Fuel Type: Plug-in Hybrid (PHEV)

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

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

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

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

Austria supplies 10% below pre-pandemic

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

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

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

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

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

Used-car switch in France

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

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

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

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

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

Electrified vehicles under mounting pressure

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

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

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

Diesel impacted in Germany

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

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

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

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

Seasonal adjustment in Italy

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

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

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

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

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

Upward trend in Spain

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

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

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

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

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

Swiss supply volume 20% lower

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

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

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

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

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

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

UK consumers impatient

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

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

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

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

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

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

This content is brought to you by Autovista24

Glass’s One Minute Market Update – May 2021

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

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

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

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

New Car Market Update May 2021

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

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

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

New car market sector split YTD graph May 2021

Data courtesy of SMMT

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

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

New car registrations fuel split graph May 2021

Data courtesy of SMMT

Outlook

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

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

A strong market for both new and used LCVs

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

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

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

Ford secured a strong month with four of its product ranges in the top ten. The Ford Transit Custom was crowned best-selling van in the UK in May, with its big brother, the Ford Transit in second place. The Ford Ranger and Ford Transit Connect were in 7^th and 8^th 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

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.

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

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

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

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

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

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

Forecast on track

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

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

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

EV encouragement

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

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

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

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

Podcast: Has the automotive industry become driven by regulations?

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

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

Show notes

Carmakers successfully pooled emissions to meet 2020 EU targets

Hitting the target: Lone carmakers that successfully reduced their emissions

Swedish ICE ban would not drastically aid climate targets

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

Are EVs as green as they seem?

Germany paves the way for adoption of autonomous vehicles

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

The Strength of the LCV Market

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 2021	Small Vans	Medium vans	Large vans	4×4 Pick-ups
Approx Sold Volumes	2,700 – 3,500	3,150 – 5,000	2,050 – 2,500	1,200 – 1,800
Sale Price Increase	£1,700	£3,350	£3,700	£3,500
% of List Price	26.0% – 34.8%	29.8% – 41.8%	23.3% – 34.7%	43.2% – 50.7%
Average Age (months)	68.3 – 76.8	67.6 – 73.0	70.6 – 70.7	65.8 – 67.6
Average Mileage (miles)	70,588 – 73,811	77,729 – 81,268	86,370 – 91,696	63,969 – 63,631
First-Time Conversion	78.8% – 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.

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.

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