Fuel Type: Hybrid (HEV)

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

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

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

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

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

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

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

Modest improvement in the second half

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

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

(Click image to view – opens in new tab)

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

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

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

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

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

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

Disruption persists in 2023

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

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

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

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

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

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

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

The new Dacia Jogger: an unlikely residual value hero

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

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

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

Dacia Jogger remarketing potential

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

Three body styles in one model

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

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

Specifications and dimensions versus main rivals

Click to expand (opens in new tab)
Source: Autovista Group specification data

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

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

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

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

Benchmark new-car price

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

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

Click to expand (opens in new tab)
Source: Autovista Group. Note: Green 95% percentile, orange mean price, blue 5% percentile.

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

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

TCO driven by depreciation

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

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

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

Click to expand (opens in new tab)

Residual values are a major advantage

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

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

Open the interactive dashboard

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

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

Open the interactive dashboard

Strong new-car registrations and RVs in Eastern Europe

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

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

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

Ulmis Horchidan, chief editor Romania, Autovista Group 

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

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

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

An option for car fleets

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

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

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

Not evoking desirability

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

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

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

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

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

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

Austria supplies 10% below pre-pandemic

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

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

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

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

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

Used-car switch in France

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

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

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

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

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

Electrified vehicles under mounting pressure

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

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

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

Diesel impacted in Germany

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

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

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

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

Seasonal adjustment in Italy

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

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

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

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

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

Upward trend in Spain

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

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

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

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

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

Swiss supply volume 20% lower

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

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

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

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

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

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

UK consumers impatient

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

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

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

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

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

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

This content is brought to you by Autovista24

Glass’s One Minute Market Update – May 2021

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

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

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

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

New Car Market Update May 2021

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

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

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

New car market sector split YTD graph May 2021

                                                                        Data courtesy of SMMT

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

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

New car registrations fuel split graph May 2021

                                                                        Data courtesy of SMMT

Outlook

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

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.

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.

Used Car Market Update- March 2021

Positive outlook as lockdown eases

The big news for the UK was the relaxation of some lockdown rules, which began for dealers in early April. Crucially for the car retail industry, this meant that they could once again open their sites to the general public. As expected, this triggered a rise in auction activity as dealers looked to top-up their stock and prepare for the anticipated rise in demand.

We also saw the introduction of the March registration plate (21 plate), which is an event that typically brings a boost to the used car market with an influx of part-exchanges in the latter part of the month. Auction sale volume saw a marked increase compared with February and an even bigger hike compared to March 2020. The first-time conversion rate also rose in March, up 8.1% from February to 82.7%. This was 6.3% lower than March 2020, but still pretty good considering we were emerging from lockdown.

Sales volume index graph March 2021

General bidding activity appeared to improve through the month, although cars requiring work or lacking specification still struggled. Convertible values noticeably improved, buoyed by the approach of Spring and, quite possibly, a more positive outlook as more restrictions are expected to be relaxed over the coming weeks and months.

Used Car Retail Market

Looking at the used car retail market for March, it is clear why the auction market saw such a rise in activity. The number of observed sales rose by 24.2% from February to March, and were a very impressive 39% higher than for March 2020 – the difference between transitioning out of lockdown rather than heading towards one.

Used car market observations graph March 2021

Unsurprisingly, this ramping up of demand led to a reduction in the length of time cars were spending on the forecourt. GlassNet Radar reported that the average for March was 48.7 days, which was an improvement of just over 9 days from the previous month. It is 9.7 days longer than for March 2020 however, but considering the circumstances it is an encouraging improvement.

Used car market average days to sell graph March 2021

Outlook

With April having less pandemic-related restrictions than we have seen for some time, we can expect to see another busy month for both wholesale and retail used car sales. Of course, there may be a degree of pent-up demand that has been released, but with more regions of the UK returning to (relative) normality it is fair to expect that the used car industry will follow suit.

New car registrations will still be down for this year – higher than for 2020 but much lower than we were seeing pre-COVID – which means there will be a shortage of nearly-new stock for some time yet, and this will filter down through the age bands over the next couple of years which should help to ensure values of used cars remain relatively healthy.

New Car Market Update March 2021

New car registrations in March showed the first green shoots of growth since August 2020, with 29,280 more units registered compared to the same month last year. This represents an increase of 11.5% according to figures published by the Society of Motor Manufacturers and Traders (SMMT).

