NEWS

Heading into the final quarter of 2018 and dealers are usually looking to increase their used stock levels to meet the sales rush in January. However, the 1 September introduction of the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) saw dealers with a glut of zero miles cars in stock that they have been concentrating on selling. The result is a break from the normal seasonal trend, with market days supply (MDS) falling in most countries.

Italy turning stock faster 
For example, the Italian market has gone from 105 days supply in August to just 66 days by the end of October meaning it is now turning its used car stock at a faster rate than Germany. 

By contrast the Spanish market has failed to see levels fall below 70 days since February 2018.

Diesel impacts Spanish stock levels
Drilling deeper into Indicata’s data by fuel type and you can see that the challenge in Spain can be specifically linked to diesel stock levels. Used car buyers are increasingly looking for petrol cars over diesel in many segments. But MDS is just part of the picture and you need to also consider sales trends to see the full supply and demand picture in each market.

It has been a busy few weeks for Autorola Group with various appearances at automotive events across the globe.
Group CEO Peter Grøftehauge spent time addressing the Welcome Tomorrow 2018 PARAR conference in Brazil on the digital impact on the automotive industry. PARAR is the major mobility event in Latin America with over 3,000 people attending the three-day event in person while a further 10,000 joined in online. Autorola Brazil also attended FENAUTO in October.

How Indicata big data helps sell ex-lease vehicles
Morten Holmsten, Autorola’s global MarketPlace director, was guest speaker at the Aumacon Top 100 Lease event in Amsterdam where he provided insight into how Indicata big data helps sell ex-lease vehicles.

Autorola embracing personal mobility
Autorola Group then supported the Fleet Europe Summit 2018, held on 27-28 November in Barcelona, by sponsoring the Fleet Europe Village which was home to leading fleet and mobility suppliers.

Morten was spotted embracing the discussion around personal mobility at the event by trying out a bicycle on the ALD Automotive booth.

We will see everybody at the ENG Vehicle Remarketing conference in Amsterdam on the 24-25 January 2019.

Vehicle repossession is often a complex process which requires consideration not only of legislation in order to protect consumers and organisations, but also of various stakeholders.

Autorola Solutions recognises this area can prove challenging and therefore provides an end-to-end solution to manage the entire process via its connected online platform.

Risks increase when payments are in arrears
”When payments are in arrears, your risk increases,” explains Ib Kimose, Global Solutions Director at Autorola. ”Therefore, swift action and strict control is a must, as you want to repossess the car as quickly as possible to minimise the lead time between gateways – both operational and legal – in order to sell the car to recoup losses.”

Autorola Solutions allows fleet operators to have full control over their cars every step of the way and to measure on all KPI’s. The platform provides a powerful tool to reduce operational costs and financial risks, and simplifies every part of fleet and resource management.

Flexibility is key
Ib continues, ”Flexibility is key and inherent in our way of thinking. Our Business Partner set up takes collaboration to a new level, helping to integrate all key business partners into a users own customised flow in Fleet Monitor. This enables operations to be streamlined and optimised at individual levels.

The system also allows users to communicate online with all stakeholders, generating receipt documents, uploading relevant documents/certificates and managing deregistration processes.

In the recent Indicata Automotive Market Trends Report November Fleet Europe special we showed how the data can be useful in analysing market days’ supply and contrasting stock levels against sales to give an average ratio. This month we thought it would be useful to show how quickly, or slowly things can change.

Sales up, stocks static
Across the UK B2C used car market total sales in October for the 15 brands shown in the chart rose by seven per cent to 286,014 units over the previous month, whilst online stock levels were up just 0.7% to 420,720 cars according to Indicata’s database.

This pushed up the average sales/stock ratio to 68% from 64% last month as dealers pushed sales hard in the run-up to the Christmas break.

Ford holds top-spot but ratios slip
Ford remained the highest selling B2C used car brand by volume, although sales fell two per cent in October. Vauxhall retained second place in volume terms with 34,052 B2C used car sales, whilst Volkswagen leapfrogged BMW to take third place with 27,917 cars, almost eight per cent more than BMW.

Looking at the sales-to-stock ratio, Ford slipped to second place behind Volkswagen which achieved a 77% sales/stock ratio compared to 75.6% for Ford. Some 18.7% separated Volkswagen at the top and MINI at the bottom of the 15 brands.

Data analysis key to avoiding risks
The key to ensuring the right stock and sales mix is to drill down deeper into Indicata’s data and analyse the vehicles at a model and fuel type by region. This will avoid the risks of overpaying for slow-moving vehicles and getting the right cars in the right place to meet demand.

The Czech Republic automotive sector has matured significantly over the past 12 months according to Rene Buzek, managing director of Autorola Czech Republic.

With a stable economic and political base, demand for new vehicles within the Czech Republic is high and has seen vehicle manufacturers turn their attentions on improving business infrastructures via the implementation of workflow management tools to enhance automation. This has been led by Fleet Monitor from Autorola Solutions.
 
‘We have witnessed an increasingly structured way of working within the market,’ explained Rene, ‘which has been positive for business and seen demand for our Solutions product increase. We are on the cusp of starting up some new projects with OEMs within the market with a view to enhancing their processes and workflows.’

