model S, in 2012. The manufacturer built up a base of BEV models while other carmakers continued to promote ICE and was well-placed to capitalise when consumers started considering alternative options. Therefore, its CO2 credits would provide a good opportunity for carmakers to reduce their overall levels. While the US company sells fewer vehicles than bigger players in the automotive market, average emissions across its entire fleet will be no higher than zero.

The FCA annual report states that CO2 emissions data for last year is not yet available but: ‘the 2020 result is expected to move toward the 95g CO2/km EU average target due to the adoption of a multi-faceted approach which leveraged conventional technologies, high-voltage electrification, pooling arrangement contribution and compliance rules for 2020.’

‘The quantity of CO2 emissions in 2021 will be affected not only by market evolution (such as the expected reduction of diesel market share) but also by the commercialisation of low-emission and electrified vehicles. Finally, according to applicable EU regulations, current pooling arrangements for emissions compliance for passenger cars entered into by FCA are expected to apply in 2021,’ FCA added.

However, at the start of 2021, FCA merged with PSA Group to form Stellantis. CEO of the new manufacturing group, Carlos Tavares, has since been reported to have terminated the agreement with Tesla. As PSA Group met its emission targets in 2020, and as FCA’s figures will now merge with these, the company should be in a position to achieve its CO2 goals at the end of this year.

In the next instalments of this series, Neil King will explore those manufacturers who met their emissions targets on their own and carmakers who failed to reduce CO2 sufficiently, whether they pooled or not.

Used Car Market Update – April 2021

Used car market gathers pace

As expected, the UK used car auction market continued to gather pace following the easing of some restrictions in March. Sale volume and first-time conversion rate both continued the improvements seen for March, albeit not to the same degree, whilst the percentage achieved of the original cost new also increased month-on-month. In summary, the three key metrics all continued to move in the right direction, with more cars sold first-time and for more money.

Used Car Market Conversion Rate Graph April 2021
Used car market percentage original cost new graph April 2021

Demand continued to grow during the month, with premium SUVs and convertibles particularly sought after. Cars that required work were less desirable, so whilst there was a clear demand for vehicle stock, whether to fill up sites depleted during the lockdown or to prepare for increasing demand, it is clear that buyers were generally looking for cars ready for customer sale with the minimum delay or additional expenditure.

Used Car Retail Market

The metrics for the used car Retail market continue the positive theme from March. The number of observed sales increasing 13.6% – not as strong as the surge seen for March, but impressive nonetheless. The average sale price decreased a little. This is likely due to the increase in the sales of lower-priced cars. Buyers of these cars appeared to be less keen during the lockdown, which was reflected in the auction results, but the opening up of retail sites to more “normal” sales procedures saw a boom in demand at the auctions as retail demand increased.

Used car market retail observations graph April 2021
Used car market average retail sale price graph April 2021

Glass’s Live Retail prices measure the length of time a car spends on the forecourt, with a shorter duration generally pointing to a stronger retail market. The Average Days to Sell in April did improve compared with March, down from 48.7 days to 47.3 days, although the improvement may not be as great as some may have been expecting. However, with all of the recent restrictions, many cars may inevitably have been in stock for longer than would be desirable in a “normal” market.

The opening up of retail sites and the rise in demand is giving many retailers a confidence boost, so the practice of trading out overage stock added to the jump in retail sales will result in a bigger stock day improvement in May.

Used car market average days to sell graph April 2021

Outlook

Early indications for May are that the used car auction market is continuing to improve. Strong demand is continuing to drive values up, and whilst this is undoubtedly good news, dealers should be cautious. With many retailers topping up their sites to pre-lockdown stock levels whilst also keeping up with the increased demand, values may over recover. Supply into the auction market is also improving, so whilst May is shaping up to be a strong month for both auction and retail, the growth in auction values may slow towards the end of the month.

Webinar: How automotive megatrends affect used-car markets

The automotive industry is in the midst of a major transformational period. New technologies are generating opportunities in vehicle development, mobility services and sales channels.