However, March is also the anniversary of the first full lockdown caused by the COVID-19 pandemic, so comparisons with 2020 figures will fluctuate wildly throughout the year. If compared to March 2019’s pre-pandemic normal market, March 2021 registrations fell 38%.

March 2021 UK new car registrations graph

                                                                        Data courtesy of SMMT

The March on March growth figure was not uniform across all sectors. While Fleet volume grew 28.7% or 33,784 units and Business was up 18.6% or 902 units, sales to private consumers fell 4.1% or 5,406. In March 2020, the Fleet and Business sectors suffered larger falls in registrations than retail, so had a lower base point to grow from. Besides, many lease contract extensions have expired, hence an uptick in March registration activity, as company cars are often ordered without any physical viewing. Private consumers are more likely to purchase a vehicle after visiting dealerships first, which is why the April 12 reopening of non-essential retail is so important for the new and used car markets.

Despite March’s rise in registrations, the new car market dropped by 58,032 cars or 12% in quarter one, with sales to private consumers affected most as shown in the chart below.

Sector split YTD graph March 2021

                                                                                   Data courtesy of SMMT                                              

The shift to alternative fuelled cars is continuing at pace, with plug-ins making record volume. Battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) took a combined market share of 13.9%, up from 7.3% last year, as the choice available to customers continues to grow.  Registrations of BEVs increased by 88.2% to 22,003 units, while PHEVs rose by 152.2% to 17,330. Hybrid electric vehicles (HEVs) also rose 42.0% to reach 21,599 registrations.

For this positive trend to continue, the government needs to maintain customer incentives for new cleaner technologies, whilst planning and implementing improved infrastructure to cope with the increasing registrations.

As we look ahead to the second quarter, it is logical that the new car market will catch back some of the ground lost in Q1, as the market was effectively closed in April and May last year due to Lockdown-1, with only just over 24,400 cars registered in the two months combined.

Glass’s One Minute Market Update

New car registrations increased by 11.5% in March according to figures released by the Society of Motor Manufacturers and Traders (SMMT).  Sales to private individuals fell 4.1% with ‘click and collect’ hampering sales rate. Fleet and business registrations more than made up for that shortfall, increasing 28.7% and 16.6% respectively, with physical transactions less common in these sales channels, so the lockdown restrictions had less impact.

Although an 11.5% increase to 283,964 registrations is a positive result in the current climate, it is significantly below 2019’s registration tally of 458,054, and for context, 2019’s total was the lowest for five years.

There was a marked improvement in wholesale trading conditions in the latter half of March, as dealers began filling gaps on forecourts in preparation for the reopening of sites to physical customers on 12 April. Overall conversion rates returned towards seasonal norms and hammer prices began rising. The percentage of cars selling on the first time of asking was 82.7% which is up 6.2 percentage points from February but still over 6 points behind March last year.

Glass’s expects a very buoyant period of retail activity from 12 April, with wholesale trading following a similar pattern as dealers replenish stock more regularly. Somewhat unexpectedly, one of the national auction groups has announced the return of some physical auctions from 12 April, with buyers welcomed back into auction halls, but adhering to social distancing measures. It will be interesting to see how the other national auction companies respond or whether they will remain on their current course of online-only sales programs.   

Changing Convertible Trends

As the days get longer and warmer and the garden furniture is dusted down, many people are drawn to the idea of owning a convertible to achieve that wind in the hair driving experience. However, Is the draw as strong as ever for these cars that are often impractical, expensive but rare and stylish?

During the 1990s, manufacturers realised the potential in this profitable segment after the success of the Mazda MX-5. They set about designing new models to increase their ranges, expanding not just to the traditional two-seater roadster but also to four-seat coupe versions of their popular saloon and hatchback models. Then came the advent of the folding “tin-top” roof to make the Convertible an all-year-round proposition.

However, did the extensive choice of Convertibles grow so large that the exclusivity factor diminished, and have consumers turned to other segments that have become more fashionable?

Up until the year 2000, the number of Convertibles registered new each year was around 2% of the whole market, according to data from the Society of Motor Manufacturers and Traders (SMMT). The peak year was 2004 where Cabriolet and Convertible registrations reached 116,500, equating to 4.6% of the new car market. The numbers have dropped to less than 2% for the last 5 years running and were only 1.2% in Coronavirus hit 2020.

What about the choice during the last twenty years? The chart below shows the number of ranges available by year.

Convertible ranges registered graph 1998-2020

The peak in the number of different ranges was in 2007. This has dwindled in recent years as models such as the Mercedes SLK/SLC, Volkswagen Golf and Beetle and Fiat’s 124 disappear. Many manufacturers no longer offer a convertible in their range.

