It’s been an interesting summer with the demand for used cars growing by 8.2% to the end of July in the five major European car markets. Dealers continue to report higher used car margins than new car sales which have fallen in nine out of the 10 months to June.
The used car growth coincides with more used cars coming back into the market from finance contracts following strong global new car sales during 2016.
Record export numbers processed on our online portal
We have seen record numbers of used cars offered and sold via our online portal and in particular cross border sales continue to grow as we help balance used car supply and demand across Europe. Used car demand remains strong in Portugal and Spain, while other countries are using Autorola to help export used diesel cars that have fallen in popularity such as Germany and Belgium.
Our newsletter highlights the role Autorola plays in cross border export sales from a vendor perspective and have spoken to our country managers in France and Holland how export works practically for customers. We are very proud of how we bring buyers and vendors together through our online portal and look forward to supporting new vendors who are considering or who have recently adopted a pan European remarketing strategy.
INDICATA powering real time used car insights
We feature stories in our newsletter on used car market insights powered by data from our INDICATA portal.
We have received positive feedback on these articles in past newsletters as they are providing vendors with valuable used car sales and supply data to support key remarketing decisions. Let us know if there are other insights article that we can provide you with in future newsletters.
INDICATA values vehicle assets during life cycle
Asset managers are responding very positively now that we have integrated INDICATA with our Fleet Monitor asset management platform. They can gain insights into the real time values of their vehicle portfolio during different stages of an asset’s life cycle.
For leasing companies, banks, finance companies and any business that owns their fleet this is a huge step in understanding their fleet risk. With recent challenges with used diesels and in some countries where used prices are falling it gives asset managers peace of mind how much their fleet is worth against written down values.
Big Data adding value to fleets
We have spoken before about Big Data and this is a great example of how it is adding value to our customers. We look forward to working with fleets to roll out this integrated asset management and valuation solution.
As we enter Autumn, so the challenges of ever-changing used car values continue to make our lives very interesting, now with the added complexity of more hybrids and electric cars hitting the used market. We plan to provide you with insights into the used EV market in our next newsletter.
Best regards Peter
NEWS
Introduction from CEO & Founder, Peter Grøftehauge
Autorola makes it easy for buyers to purchase used cars cross border says Pierre Emmanuel Beau, director of Autorola France.
Export buyers purchase up to two thirds of all used cars sold by Autorola France, with 40% of their volume currently heading for Portugal and Spain to accommodate used car shortages in both countries.
At the heart of the French export success story is the service it offers to buyers. The French team speak 11 languages. They are available on the phone or email to answer buyer questions in their own language which further adds to the trust of buying from the Autorola online auction platform.
Autorola manages a shared buyer network across Europe
Autorola has a shared network of used buyers across Europe with notes of the types of used vehicles they want to buy. Pierre and his team match those buyers with vendor clients that they know have an export stock profile.
Different countries want different types of cars with buyers having access to tens of thousands used cars each week through the Autorola online portal. Buyers simply log on, bid and buy, and transport can also be arranged if required.
Export cars are listed net of Vat and local taxes
Prices are listed for each car net of local VAT and taxes so buyers always know the exact price they will have to pay for export vehicles.
“Vendors have the peace of mind that all our buyers have been vetted by us before they can buy cars. Many buyers have been working with Autorola for many years, so the trust has been built up over time.
“This is how we set the online auction benchmark, by putting everything in place to gain buyer trust encouraging them to bid and buy a used car remotely. On the odd occasion there is a problem the buyer knows we will do our best to sort it out quickly and efficiently which suits both buyer and vendor,” said Pierre.
INDICATA tracking used car markets across Europe
Whilst the five largest car markets are key countries to track across the industry for the major international automotive companies, it is also worth monitoring trends across the rest of Europe. A sneak preview at INDICATA’s average stock days by age across multiple markets shows the diversity of stock across Europe.
The next three largest car markets in Europe after the big five and in order of forecast new car sales for 2019 are Poland, Belgium and the Netherlands where a combined 1.46 million new cars are likely to be sold this year, which is more than Spain. These three countries account for significant amounts of used car exports and, in the case of Poland, also imports across the whole of Europe.
Considerable disparity across smaller markets
There is considerable disparity across these smaller markets. Austria, the Netherlands and Sweden have significant levels of younger aged stock of one to two-year-old used vehicles compared to Belgium and Poland where it is the 25 to 36-month-old vehicles which are currently proving the hardest to sell.