Autovista Group identifies five megatrends in its latest webinar: How automotive megatrends affect used-car markets. These are:

  • Autonomous technology
  • Connected technologies
  • Digitisation of sales
  • Electrification
  • Shared mobility

Autovista Group Daily Brief editor Phil Curry is joined by chief economist Christof Engelskirchen and Sonja Nehls, director of Car to Market and Consulting, to discuss the most prominent trends. You can watch the full presentation below.

The webinar also included a look at the opportunities and threats to the used-car market and how activities such as functions-on-demand (FoD) may impact residual values (RVs) as the technology becomes more widely adopted in the industry.

To download the presentation from this webinar, click here.

Further resilience in European used-car demand during the first quarter

Senior data journalist Neil King considers how the big five European used-car markets developed in the first quarter of 2021.

Europe’s big five used-car markets exhibited further resilience in the first quarter of 2021. The total volume of transactions grew year on year in France, Italy, and Spain. Germany and the UK endured single-digit declines, but dealer activity was hampered by COVID-19 restrictions. Nevertheless, the year-on-year performance of both used-car markets outperformed the respective new-car markets.

Used-car transactions in the first quarter increased by 17.9% year on year in France, according to the French industry association CCFA. This was slightly lower than the 21.1% year-on-year growth in new-car registrations. However, these figures were adversely affected by comparing to a period that included the start of the country’s lockdown, from mid-March 2020.

This situation was replicated in Italy, with 11.5% growth in used-car transactions in the first quarter of this year, according to trade body ANFIA. This compared to 28.7% growth in new-car registrations as the country entered lockdown earlier last year, on 12 March.

In contrast to the dramatic 14.9% year-on-year decline in new-car registrations in Spain in the first three months, used-car transactions increased, albeit by just 1.1%, according to GANVAM, the Spanish dealers’ association. However, GANVAM cautions that ‘the average age of used passenger cars sold until March reached 10.6 years, compared to 10.4 last year, and exceeded 14 years – compared to 13.6 in the first quarter of 2020 – in the transactions between individuals.’ This exemplifies the demand for cheap used cars across Europe as a substitute for public transport in the wake of the COVID-19 pandemic.

‘The used-car market in Spain is always more favoured than the new-car market in times of crisis. 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,’ explained Ana Azofra, Autovista Group head of valuations and insights, Spain.

Downturns in Germany and the UK

Whereas used-car demand increased in France, Italy and Spain in the first quarter of 2021, it contracted in Germany and the UK due to COVID-19 restrictions. However, the downturns were less pronounced than in the new-car markets, which rely far more heavily on the dealer network.

In Germany, the used-car market contracted by 4.6% in the first three months of 2021, according to the motor-vehicle authority KBA. However, dealerships in the country could only reopen, conditionally, from 8 March. This naturally impacted the new-car sector more, with registrations down 6.4% year on year in the first quarter. Schwacke expects a slight improvement in used-car sales compared to 2020. ‘The used-car business was quite successful under the circumstances and sold slightly more than seven million cars by the end of 2020. The forecast for 2021 is the same – around seven million cars,’ commented Andreas Geilenbrügge, head of valuations and insights at Schwacke.

The UK’s used-car market suffered the greatest downturn of the big five European markets in the first quarter of 2021, with 8.9% fewer transactions than in Q1 2020, according to the UK Society of Motor Manufacturers and Traders (SMMT). However, this compares favourably to the new-car market, which contracted by 12%, as it was more adversely affected by the closure of dealers until 12 April. Used-car transactions are expected to improve in 2021, but with a lower growth rate than new-car registrations.

‘Among the turbulence, demand for used battery-electric (BEV), plug-in hybrid (PHEV) and hybrid vehicles (HEV) remained strong in Q1. Buyers were keen to purchase pre-owned ultra-low and zero-emissions cars, helped by increased availability and more models available,’ the organisation stated.

