NEWS

After three consecutive months of growth, culminating in a 28.1% increase in new car sales for the European Union’s biggest five car markets (Big 5) in August 2018, the true impact of the Worldwide harmonized Light vehicles Test Procedure (WLTP) saw sales plummet 22.3% in September.

At the end of the first half of 2018, the Big 5 were up 1.0% although this was mainly due to the drag caused by the decline in the UK car market. However, the move to WLTP for all new cars registered since September 2018 saw a flurry of day registrations or pre-registrations across Europe.

New car sales stall on WLTP introduction
Excluding the UK, the remaining 4 major European car markets were up 3.2% for the first six months of the year. But by the end of August, the same four markets were up 6.6%, with the UK dragging the overall August year-to-date (YTD) growth down to 4.3%, but still well above the 1.0% growth for the first half of 2018.

The introduction of WLTP from 1^st September has meant manufacturers are unable to sell vehicles which have not yet been tested and this has resulted in a significant number of models being unavailable to order or with very long lead times. Manufacturers are removing some models or derivatives which require re-engineering to get a good result under the new test procedures. Other manufacturers are waiting in long queues for their models to be tested by the official regulatory bodies before they can sell them.

Downturn in new car sales set to continue
With dealer’s stocking plans full of day registrations and long lead times on quite a few models and derivatives the downturn in new car sales is expected to continue for the remaining three months and even extend into 2019 for some brands.

Following the drop in September, new car sales for first three quarters of the year for the Big 5 are up 0.8%. At a country level Spain is still seeing the strongest growth up 11.5% after nine months, followed by France up 6.5% with Germany third as sales growth is now just 2.4%. The political turmoil in Italy has seen sales go into reverse with total sales for the first three quarters of 2018 now down 3.0% over the same period last year; whilst the UK new cars sales continue to drop sharply with sales now down 7.5%.

The WLTP effect means the Big 5 are likely to sales falling sales for the remainder of the year and end the year down 1.9% which equates to an average 11.2% fall for the final quarter.

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ŠKODA UK has adopted the Indicata online used vehicle management system.

Indicata will play a major part in supporting ŠKODA as it grows its used car sales volumes across its UK dealer network.

Indicata can be analysed at a local, regional or national level
Indicata processes and analyses used car market data freely available in the public domain and turns it into live powerful market dynamic insights, including demand, supply, pricing and inventories. This can be analysed at a local, regional or national level.

ŠKODA has rolled Indicata out to its four used car area managers and will use the market insights to support its 130 dealers. The move follows a successful two-month trial. Currently the brand has 7,000 used cars in its network.

It gives OEMs a network-wide view of its used stock
Neil Gilligan, Indicata’s National Business Development Manager commented: “We are proud to have ŠKODA UK on board. They were impressed with the valuable insights Indicata provides which can quickly help dealers sell more used cars locally. It also gives manufacturers a unique network-wide overview of its used stock which helps them develop national used car offers and incentives.”

Autorola UK already supports the ŠKODA dealer network in selling over-age stock and unwanted part exchanges via its online used car portal.

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Autorola Solutions is currently providing an extensive range of vehicle asset management tasks in 15 countries, across four continents, for some 300 companies.

Working with OEMs, banks, leasing companies, rental companies and dealers, Autorola Solutions allows vehicle asset owners to manage every single car, van and truck from its original order being placed all the way through to its remarketing at auction and onward delivery to its next owner. It also allows users to check the status of vehicles and ultimately the transparency of the vehicle’s history from mileage to maintenance, 24 hours a day.

The system provides users with a complete end-to-end solution to manage the processes that join the vehicle in-life and remarketing processes together, making it easier for internal fleet management teams and related supply chains.

The system is fully customisable and can be seamlessly integrated across IT platforms to allow users to combine processes and systems, creating a flow that 100% supports individual business needs and allows users to plan and control all activities from one single point.

In order to provide the necessary and relevant remedies to individual asset owners, the Autorola Solutions team start with an initial consultation to understand what is required. From this, a professional project manager will manage all elements of the ongoing client relationship to optimise and fine tune solutions in line with customer requirements with dedicated quarterly account management meetings.

To find out more about Autorola Solutions visit www.autorolagroup.com/about/solutions/ or call Maria Lee Winther on + 45 51854564 or email mlw@autorola.com

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Used retail car prices have remained relatively stable across Germany, the UK and Italy with average prices increasing by just 1.3%, 1.1% and -0.1% respectively, although the underlying Indicata data shows some interesting market dynamics as you drill down.

Average used car prices in France increased from €19,136 in October 2017 to €20,391 whilst used car prices in Spain have jumped by 17.4% over the same period to €21,147. Part of the reason for the increase, particularly in Spain, is the mix of vehicles as buyers are changing their cars at younger ages and now feel able to upgrade to more premium and larger vehicles without fear of looking ostentatious to their peers.

Petrol is outperforming diesel according to Indicata
A review of Indicata’s used car index, which normalises for mix and inflation, shows a common theme of petrol outperforming diesel over the last 12 months.