Before considering cross-border trading between any market it is a key requirement to understand if you are moving stock into or out of a country at the right time. Whilst you may consider this is possible to do at a very high level, the INDICATA data shows that once you start dissecting different markets by vehicle age, segment type, fuel, body style and make or model mistakes can be made, and opportunities missed.
The daily rental market in Spain and the fleet markets in countries like Belgium, the Netherlands and the UK export tens and even hundreds of thousands of used cars each year and identifying where the biggest demand could be for a particular vehicle could transform a company’s bottom line profitability.
Used car sales outperforming new car sales across Europe’s big five car markets
Car buyers are switching to buying newer used cars instead of new according to the INDICATA database.
To June 2019 new car sales had fallen in nine of the previous 10 months, with just a miserly 0.1% positive movement in May 2019 being the only glimmer of hope across the 28 European member states and the European Free Trade Agreement countries of Iceland, Norway and Switzerland.
However, used car sales across all five major European car markets grew by 8.2% for the period January to July 2019 compared to the same period in 2018. France has seen the biggest rate if increase, up 14.6%, followed the UK (+9.2%), Spain (+7.0%), Germany (+5.8%) and Italy (+3.6%).
Used car sales outstripping new
Over the first seven months of 2018 online B2C used car sales were achieving parity with sales of new cars across Europe’s five largest car markets, with 7.14 million new cars registered compared to 7.15 million used car sales. One year later and used car sales are now 10% higher than new car sales with 7.74 million online B2C used cars sold in the first seven months of 2019 versus 7.01 million new cars over the same period.
The widening gap between new car sales and used car sales started in September 2018 when the introduction of the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) saw new car sales collapse. Used car sales also started to rise from January 2019, increasing in volume terms by an average 8.4% per month between January and July. Despite new car sales rising by 0.9% across the five biggest car markets in Europe in July, used car sales leapt by 20.9% according to the latest INDICATA data.
Spanish market on road to recovery
Focusing on specific markets, a weak quarter one (Q1) of online B2C used car sales in Spain was compensated for by a strong second quarter (Q2) which saw sales rise 32.1% over Q1 2019 and up 19.3% over Q2 2018. The recovery was not quite enough to put the Spanish used car market back into growth though and for the first half of 2019 it was still down 2.6%, but an even stronger July meant total online B2C used car sales in Spain were up seven per cent.
July also saw strong used car sales growth in the remaining four markets with sales for the big five countries up 20.9% in total over July 2018. Germany saw online B2C used car sales rise by 26.2% in July 2019 compared to the same month last year, whilst France (+23.3%), the UK (+11.6%) and Italy (+10.8%) also saw strong increases for the month.
However, it should be remembered that July and August 2018 saw significant new car discounts being offered to clear out new cars which had not or could not be homologated in time for the introduction of WLTP in September, so the rate of growth should stabilise once we are past this period.
Integrated systems are providing vehicle asset managers with critical, real time market insights says INDICATA’s Jurgen Claus.
The combination of Fleet Monitor and INDICATA is adding a new dimension to vehicle fleet asset managers ability to maximise portfolio values via enhanced sales, risk management and remarketing insights.
Workflow monitoring tool, Fleet Monitor in combination with data driven market insights tool, INDICATA, enables vehicle asset managers to take a pro-active approach to understanding the real-time value of their vehicle portfolio, constantly screening for business opportunities and providing immediate decision-making capabilities.
Changing the way asset managers value portfolios
Traditionally, vehicle asset managers have valued their assets using historic data rather than actual market prices. This ‘reactive’ approach often results in asset portfolios being misaligned with widening used vehicle value gaps, often only evident at the end of a vehicle contract. This creates a major challenge for asset managers. However, by using the Fleet Monitor/INDICATA system, vehicle fleet owners add a dynamic monitoring tool to the instruments of portfolio management.
With individual vehicle details uploaded into the Fleet Monitor system, INDICATA integrates within the system to allow asset managers to truly understand the value of any given vehicle at every stage of its life cycle.
Tailor to meet specific requirements and risk parameters
Asset managers can tailor the system to meet specific requirements and risk parameters to ensure management of the entire vehicle portfolio is by exception and not rule – helping to ensure focus is prioritised on vehicles which match the ‘risk’ criteria.