SMMT chief executive Mike Hawes has also highlighted the positivity, commenting that ‘the second quarter will see significant growth as last year’s April and May markets were severely limited by lockdown measures. It is vital that the used market is rejuvenated to help sustain jobs and livelihoods, drive fleet renewal and support environmental progress. With car showrooms open again and the UK coming out of COVID restrictions, the sector can look forward with renewed optimism.’

Supporting residual values

The ongoing comparative strength of Europe’s big five used-car markets supports Autovista Group’s core prediction, outlined at the start of the year, that residual values (RVs) face limited pressure in 2021.

Autovista Group’s COVID-19 tracker shows that the RV index finished 2020 at or above pre-crisis levels in all of Europe’s major markets. The measurements began in February 2020, with an index value of 100. RVs retreated in most markets at the start of 2021, but have recovered again in recent weeks and remain firmly above pre-crisis levels.

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

Looking ahead, the economic fallout from the COVID-19 pandemic, as well as the ongoing aversion to public transport, will support used-car demand. Furthermore, the semiconductor shortages are curtailing supply of new cars, favouring demand for young used cars.

Autovista Group’s latest monthly market dashboard reveals that the average value retention of cars, represented in RV-percentage (RV%) terms, improved month on month in four of the big five European markets in April. Italy was the exception, where the average RV% fell, albeit by only 0.8%. However, in value terms, average RVs declined by 2% and 0.5% in Italy and Spain, respectively. This ties in with demand for cheaper used cars, in the same way that older used cars increased the average age of used cars transacted in Spain in the first quarter of 2021.

For now, RVs in the 36-month/60,000km scenario remain above levels of a year ago in all markets. But they are forecast to end 2021 slightly down compared to December 2020, except in the UK. The poorest RV outlook is in Italy, where values are currently forecast to fall by 2.3% in trade percentage terms. Used cars have not weathered the COVID-19 storm better than new cars, and the introduction of additional incentives for low-emission new cars has applied more pressure on used-car demand and RVs.

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

A strong market for both new and used LCVs

An artificially inflated 798.8% increase in light commercial vehicle registrations in April 2021 were recorded, against a backdrop of twelve months ago when nearly all registrations stopped due to coronavirus lockdowns.

This growth was largely driven by demand in the 2.5-3.5-tonne sector, where 20,037 vans were registered. In the first four months of 2021, registrations in this sector have nearly doubled those in the same period in 2020 and reflect a market that saw its largest ever April total since records began. A year-to-date total of 127,796 registrations is a rise of 79.3% overall versus 2020 and reflects a market that is 23.2% up on the five-year average.

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.

Breaking down the results highlighted huge increases for all sectors. Demand for vans under 2.0 tonnes rose by 884.6% whilst registrations in the between 2.0-2.5 tonne and 2.5-3.5 tonne sector improved by 1,042.7% and 674.2% respectively. The Pickup sector also recorded a 1,425.5% increase.

The Ford Transit Custom van combined with the Ford Tourneo Custom people carrier was crowned best-selling vehicle in the UK in April, outselling every other car and van on the market. The second best selling van was its big brother, the Ford Transit. The Mercedes-Benz Sprinter was third and the Volkswagen Transporter was fourth. PSA also returned a strong month, with five of their product ranges in the top ten places. Year-to-date Ford dominates, with four of its product ranges in the top ten. PSA also feature strongly, with the Vauxhall Vivaro, Vauxhall Combo, Peugeot Partner and Citroen Berlingo positioned in the top ten.

Top five LCV registrations

Top five LCV registrations table April 2021

The effects of the pandemic continue to distress the automotive industry. Further lockdowns and COVID restrictions in many European countries, continue to affect many vehicle producing nations and the wider supply chain. Ongoing semi-conductor, steel, rubber and even wood shortages are now compounding the situation. With this fragile supply chain still at risk of disruption, there is still some way to go before the industry returns to normal. The last year has proved though that the commercial vehicle sector is nothing but resilient. Demand is strong, registrations are up and the outlook is much brighter.