In Spain and France, the markets are both showing prices for used petrol cars strengthening whilst used diesel prices are relatively flat.

Spain experiences used car price increases
Spain has seen particularly strong growth in used car prices for F segment petrol cars with luxury car buyers typically paying up to 10% more than they were a year ago. Whilst buyers of B-segment (small cars), C-segment (medium cars) and D-segment (large cars) are paying anything from 3% to 6% more than they were last year.

The growth in French used car values is also being powered by demand for petrol vehicles. Petrol car values for B-segment rose 5% whilst D-segment, E-segment (Executive cars), M-segment (MPVs) and S-segment (sports cars) rose 8%, 3%, 3% and 4% respectively compared to diesel values which remained generally flat.

Across the other markets we are still seeing petrol performing better than diesel but it is a case of used petrol cars remaining stable as diesel prices are falling by 3% to 5% on average.

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The latest data from Indicata shows that despite the drop in new car sales in September the used car market remains strong, with sales rising in the UK, France and Italy after the traditional lull in sales during the holiday period.

In the chart adjacent shows the traditional fall in sales in July and August in Germany, France and Italy as consumers look to spend their money on holidays rather than considering buying a replacement car.

German used car sales reverse in Germany
Whilst used car sales in Germany went into reverse in September, falling by around 4% this is partly due to the rush to change cars in the run up to WLTP and sales are not expected to fall any sharper than one would expect in the run up to the festive period and the year end. However, it should be noted that the Indicata Germany specific market report does show used car sales volumes marginally down in August and September 2018 over the same months in 2017.

Spain is showing minimal movement in volumes throughout the period, but this is in line with how the market has recovered from being one of the worst hit during the economic crisis. It is also a market where a lot of used vehicles are exported, and this helps balance the supply and demand equation.

UK has its own used car micro climate
Even though WLTP has been introduced across Europe from the 1^st September the UK, being the only major right-hand-drive (RHD) market, means it has its own micro-climate for cars. This is because exports into the other four RHD markets of Ireland, Malta and Cyprus are limited by their market sizes. The result of this saw the usual seasonality in used car sales being distorted by the rush to register new cars in the run up to September, and with it the need to sell used cars to free up dealer stocking plans.

Whilst not visible from the chart the underlying data from Indicata also demonstrates the impact the “war on diesel” has had on used car sales in some of the markets. For example, in Germany in October 2017 petrol used cars were already 54% of the 425,00 used car sales identified in the month, but by September 2018 petrol now accounts for 60% of all used car sales according to Indicata.

Diesel demonisation impacts UK market
The UK has also been impacted by diesel demonisation, with used petrol car sales moving away from a parity in volume terms with diesel from October 2017 through to March 2018 where it is now 6% higher than diesel cars in volume terms.

Used diesel cars continue to outsell petrol in France, Spain and Italy but this is a legacy issue due to the previously higher volume of new diesel cars being bought and the longer average retention periods by consumers. Looking ahead the situation is expected to follow what we are already seeing in Germany, and the UK as buyers move away from diesel due to the change in the supply mix coming from the new car market.

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With used car sales volumes increasing and used car values generally remaining relatively flat one might expect used car stock levels to be falling sharply. However, the influx of used vehicles into the market from WLTP has created some market distortion.

The micro-climate of the UK right-hand-drive (RHD) car market demonstrates the true extent of the impact of WLTP with used car stock levels in September of just under half a million cars which is over 7% higher than the same time last year.

UK and German dealers increase used petrol stocks
The increase in sales volumes of petrol cars noted previously in Germany and the UK is also being met by a change in used car stocks. Dealers are increasing the volume of used petrol cars on their forecourts whilst reducing their volume of used diesel cars in both markets according to Indicata.

Used car stock levels in Spain having been dropping for most of 2018 and a significant part of 2017. Total Spanish used car stock levels of 79,468 in September 2018 is 26.3% lower than the same time in 2017. To understand what is causing this you need to remember that whilst new car sales in Spain for 2018 are forecast to be 1.3 million cars, just four years earlier it was just 0.86 million. Despite this many fleet operators are continuing to export their vehicles out of the country as they come off fleet resulting in a shortage of supply and this is also helping to push up used car prices.

Indicata reveals market days’ supply by country
According to Indicata data Market Days’ Supply (MDS) has remained relatively steady as dealers try to match their stock levels with sales. Germany, Spain and Italy are all showing around 80 days’ worth of used car supply, although the previously mentioned situation in Spain has meant quite a bit of volatility over the last twelve months.

French dealers are currently running at a leaner 60 days MDS whilst the UK is currently at just over 40 days.

WLTP has put quite a lot of nearly new used vehicles into the market. Once they are available for sale, the fact that so many new cars are not available to order or have long lead times as manufacturers wait for certification means we could start seeing a shortage of used cars coming back into the market as part exchanges. Reduced fleet cars coming back off contract could also drive down MDS further as supply may fail to match demand.

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