On fleets of any scale but specifically those larger fleets, this specifying of risk criteria ensures enhanced efficiencies and clear visibility of pending, current and future challenges and opportunities. Examples of customised gateways include low or high market days supply or higher/lower book value than wholesale and can be incorporated at any stage of the vehicle life cycle from arrivals, handover to drivers, returns, inspections and sales.
Constant screening helping to detect risks
Jurgen Claus, international business development manager, Autorola Group who is working with organisations across the globe to leverage the true benefits of the system, said, ‘Constant screening of a portfolio can not only detect risk – or risk tendencies – in the early stages but it can also give you an insight in cluster risk such as percentage of petrol Vs diesel on your fleet or gearbox variants that are no longer in fashion etc.’
Jurgen continued, ‘From a sales perspective, the tool also allows users to detect sales opportunities. Leasing and financing companies can detect those vehicles that are less prone to variable market trends which are ‘in the market’. Potentially, these could be presented to drivers as a new alternative, increasing the car sales rotation and, at the same time, providing the used car market with high quality late and low stock.’
Powering the potential for global asset management
Another key aspect of the integrated system relates to end of contract and determining the most suitable and cost-effective route of disposal. In ’normal’ portfolio management the end of contract process starts at 180 days before the contract expires.
Based on the data Autorola collects daily across Europe, it can advise every fleet owner where in the world to sell the end-of-contract-cars to gain the best price and that may mean exporting the cars. This decision is based on Autorola’s cross border used vehicle expertise as well as actual market prices which show true supply and demand in individual markets.
Jurgen explained, ‘Not only is this functionality less time consuming for asset managers to consider and decide on their routes for disposal, but it also helps to optimise the resale value of the vehicle and any difference with the book value of the car.’
The introduction of INDICATA integrated into Fleet Monitor is the newest addition to Autorola’s range of enterprise solutions, where business units and product modules join forces to provide premium business propositions.
For more information, please contact Jurgen Claus, International Business Development Manager, Phone: 0032 (0)3/887 19 00, Mobile: 0032 (0)473 96 41 09, Email: jcl@autorola.be
Market days’ supply sees double-digit decline as demand for used cars increases
Car buyers switching from buying new cars to used cars across Europe are pushing down market days’ supply (MDS) for online business to consumer (B2C) used cars of all types, according to the latest data from INDICATA.
MDS measures the amount of used stock available across retailers in a country and compares that to the volume of sales. Therefore, if demand increases but stock levels stay the same the MDS falls because traders will sell out of their stock over a shorter timeframe.
Since the start of 2019 MDS in Spain has fallen 25.6% as supply for used vehicles is failing to keep up with demand. Despite online B2C used stock levels rising by 41.9% between January to July 2019, it is still not enough to meet the increasing demand from used car buyers looking for a more cost-effective way to change their cars.
Stock levels static whilst used demand increases
The increase in used car sales is having a similar effect across the major European used car markets with the remaining four markets all seeing total stock levels remain relatively static whilst used car demand increased. The highest and lowest stock movements for the big five markets, excluding Spain, were in Italy where online B2C used car stock levels rose by just 4.2% from January to July this year whilst the UK saw levels drop by 0.7% over the same period.
MDS fell 19% in Germany for all fuel types with the decline much sharper for used diesels. This indicates that dealers could be destocking diesel and switching their focus to selling used petrol cars a bit faster than used car buyers are changing their buying habits.
Germany and France impacted by transition from diesel to petrol
Online B2C used diesel car MDS in Germany stood at just 62.78 days in July this year which is the lowest level in the market since INDICATA started tracking MDS in this way and well below the average 78.61 days seen for 2018. In contrast MDS for online B2C used petrol cars stood at 77.31 days in July 2019 compared to a similar 76.81 days 2018 average.
France has seen MDS fall by 17.7% between January and June this year with MDS dropping from 61.77 days in January for the whole market to just 50.84 days by July 2019. Drilling down further into INDICATA’s data shows the French used dealer market seems to be handling the move to petrol from diesel in a more controlled fashion than Germany. Used petrol car MDS in France has increased by 4.2% since January 2019 and 12.4% since July 2018. In July 2019 it stood at 54.78 days whilst used diesel car MDS has dropped 28.7% since January and 22.8% down over the previous year and now stands at 47.09 days – a gap of just over seven days between both fuel types compared to over 14 days’ worth of stock in Germany.