April used Light Commercial Vehicle (LCV) overview

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.

The limited numbers of sub 2-year old stock sees buyers continuing to haggle over the best examples, with additional interest from franchised dealer groups ensuring prices have remained strong during April. Only 4% of all stock sold was in this age bracket during the month.

Twenty eight percent of stock sold in April was in the 2 to 4-year-old age bracket, whilst vehicles over six-years old contributed to 39% of all sales. Although medium-sized vans again proved the most popular during April with 38.9% of all sales, prices were down 0.94% on March. Small vans followed with 28.8%, up 13.2% on March and large vans were third with 23.4% up 2.4% on March.

With the SMMT reporting another strong new registration month in April, it is hopeful that vehicle de-fleets will start to find their way into the wholesale market soon. Although this will improve the supply of stock into the used market, there remains delays surrounding the supply of new vehicles to the UK. As a result, prices look set to remain high for the remainder of the year.

April in detail

Glass’s auction data shows the overall number of vehicle sales in April decreased by 6.85% versus March 2021, whilst first-time conversion rates remained steady at 86.9%.

Average sales prices paid in April decreased by 2.84% versus March, but remain 62.78% higher than the same point last year – the first full month of the pandemic. The average age of sold stock increased from 70.8 months in March to 72.2 months in April and was 10.8 months younger than the same point last year.

Average mileages remained static during April, moving from 86,603 miles in March to 86,442 in April (-0.19%). This mileage was 14,823 miles higher than in April 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 market place.

Originally written for Commercial Fleet.

Glass’s One Minute Market Update – April 2021

New car registrations in April were unsurprisingly up on last year with just over 141,500 cars registered, according to data published by the Society of Motor Manufacturers and Traders (SMMT). This was an increase of over 3,000% on April 2020s full Lockdown tally of just 4,321.

Despite a return to sensible numbers, excluding last year’s total, April 2021 produced the lowest number of April registrations since 2011, but coming off the back of over three months of lockdown, with no opportunity for consumers to access physical showrooms, it was not a bad result. It underlines the reliance that the UK buying public has on a physical sales process, with the old adage of ‘bums on seats sells’, which refers to the need for test drives, still proving relevant in today’s market.

The wholesale used car market spluttered back into life in April, although the beginning of the month was quieter than expected. Instead of rushing out in preparation for showrooms to begin opening on 12 April, it took until the latter part of the month for customer activity to ramp up. That said, ever since, it has not stopped and continues to strengthen. The percentage of cars selling on the first time of asking increased in April by 1.7 percentage points to 84.4% compared to March. Pretty much all segments have enjoyed a significant uplift in hammer prices in the first two weeks of May, with convertible models the stand out performer, despite already seeing values increase over the past couple of months.

The outlook for the wholesale market is very good, with demand expected to remain at current levels well into June. What is a little more difficult to predict is what the level of supply will be. More part-exchanges should begin flowing through to auction channels now that the new car market is producing reasonable numbers, and fleet registrations indicate that lease vehicles are being changed, which will lead to more de-fleets, so it will be interesting to see how the supply and demand dynamic develops over the next couple of months.

New Car Market Update April 2021

April’s new car market showed some recovery as the government eased lockdown rules to allow showrooms to reopen their doors during the month.

Drawing comparisons to last year’s figures is problematic as the country was in full lockdown and registrations were almost non-existent. Therefore a 3000% increase to 141,583 from 4,321 registrations needs to be put into context. When April 2021 is compared to pre-pandemic April 2019, total registrations were lower by 12.1%, with drops across all sectors as shown in the table below.

Total registrations recorded in April table

                                                                                                     Data courtesy of SMMT

Year-to-date registrations for 2021 now stand at 567,108 units, which represents a reduction of nearly a third of the average recorded over the past decade. However, the full impact of showrooms reopening has yet to be realized given the time lag from visiting a showroom to taking delivery.