Manufacturers are reacting to the fall in consumer demand for convertible versions of two-seater sports and small cars, as demand switches to other more popular body styles. There is no need to look beyond the SUV/Crossover segment to see where customer demand has shifted over time.

In 1998 there were 35 different SUV models available according to data gathered by Glass’s, and they fell into two distinct types. There was the large and expensive end of the market like the Land Rover Range Rover and Toyota Land Cruiser, or more utilitarian models from Isuzu, Mitsubishi and Daihatsu.

With the growing popularity in this segment, more manufacturers were taking note. Honda released the smaller CR-V and HR-V in the UK to rival the RAV4 from Toyota, and so the smaller SUV started to become more recognised on UK roads. They were often cheaper, but still retained the high driving position and four-wheel drive.

It soon became apparent that these cars were not often taken off-road, so new models launched featuring two-wheel drive, bringing costs down whilst also lowering CO2 emissions. The Nissan Qashqai typified this new wave of Crossovers, and by 2010 the number of SUV/Crossover models available had jumped to 60.

Mainstream manufacturers continue to increase offerings as the lines between body types blur more and more, and so we saw at least 100 different models available in 2020. Even sports car manufacturers recognize the opportunity, with Porsche launching the Cayenne in 2003, and in later years Maserati, Lamborghini and Aston Martin have joined the party along with Bentley and Rolls Royce.

As expected market share has grown too, otherwise manufacturers would not continue to grow their stable of SUV/Crossovers, as can be seen in the chart below where market share has grown from 4% to 35% of the UK market in 2020.

SUV/Crossover UK market share graph 1998-2020

With no likelihood of these trends ending soon, the return of the convertible to niche status seems inevitable, while the Crossover continues to sweep all rivals aside. That is not to say they have lost their appeal, in 2020 Glass’s average residual value for Convertibles rose significantly due to an uptick in demand as shown in the chart below. This will have been helped by extremely good weather, but also possibly due to people treating themselves to something as the global COVID-19 pandemic affected other areas considered a luxury, like overseas holidays.    

Average RV% 3 yr old convertible/cabriolet graph 2020 vs 2019

Making the CASE for advanced commercial vehicles

Advanced automotive systems including connected cars, autonomous driving, shared vehicles, and electromobility (CASE), are experiencing exponential development as OEMs undergo digitalisation. While many of these technologies might be associated with high-end luxury passenger cars, manufacturers are also exploring commercial vehicle applications.

Toyota Motor Corporation (Toyota) recently announced it would combine its CASE technologies with the commercial vehicle foundations cultivated by Isuzu Motors (Isuzu) and Hino Motors (Hino) as part of a new collaborative effort. Meanwhile, Renault’s light commercial vehicle (LCV) offering is undergoing its own energy transition, emphasising electric and hydrogen drivetrains for its upcoming models.

A commercial CASE

Through their new partnership, Toyota, Isuzu and Hino hope to accelerate the adoption and implementation of CASE technologies. As well as addressing various difficulties facing the transport industry, the three companies hope their collaboration will help the progression towards a carbon-neutral society.

In a press conference, the manufacturers explained small commercial-purpose trucks would be used to help develop battery electric vehicles (BEVs), electric platforms, and fuel-cell electric vehicles (FCEVs). Given the expensive developmental costs of BEVs and FCEVs, this collective approach makes sense. Toyota, Isuzu and Hino are also planning to advance the implementation of infrastructure. This will include introducing FCEV trucks to hydrogen-based society demonstrations in Japan’s Fukushima Prefecture.

The partnership will also look to accelerate the development of autonomous and other advanced systems. By building a connected technology platform for commercial vehicles, they hope to provide logistical solutions to improve transport efficiency as well as reducing CO2 emissions.

‘CASE technologies can only contribute to society once they become widespread,’ the companies explained. ‘Commercial vehicles can play important roles in dissemination, as they travel long distances for extended periods of time to support the economy and society and can be easily linked with infrastructure development. And from the standpoint of carbon neutrality, commercial vehicles can especially fulfil a key function.’

Forming new ties

To promote the partnership, the manufacturers will form a new business called Commercial Japan Partnership Technologies Corporation. This new company will be focused on mapping out CASE technologies and services for commercial vehicles. Moving forward, the collaboration will not only deepen, but open up to other like-minded partners.