UK limited by scale of right-hand drive markets
With the UK being the largest right-hand drive market in Europe it doesn’t have the flexibility to import and export used cars as freely as most of mainland Europe. Germany has increased its used diesel exports which is resulting in much lower MDS for used diesel cars, but the UK is limited due its scale over other right-hand drive markets. This limitation means it is only able to export around three per cent of all online B2C used car sales to countries like Ireland and Malta. Despite this MDS for both used petrol and used diesel vehicles have been on a par with each other since the end of 2017, standing at 42.47 days for used diesel cars and 42.0 days for used petrol cars.
Much of the 24 months to 48-month-old used stock comes from fleet and retail finance defleets many of which are diesel. Only recently INDICATA confirmed that petrol powertrains are proving to be “the UK’s top selling used cars during 2019” which might indicate concerns of a possible major disparity in supply and demand.
The fact is that whilst used car market demand is changing and becoming more petrol focused, the change is happening at a slower rate compared to the new car market, lagging behind by two to three years at the moment according to INDICATA’s database.
Used diesel car sales fall as supply from new car market drops
How a vehicle performs in the used car market is a real determining factor in a new car sales success. If demand in the used marketplace dries up, then residual values collapse making the car unattractive in terms of financing and cost of ownership. This means it is the used car market which is the key driver for the new car market.
However, when legislators and the media distort the market, as it has done with the war on diesel, we can see the used car market being dictated by the new car market.
The war on diesel having an impact
New diesel car sales started to decline in 2011 when the introduction of Euro-5 emissions tests back in 2008 saw three-year-old used cars starting to suffer with clogging issues with the diesel particulate filter (DPF). The war on diesel and the announcement and introduction of various clean air zone (CAZ) charges and other tax changes in 2016 and 2017 have accelerated the rate of decline in new diesel car sales. The result is we are now seeing the supply of three-year-old used diesel cars coming back to the market reducing.
Used car buyers are generally more pragmatic when it comes to choosing their next car being less concerned about the latest trends and more focussed on finding a car to meet their daily needs. This has resulted in demand for used diesel cars remaining relatively strong with total online B2C used diesel car sales up three per cent for the first seven months of 2019 – hitting 3.74 million compared to 3.64 million for the same period last year. 
Diesel outlook on downward trajectory
The outlook for used diesel cars is still following a downward trend though. According to INDICATA’s data, used diesel car sales lost their crown as the powertrain of choice in August 2018 and since then they have continued to lose market share to used petrol cars and, to a far lesser degree, to hybrids and electric vehicles.
Four of the five largest car markets saw a shift in market share from diesel to petrol of between 2.3% (Germany) and 3.4% (Spain) with the UK seeing a 2.5% switch and France a 2.8% movement between the two fuels. Italy continues to be the exception with 469,502 online B2C used diesel car sales recorded by INDICATA for the first seven months of 2019, a 4.7% increase over the same period in 2018 and increasing the diesel used car market share from 68% over that period last year to 68.3% this year. This is clearly why so many German used car dealers are seeing Italy as a good place to export their unwanted older diesel cars.
Petrol continues to be powertrain of choice
Online B2C used petrol cars continue to strengthen their place as the powertrain of choice across the other four markets though. Sales grew by 12.5% across the five largest markets combined, hitting 3.86 million units for the first seven months of this year, or up 13% excluding Italy. This situation is expected to continue for the next three to four years as the collapse of new diesel car sales continues to wash through to the used car market. This will leave used car buyers with little option but to buy used petrol or start to pay a premium for the limited supply of used diesel cars which will then be available by 2021-2022 and beyond.
Of course, this will cause a dilemma for politicians and lobbyists as this means we will see increased levels of CO2 being produced by the increasing volume of used petrol cars on the roads, which could cause more chaos for the automotive industry and car owners with yet more legislation.
Supply and demand provide ‘stability’ to diesel market
The limited supply of diesel cars coming into the market is good news for sellers of used diesel cars. Whilst demand for new and used diesel cars are in decline, the fall is far less noticeable in the used car market.
When used diesel car demand is combined with the reduction in supply the net result is the price of online B2C used diesel cars generally remains stable across all markets, according to INDICATA. But this high-level view needs to be considered carefully and explored to truly understand what is going on.