The major growth area continued to be the alternative fuel sector, with plug-ins accounting for 13.3% of the April market. Indeed, when compared to April 2019 the growth has been almost exponential as supply and choice improves.

Plug-in new car registrations April 2021 graph

                                                                                      Data courtesy of SMMT

A full recovery is some way off, especially as many manufacturers struggle to get back to full capacity around the world due to high COVID-19 infection rates. Also, the supply of semiconductors is still problematic and creating long lead times for build and delivery.

The outlook for the next couple of months is positive, as the Government continues to roll back lockdown rules coupled with the successful vaccination rollout and a low infection rate. Consumer and business confidence will keep improving and the new car market should return to a degree of normality with consumers having full access to dealer showrooms.

Subaru reveals the name of its new electric SUV

Subaru has revealed the name of its first battery-electric vehicle (BEV): Solterra. Built on the dedicated e-Subaru global platform, the C-SUV will go on sale next year in countries around the world.

The Solterra will join the ever-expanding electric C-SUV segment which features the likes of the Volkswagen (VW) ID.4, the Ford Mustang Mach-e, and the Audi e-Tron. Given the present popularity and higher residual value of SUVs, the decision by so many carmakers to opt for this segment might appear obvious, but the reasoning goes deeper.

The development of new electric drivetrains is an expensive venture, one which the higher price tags of these large vehicles can help compensate for. A BloombergNEF study also recently revealed larger BEVs are expected to reach price parity with their fossil-fuel counterparts earlier than smaller electric models, encouraging consumer adoption and directing development.

Defining a name

The new Subaru’s name was created via a portmanteau of the Latin for Sun and Earth, Sol and Terra. This naming convention signifies the need to appreciate and coexist with the planet, the carmaker explained. This effort to be seen to have a planet-friendly attitude comes as OEMs respond to a wave of climate concern by building electrically-chargeable vehicles (EVs) and foregoing fossil-fuel-powered ones.

‘Subaru gave this name to the EV to appreciate mother nature and further advance the form of coexistence with it, together with our customers, and to represent our commitment to deliver traditional Subaru SUV’s go-anywhere capabilities in an all-electric vehicle,’ the carmaker said.

Solterra will join Subaru’s line of existing SUVs, including the Ascent, the Outback, the Forester and the XV. It will go on sale globally by the middle of 2022 in markets including Japan, the US, Canada, Europe and China.

Joint development

The Solterra will sit on top of the e-Subaru global platform, which the OEM developed alongside Toyota, another carmaker looking to introduce an electric SUV into the market: the bz4X. This jointly-developed platform will enable the rollout of various EV types by combining multiple modules and components, like the front, centre and rear of the vehicle.

This modular approach to BEV platforms is a running theme for carmakers as they look to streamline development and production, as well as incorporating collaboration. For example, VW’s modular electric-drive (MEB) platform is the foundation of its ID. family, but the company also joined electric forces with Ford. In a similar vein, while the two Japanese OEMs came together to build the Solterra’s platform, Subaru emphasised its aim to realise ‘superior passive safety and vehicle stability’ within the build.

Looking past the BEV’s modular platform, the two companies also worked together on product planning, design and performance evaluation. Relying on their respective strengths, Subaru leant into its all-wheel-drive capabilities, which unsurprisingly also informed the building of the bz4X. Meanwhile, Toyota’s vehicle-electrification technology helped give the Solterra a boost, lending it attributes that ‘only an all-electric vehicle can offer.’

This modular, collaborative approach will help keep development costs down and ensure the creation of more advanced technologies. However, it will also mean the homogenisation of powertrains. On this path, many BEVs will end up sharing similar designs and capabilities on a smaller handful of electric bases. So, while consumers may only be able to choose from a few platforms, the scope for brand-based design will reside largely within the body and interior. This means carmakers will need to make sure they know what their customers want.