Leasing segment overloaded
The leasing sector is what Rene describes as ‘overloaded’ with vehicles at present with unrealistic residual values resulting in higher levels of stock and stocking days. The private buying market is simply not absorbing the volume of vehicles coming to market and, as a result, banks are showing signs of nervousness and applying pressure on lease companies to ensure they speed up used sales, so they can see return on investment.

Rene said, ‘From our perspective this challenge is a great opportunity. We are working together with the leasing sector to relieve the pressures to find the right pricing models and to keep stock days under control. We are using Solutions to educate and coach the leasing sector about which vehicles to dispose of via which channel to optimise both stocking days and pricing.’

Rise in export
Despite the overall used car sector being buoyant, the challenge of choosing the correct channel for disposal of certain vehicles has also seen a steady rise in the volume of vehicles being exported. With certain ‘lower specification’ vehicles becoming less desirable as the market matures, some of the major vehicle handlers are turning to export as a means of disposing of the surplus domestic stock.

However, as the lower specification vehicles leave the market via export, the import market is steadily developing with the demand for higher specification, lower mileage vehicles rising. René said ‘In line with the new sector, over the past 12 months the demand for high specification, lower mileage used vehicles is too, very positive.’

These imported vehicles are entering the market from Austria, Belgium and, predominantly, Germany.

Global issues rumble in background
Although the market has and continues to evolve at pace, some of the current major global challenges appear to have had little impact on the market to date, but the rumblings are clear.

As the ‘demonisation of diesel’ continues to spread post- ‘Diesel Gate’, the market for diesel powertrains remains buoyant domestically. However, there are some rumblings within the market that plans are afoot to implement regulatory measures, in line with EU recommendations.

Rene said, ‘This is causing a bit of concern within the market at present, but I am confident that we will not see big change within the next five years.

‘The impact of WLTP is another issue that has been under great scrutiny in recent months, throughout Europe, and looking at the domestic data – registration figures have reduced, yet the market remains positive.’

Supporting the change
With the evolution of the market well underway, technology is beginning to play a key role in progressing business across the board but Rene points to one of the key challenges within the market as being centred on mindset and the willingness to adapt to the new order.

‘It’s a challenge in some areas for people to accept the need to change their remarketing strategies,’ said Rene, ‘but on the whole, the market is recognising that it needs to bring in new processes, business models and management flows to satisfy demand.’

With petrol MDS falling sharply in Spain but diesel B2C used car market share remaining high, the next logical place to look at Indicata’s data is used car pricing by fuel type.

Since October 2017 the average B2C used petrol car price in Spain has risen by 39.6% to €27,931 compared to an average 6.5% rise seen in used petrol prices in the other four large European markets.

Rising petrol prices well ahead of diesel
The rise in petrol prices are well ahead of diesel which rose 8.1% over the last year in Spain and three per cent across all five markets. The trend was depressed by a 1.9% fall in the Italian diesel B2C used car prices where compressed natural gas (CNG) and liquefied petroleum gas (LPG) are becoming increasingly popular.

Used petrol cars are also gaining popularity in Italy with prices rising 8.1% in October 2018 compared to October 2017, making it the second highest rising market after Spain.

C-segment petrol prices rise sharply
The medium sized car C-segment is very popular in most countries. A review of the Indicata Index shows how B2C used petrol car prices have been rising sharply during the second half of 2018 in Spain compared to the decline in average diesel used car prices throughout the year.

The same pattern can even be seen in the Spanish SUV segment as demand for the smaller petrol SUVs have seen used prices rising against falling diesel used car values.

The slump in new car sales in Germany following the introduction of WLTP in September has seen the sale of business to consumer (B2C) used cars continue to rise once the traditional holiday season slump has been normalised.

The new car sales fall in September, a result of the WLTP introduction, meant German dealers and traders sold 2.1 used cars for every single new car. Whilst October saw that gap close to 1.7 it was still 10% higher than October 2017 and well above the 1.4 average for the first half of the year. 

Demand strong for petrol
Demand in the German used car market has been particularly strong for petrol cars where B2C used car sales have risen by 15.7% in October 2018, compared to the same month last year. By comparison, diesel B2C used car sales fell by 14.8% according to the latest Indicata data.

The UK is the other European country where traders and dealers usually sell significantly more used than new cars. It has been running at an average of 1.9 B2C used cars for every new car this year.

In the remaining three largest European car markets – France, Italy and Spain – used car sales generally followed their usual seasonal patterns, although France has yet to recover from the impact of WLTP and used cars continue to outsell new cars.

Spanish car buyers more willing to buy new
The conservative decision by Spanish car buyers to buy used instead of new cars during the height of its economic crisis continues to unwind as car buyer prosperity is leading to growing new car sales. The net effect is B2C used car sales are continuing to fall, but even in a market like Spain, which has been quite resilient against the diesel backlash, diesel is taking the brunt of the decline falling 28.9% in October 2018 versus October 2017, whilst petrol used car sales dropped 25.3% over the same period.