Germany has seen stock of used cars fall sharply, according to the latest data from INDICATA. Market days supply (MDS) of used cars saw the usual uplift in the run up to the end of the year followed by the traditional downward trend in the first quarter (Q1) of 2019 as dealers took advantage of the pent-up demand from car buyers to change their vehicles.
Across the big 5 markets of Germany, UK, France, Italy and Spain combined, the average MDS in Q1 2019 is inline with the same quarter in 2018 but at a country and fuel type level there are marked differences as a result of varying strategies in dealer stocking plans and used car buying demand.
In Q1 2018 MDS in Germany stood at 78 days’ supply, a fall of three days against Q4 2017. Move forward one year and MDS stands at just 72 days for Q1 2019, a drop of 11.3% against Q4 2018 and down 8.0% against Q1 2018. This quickening of stock turn should add a boost to dealers’ profitability.
Drilling down deeper into the INDICATA data shows that market demand for used diesel is weakening but it remains reasonably strong with diesel taking 49.2% of the B2C online used car sales volume in Germany in Q1 2019, compared to 52.0% for the same period last year. But a review of stock levels shows that online B2C stock levels of used diesel cars in Germany has dropped by 15.9% in Q1 2019 against the same quarter last year whilst stock of used petrol cars has risen by 13.9%. Given this imbalance it would appear that dealers are fearful of the used car market following the new car market due to the demonisation of diesel and are choosing to buy used petrol cars rather than used diesel cars.
Whilst the gap between average used diesel prices and petrol prices has moved against diesel by 3.0% between Q1 2018 and Q1 2019 the clear demand and increasing shortage of diesel stock could create some market opportunities with used petrol MDS standing slightly higher at 71.9 days compared to 70.5 days for used diesel.
Italy has also seen MDS falling, down 6.7% to 72 days for Q1 2019 compared to Q1 2018. However, the underlying INDICATA data shows a different trend to Germany. Online B2C used car sales volumes for both fuel types have risen by a little under 9.5% in Q1 2019 versus the same period last year but prices are rising much faster for petrol used cars than for diesel. Whilst dealer stock has seen a 9.4% increase in online B2C used diesel cars on average for Q1 2019 compared to Q1 2018 used petrol stock levels have dropped by 6.0% over the same period, indicating that dealer stock mix is out of line with market trends. This explains why MDS for used diesel stock now stands at 77.1 days on average for the latest quarter compared to just 64.1 for used petrol cars.
Whilst the new car market in Spain has fallen by 6.9% for the first quarter of 2019 compared to the start of 2018 the sale of online B2C used cars has dropped by 18.8% over the same period. The INDICATA data previously showed that Spain was suffering with an excess of used stock as buyers were switching from buying used cars to new cars but it is not in large enough numbers to absorb the stock levels seen and this trend is still visible.
Overall Spanish dealers seem to have now got the mix of used petrol and diesel cars closer to market demand with MDS in Q1 2019 for used petrol at 83.4 days and used diesel 86.0 days, a gap of just 2.6 days compared to 5.6 days for Q1 last year and well below the double digit gap that existed for Q3 on average. However, stock levels are still the highest in terms of MDS adding an extra funding burden to dealers’ bottom line profitability.
New and used car markets in Spain are struggling and companies defleeting used cars in volume may want to consider taking some stock out of the market to achieve better returns.
Click here to get back to all News