BEV vs ICE: a race to price parity

Battery-electric vehicles (BEVs) will achieve price parity with their fossil-fuel counterparts across Europe from 2027 at the latest. This is according to the results of a new BloombergNEF study commissioned by the clean-transport campaign group Transport and Environment (T&E).

Electrically-chargeable vehicle (EV) adoption is increasing with help from incentive programmes and expanding model offerings. In the first quarter of this year, BEVs accounted for 5.7% of EU new-car registrations, an increase of 59.1% compared to the first three months of 2020. Plug-in hybrids (PHEVs) took 8.2% of the market, equating to an increase of 175%. Meanwhile, diesel and petrol-powered cars continued to see falling volumes.

However, the automotive industry is still in the early stages of electrification. Presently, those investing in EVs have both the confidence and capital to invest in electric drivetrains. As components, particularly batteries, become cheaper and more technologically advanced, EV price tags should shrink.

Price parity

The segment will dictate a BEV’s point of price parity with petrol in the coming years, with larger vehicles becoming more affordable more quickly. According to the BloombergNEF study, light vans will lead the charge, becoming cheaper than their ICE counterparts in 2025. BEVs in the C and D segments will follow in 2026, while small cars (B segment) bring up the rear in 2027.

Source: T&E

‘EVs will be a reality for all new buyers within six years,’ said Julia Poliscanova, senior director for vehicles and e-mobility at T&E. ‘They will be cheaper than combustion engines for everyone, from the man with a van in Berlin to the family living in the Romanian countryside. Electric vehicles are not only better for the climate and Europe’s industrial leadership, but for the economy too.’

Building better batteries

So, what will be the driving force behind shrinking costs? The BloombergNEF study points to falling battery costs, new vehicle architectures and dedicated production lines as leading factors in reducing price, even before subsidies come into the equation. ‘An optimal vehicle design, produced in high volumes, can be more than a third cheaper by 2025 compared to now,’ the study states.

Source: T&E

Batteries in particular have had an important role to play as they have consistently been the most expensive EV component over the past decade. In the US, they currently account for roughly 30% of an EV’s cost. In Europe, prices are more widely spread, raising the continent’s average battery price above the global average – resulting partly from some lower-volume orders. But as battery prices fall and more optimised platforms are developed, EV prices should follow.

‘New chemistries, better manufacturing methods, innovative cell and pack-design concepts and other factors contribute to average prices per kilowatt-hour declining by 58% from 2020 to 2030,’ BloombergNEF points out. Past this point, new technologies like the solid-state battery will continue to drive down price. These smaller, more powerful units are seeing an uptick in interest from OEMs. Most recently, BMW and Ford led an investment round in Solid Power, a producer of solid-state batteries.

Plugged-in projections

Europe could see 4.3 million plug-in vehicles sold in 2025, representing roughly 28% of the market. BEVs would capture over half of those sales, with the rest made up by PHEVs as carmakers use them to meet emissions targets. In an economics-driven scenario, BloombergNEF believes BEVs could claim up to half of Europe’s market share of sales by 2030 and 85% by 2035.

T&E points out that battery-electric cars and e-vans could reach 100% of new sales by 2035 – including southern and eastern Europe, where initial take-up rates have been comparatively slow. However, this would be dependent upon lawmakers ramping up CO2 targets and producing policies to stimulate market developments including the introduction of more infrastructure. The environmental group states that without these additional policies, battery-electric cars will claim 85% of the EU market and e-vans 83%. This would mean missing Europe’s goal to decarbonise by 2050.

‘With the right policies, battery-electric cars and vans can reach 100% of sales by 2035 in western, southern and even eastern Europe,’ said Poliscanova. ‘The EU can set an end date in 2035 in the certainty that the market is ready. New polluting vehicles should not be sold for any longer than necessary.’