Diesel used values not collapsing
What is clear from a high level is that diesel used car values are not collapsing. Even in Germany, where a review of INDICATA’s MDS showed German dealers as having cleared out more stock than they may have needed to, used diesel car prices are rising, up 2.8% on average in Q2 2019 versus Q2 2018. In fact, online B2C used diesel car prices have risen two per cent over the first seven months of 2019 compared to a 3.5% fall in average used petrol car prices.
Average online B2C used diesel car prices are also up in France (+3.1%) for Q2 2019 compared to the same period last year. Whilst used diesel car values have remained almost flat in 2019 with just a 0.2% increase from January to July the situation for average online B2C used petrol car prices follows a similar but more severe pattern to what is happening in Germany, dropping 6.4% in seven months.
UK diesel prices fall whilst petrol jumps
The UK has seen average used diesel car prices fall by 1.1% in Q2 2019 to an average of £14,848 per car compared to £15,026 per car last year, whilst used petrol car prices have jumped up 3.6% in the same quarter hitting an average of £13,114 per unit in Q2 2019.
In general France and Spain both continue to show online B2C used car prices for petrol cars outperforming diesel whilst the other three markets show average online B2C used diesel cars doing better.
Spanish market provides greater insight in changing dynamics
Taking a deep dive into INDICATA’s data in Spain gives a little more insight into the changing market dynamics and why you should consider looking deeper to specific models before drawing too many conclusions.
Whilst both the B and C segments in Spain have shown healthy increases in the average used petrol prices for cars, the situation for J segment petrol SUVs is far less dramatic.
By July 2019 used B segment petrol cars were at 104% of the index point from a year earlier, whilst used C segment petrol cars fared even better, hitting 107%. But used petrol SUVs only saw a one per cent increase in their index value over the same period.
INDICATA’s used diesel car index values show an even more diverse pattern, with the J segment SUV’s index falling to 98%; B segment used diesel index falling to 99%; whilst the C segment used diesel index actually showed prices rising, albeit to just 101%.
Michael Bernsen, remarketing manager of Alphabet the Netherlands says Autorola the Netherlands is a trusted partner for cross border used car sales.
As one of the leading European leasing companies we expect high quality service from our providers and that is what we get from Autorola, Michael Bernsen, remarketing manager of Alphabet the Netherlands, says and continues; around 35% of our used cars are exported so online auctions are a key part of our remarketing strategy. The Autorola platform hosts our open online auction four times a week in real time which allows all interested buyers to bid on our cars. Images and condition reports on each vehicle are downloaded from our appraisal system so they are presented for sale to a high standard.
Export channels ensure best practices and prices
Net VAT and net luxury tax figures are generated by the Autorola platform to make life easier for export buyers to understand the actual price they are paying for a car. Opening up our used cars to export buyers ensures we get the best price for each one we sell.
Autorola helps reduce our risk as they work with registered buyer partners in each country and we receive payment for our cars very quickly. They manage all the administration around export which makes it a very efficient channel for our team.
Helping prepare for the future
If we need access to remarketing trends to share with my colleagues Autorola provides us with data very quickly. Autorola is a proactive business partner and is constantly looking to help vendors prepare for future remarketing challenges.
Autorola provides peace of mind for European vendors exporting used cars says Frank Tanke, country manager of the Netherlands.
Autorola’s online portal is at the heart of balancing the used car supply across Europe through export. The group helps vendors through the process of exporting used cars and with active buyers in 31 European countries has a long track record in managing all aspects of cross border challenges such as logistics, different currencies, unknown foreign taxes and VAT.
Helping buyers source diesel cars
Recently used diesel cars have had a tough time in some countries and the Autorola platform has played a major part in stock being purchased by buyers in countries where diesel demand is strong.
Fifty per cent of all used cars on the Dutch Autorola online platform are exported, with one third of all those going to Portugal. Portugese dealers are short of stock caused by a shortfall of new car sales in 2016 and a rise in demand for used cars fuelled by an economic recovery. Autorola the Netherlands exports cars to a total of 27 different countries.
Supporting decision making process
But before used cars are sold online, Autorola can help vendors in the decision-making process as well. Using real time European INDICATA data vendors can identify which markets are relevant and where prices are good. This proactive approach ensures vendors receive the best price for their used stock.
Autorola’s combination of using international network of buyers with having access to real time market data is what gives Autorola’s cross border remarketing proposition peace of mind for both vendors and buyers.
For further information contact Frank on M +31 (0)6 86815250 E ft@autorola.nl