Isuzu and Toyota have also agreed on a capital partnership to advance their collaborative efforts. Through a cancelation of treasury stock through a third-party allotment, Toyota is scheduled to acquire 39 million shares of its common stock worth a total of ¥42.8 billion (€332 million).

This will leave Toyota with 4.6% ownership of Isuzu in terms of total issued shares as of the end of September 2020 and a post-allotment voting rights ratio at Isuzu of 5.02%. Isuzu also plans to acquire Toyota shares of the same value through a market purchase.

Renault’s zero-emission solutions

Meanwhile, Renault is renewing and expanding its LCV range, with new versions of the Kangoo, the Express, the Trafic Combi and the SpaceClass. The manufacturer is also developing its Renault Pro+ services, offering turnkey digital and connectivity solutions.

Through this work Renault is looking to support the transmission to zero-emissions. The new Kangoo Van E-TECH Electric is expected by the end of 2021, picking up where the Kangoo ZE left off. It will be equipped with a 44kWh battery, offering a range of 265km. The OEM also offers fleet charging solutions with its subsidiary, Elexent. 

Before the end of the year, Renault will unveil the Master ZE Hydrogen, an alternative to the diesel Master. With its hydrogen partner Plug Power, the manufacturer is looking to capture 30% of the European hydrogen LCV market by 2030.

Smart zero-emission vans promise greater development of green and connected technology for the wider automotive sector. Commercial vehicles spend their lives on the road, meaning any new drivetrain and technology must be well-designed and long-lasting. This know-how can then be utilised by the passenger-car segment, as these systems are stress-tested.

However, these technologies must first be adopted. As demonstrated by the European Automobile Manufacturer Association’s (ACEA’s) latest figures, diesel still reigned supreme last year in the new-LCV segment. Accounting for 92.4% of the van market, the fuel type was leagues ahead of electrically-chargeable vehicles (EVs) which garnered a 2% share. In reality, the adoption of these new drive trains will likely be mandated by zero-emissions policies created at national and international levels.

Used Car Market Update- February 2021

Used Car Auction Wholesale Market

At the beginning of February, it was still unclear how long this latest lockdown would continue, or how restrictions would be lifted or eased once it ended. Crucially for the UK used car industry, there was, therefore, no indication when showrooms and sales sites could open to “physical” customers.

The use of online selling and suitably distanced handovers has certainly helped dealers achieve more sales than would have been considered possible twelve months ago, but for many buyers, there is no substitute for actually seeing the car they are buying before they sign on the dotted line.

Therefore, it should come as no surprise that the used car wholesale market in February was relatively steady. Auction sale volume was slightly lower than in January, yet understandably was significantly lower than February 2020. Similarly, the first time conversion rate of 76.5% was only 1.7% lower than January’s score but over 12% lower than a year ago.

Used car market first time conversion rate graph February 2021
Used car market percentage of original cost new graph February 2021

Charts based on a representative sample of current UK auction data but excludes observations from British Car Auctions

As usual, the cars that sold best were the ones in good condition, with the desirable specification. Without the need for restocking, there was even less desire than usual to buy cars that need work. It was noticeable that demand increased right at the end of the month following the announcements regarding the route out of lockdown.

Used Car Retail Market

Whilst February’s used car auction market was relatively steady, the used car retail market performed fairly well despite the ongoing lockdown. The number of observed sales were up almost 14% compared to January, as was the average sale value, albeit only by 2.3%. Unsurprisingly, the number of sales were almost 13% lower than for February 2020 but still promising given the challenging circumstances.

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

The length of time a car spends on the forecourt is a good indication of its retail popularity, and it is one of the pieces of data that GlassNet Radar records. February’s average of 57.8 days was 6.1 days higher than for January and almost 15 days higher than the average stay in February 2020. This is not surprising given the current situation and is likely to improve once sales sites can open fully.

Used car market average days to sell February 2021

Outlook

The announcement towards the end of February of the phased lifting of lockdown restrictions led to an improvement in used car auction activity, and it is reasonable to expect that this will continue through March. The introduction of the new registration plate usually leads to an increase in auction activity towards the end of the month, however, Glass’s expects registration volumes to be significantly lower than in 2019 (the last “COVID-free” March!), and even last year, so demand may well exceed supply which should lead to a strengthening of hammer prices.

New Car Market Update February 2021

With the UK in lockdown throughout February, it comes as no surprise to see another drop in new car registrations, with dealers having to rely on ‘click and collect’ and telephone transactions only. A total of 51,312 new cars were registered in February, down 35.5% from last year, according to data published by the Society of Motor Manufacturers and Traders (SMMT). Underlining how poor February’s total was, the SMMT reported it was the lowest for the month in 52 years.