In April, T&E published the results of a poll of 15 European cities showing that nearly two thirds of urban residents support a ban on the sale of new petrol and diesel cars by 2030. Additionally, Volvo Cars, Uber and LeasePlan were recently among a group of companies calling for an end date to new ICE car purchases in Europe no later than 2035. While requests for electrification mount alongside evidence of EV credentials, shrinking price tags will undoubtedly increase adoption rates.   

The EU big four new-car markets deteriorate in April

Autovista Group senior data journalist Neil King explores the significance of the downturns in the EU’s four largest markets in April 2021, compared to April 2019.

New-car registrations in France, Germany, Italy and Spain continue to struggle to find a way out of the fallout from the COVID-19 pandemic. All four markets suffered double-digit declines in April, compared to 2019 figures. Moreover, the contractions were even more pronounced than in March, with all markets going into reverse.

As COVID-19 lockdowns decimated dealer activity in April 2020, the extraordinary year-on-year growth rates are meaningless. Therefore, this article focuses on more meaningful comparisons with 2019, which give a better representation of the performance of new-car markets.

France SAAR at lowest level since November

According to the latest data released by the CCFA, the French automotive industry association, only 140,426 new cars were registered in France in April. This is far below the average of 175,000 registrations for the month between 2010 and 2019. Compared to 2019, the market contracted by more than a quarter in April and is one fifth smaller in the year-to-date. Moreover, the seasonally-adjusted annualised rate (SAAR) of the French market fell to 1.63 million units last month – the lowest level since November, when dealers were closed for most of the month.

‘We are now starting to have delivery problems due to the great shortage of electronic components,’ commented CCFA spokesperson François Roudier. Component shortages have disrupted production at some car plants, including a three-week production stoppage of the new Peugeot 308 at Sochaux, the CCFA noted.

Although dealers have remained open in France, some sales channels continue to struggle because of restrictions in the country. For example, short-term rental companies have registered fewer cars ‘since people do not go on vacation and there is no business travel either,’ underlined Roudier.

The French new-car market faces another challenge later in the year as incentives for battery-electric vehicles (BEVs) will be reduced by €1,000 from 1 July. Assuming no further COVID-19 restrictions on dealerships in France, Autovista Group forecasts that the new-car market will grow by 8% in 2021, following the 25% contraction in 2020, to close to 1.8 million units. This is a slight downward revision of the 10% growth previously forecast by Autovista Group for 2021, and is 19.5% lower than the volume of cars registered in pre-crisis 2019.

Second-lowest April volume in reunified Germany

New-car registrations in Germany amounted to 229,650 units in April, equating to a decline of 26.1% compared to the same month in 2019, according to the latest figures released by the Kraftfahrt-Bundesamt (KBA). With the conditional reopening of dealerships in Germany since 8 March, the new-car market appeared to be on the slow road to recovery. However, the level of registrations retreated in April as the country battled against stubbornly consistent COVID-19 infection rates.

Autovista Group calculates that the SAAR of the market plummeted to 2.5 million units in April – the lowest level since June 2020. Furthermore, the German automotive industry association VDA highlighted that ‘the car market in April 2021 represents the second-lowest market volume for April in reunified Germany.’

In the first four months of 2021, the poor performance in April brought the year-to-date contraction, compared to the same period in 2019, down to 25.6%. In this context, and with no dramatic improvement in the vaccination rollout and the number of COVID-19 cases, the recovery of the German market will come later than previously anticipated. Accordingly, Autovista Group has reduced its forecast for 2021 to 3.06 million new-car registrations, up just 5% on 2020 and 15% lower than 2019.

Italy’s ‘gradual restart is backing down’

In Italy, the industry association ANFIA reports that, compared to April 2019, the new-car market contracted by 17.1%. Similarly, registrations were 16.9% lower in the year-to-date than in the first four months of 2019. Furthermore, the weaker comparison to 2019 than in March suggests that ‘the gradual restart of the market, with incentives for cars in the 61-135g/km range of CO2 emissions, is backing down,’ said Paolo Scudieri, president of ANFIA.

‘The priority at the moment is, therefore, the refinancing of the support measures for car demand, but also for light-commercial vehicles. These measures pay for themselves in a short time, with additional cash for the state, and represent investment in the modernisation of the fleet, by putting latest-generation vehicles on the road. This is an indispensable intervention to support a sector that guarantees employment and economic growth, and which is experiencing a particularly difficult phase also due to international crisis factors such as the problems of supplying microchips,’ he added.

As it stands, the government incentives are in place until at least the end of June. Assuming there are no COVID-19 restrictions on Italian dealerships in 2021, Autovista Group forecasts that the market will grow 17% year on year in 2021, to over 1.6 million units. This is a higher growth rate than in France, but Italy starts from a weaker base, with registrations down 28% in 2020. Nevertheless, the market would still be 15.7% down on the 2019 level.

Long way from recovery in Spain

In Spain, 58,279 new cars were registered during April, according to ANFAC, the Spanish vehicle manufacturers’ association. The market continues to contract compared to the pre-COVID-19 levels of 2019. There was a greater decline in April (down 34.2%), than in March (down 30%). In the first four months of 2021, 39.3% fewer cars were registered than in the same period in 2019.

April closed ‘one of the worst four-month periods since the last years of the economic crisis,’ the industry body commented. Fewer than 265,000 new cars were registered between January and April 2021, compared to over 300,000 units in the May-August and September-December periods in 2020.

‘The pandemic, the uncertainty about vaccination and successive waves, the lack of tourism, the economic crisis, the lack of aid to demand and the registration-tax rise continue to affect the market,’ ANFAC added.

Juan Luis Fernández, head of public affairs at the Spanish association Faconauto, noted; ‘We are a long way from recovery: we continue to lose units month after month with no hope or changes in the short term. In this scenario of a health crisis, which logically has a negative impact on consumption, there are two worrisome points; how relegated the private channel is being, which only accounts for four out of every 10 sales, and the delay in the arrival of vehicles to dealerships because factories are very affected by the lack of semiconductors for their production.’

‘The uncertainties are greater than the certainties’

Spain introduced the new MOVES III incentive scheme for electrically-chargeable vehicles (EVs) on 10 April 2021, which includes hydrogen fuel-cell vehicles (FCEVs) for the first time. However, ‘in the absence of being able to assess the scope of the incentives for electrified vehicles in the market, as well as the arrival of the long-awaited recovery, a few very committed months await us for the sector, where the uncertainties are greater than the certainties,’ Fernández explained.

‘For all this, a strategic plan for the sector is urgently needed, in which the government and the employers’ associations work to try to reverse this situation,’ he concluded. Without an improvement in consumer confidence, a return of tourism, and/or new measures to stimulate new-car demand, the Spanish market will continue to struggle. Autovista Group maintains its forecast that demand will recover from the 32% loss in 2020, albeit only by 6% to about 900,000 units in 2021. Moreover, at this level, the Spanish market will be 28.3% smaller this year than in 2019.

Podcast: Carmakers take aim at electrification targets

Carmakers are taking aim at electrification targets. Some manufacturers have laid out ambitious plans, while others are making more gradual transitions. Autovista Group Daily Brief journalist Tom Geggus discusses these targets with editor Phil Curry and senior data journalist Neil King.

https://soundcloud.com/autovistagroup/carmakers-take-aim-at-electrification-targets

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

Stellantis targets 70% electrified-vehicle sales in Europe in 2030

Volvo to go all electric and online by 2030

Honda targets 100% BEV and hydrogen sales with improved carbon-neutrality

Renault aims to achieve European carbon neutrality in 2040

Can the automotive industry carve out a sustainable future?

Are EVs as green as they seem?

VW outlines large-scale energy production as part of carbon-neutrality plans

VW accelerates towards electric and digital future

Is it too early to go ‘EV-only’?

Jaguar makes BEV and hydrogen changes on path to net zero