February’s deficit was a slight improvement on January’s 39.5% reduction. However, that is little comfort on such a small volume, in what is usually the quietest month of the year for sales, as consumers await the new plate in March.

Plug-in vehicles continued their upward trajectory with Battery Electric Vehicles (BEVs) and Plug-in Hybrid (PHEVs) taking a combined 13.0% market share for the month, up from just 5.7% in February 2020. BEV registrations increased by 40.2% to 3,516, and PHEVs by 52.1% to 3,131 as the motor industry continues to improve the choice and supply for consumers.

The contraction in registrations in February was more severe in the retail sector, down 37.3%, while fleet volume was down 33.5%. The fast disappearing business sector fell 56.6% to just 637 units. Over the first two months, the retraction in volume has been even across both private and fleet as shown in the chart below.

Sector Split YTD February 2021

On 22 February, The Prime Minister outlined a 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. A review of restrictions in Wales conducted on 12 March was expected to announce that non-essential retail would be able to reopen as soon as 15 March, however, although some restrictions were relaxed, non-essential retail will remain close until 12 April. A timetable for easing restrictions in Northern Ireland has not been announced, although a review is planned for 16 March.

Glass’s expects another poor set of results for March 2021, which is usually the busiest month of the year. We may not see a huge percentage drop versus last year as March 2020 heralded the start of the first national lockdown, with dealerships closing towards the end of the month, which impacted registrations.

From April, as the economy opens back up, there is an expectation that we will see pent-up private consumer demand released, together with an uptick in fleet activity as many extended lease contracts end. This will provide a significant boost to registrations for the second quarter, kickstarting dealers 2021 new car campaigns.

Ford Puma – The changing face of automotive

Approximately, one in three car buyers in Europe is choosing an SUV. As part of a drive to increase SUV penetration, the Ford Motor Company resurrected the Ford Puma name in 2019, but in keeping with current trends, this time for a small SUV rather than a small Fiesta-based agile coupe as it did in the 1990s. This was a controversial move among Ford fans, but the result is a model that has a crossover stance and a bigger boot than the Ford Focus and sits in Ford’s European range halfway between the Ecosport and the new Kuga.

Based on the seventh generation Fiesta chassis, the new Puma looks differ from many crossovers on the road, offering a much sportier stance. Proving popular from launch, it continues to impress critics recently winning What Car? – Car of the Year in 2020.

2019 Ford Puma ST-Line

The new Ford Puma offers a sporty on-road presence

Overall the vehicle appears a little tall, but Ford’s engineers have created an SUV that is composed and offers an excellent drive, with a first-rate manual gearbox, direct steering and minimal body roll. With some shared parts from the current Fiesta, the Puma feels as engaging as many well-sorted hatchbacks.

The current entry-level Puma – the Titanium, offers a very impressive specification including 17-inch alloy wheels, projector headlights and Ford’s SYNC 3 navigation with 8-inch TFT touchscreen display as standard, as well as an array of safety features. It comes fitted with a mild-hybrid 1.0 litre EcoBoost petrol engine in manual transmission, offered as a 125PS and 155PS variant. An automatic version is also available, although this the automatic version does not have a mild-hybrid engine.

Prices start at £22,040, rising to £29,445 for the range-topping ST with Performance Pack, which is fitted with a 1.5 litre 200PS version of the EcoBoost engine.

The Puma was Ford’s first new car to include the ‘Ford MegaBox’, which enhances the boots capacity by 80 litres, giving the car class-leading load space of 456 litres. The ‘MegaBox’ provides a deep, versatile storage space that is capable of comfortably accommodating two golf bags in an upright position.

The ‘Ford MegaBox’

Residual Values

Comparing Glass’s Forecast values for the Ford Puma with the average for the B segment, it performs favourably at 3-years, 30,000 miles. As the graph below shows, Glass’s Forecast suggests the Puma will achieve a residual value equating to 50% of the original cost new prices, whereas the average for the B segment is just over 40%.

The Ford Puma outperforms the B-Segment

Summary

There is no doubt that the Puma has strong rivals, including models from its own stable, however with a good mix of style and practicality the car appeals to a wide demographic. With small SUV sales continuing to climb, the Puma is an extremely important model for Ford. With mild-hybrid technology and the 1.0-litre EcoBoost engine ensuring low cost of ownership, today, the Puma is an excellent small SUV choice.

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