NEWS

Market Days Supply falling sharply in Germany and Italy

Apr 15, 2019   written by Dean Bowkett


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.


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Used car sales rise as new car sales stagnate across most of Europe’s big 5

Apr 15, 2019   written by Dean Bowkett


According to INDICATA’s latest data 3.35 million online business-to-consumer (B2C) used cars were sold in the first quarter (Q1) of 2019 compared to 2.99 million new cars. It means that whilst new car sales have fallen by 2.6% for Q1 2019 compared to Q1 2018, across the big 5 European car markets online B2C used car sales have risen by 8.5% over the same period.

Both new and used car sales saw the usual quarterly seasonal increases in Q1 2019 with new car sales rising 23.2% compared to Q4 2018 and used car sales rising 16.3% over the same period. This is stronger growth than the previous year where new car sales rose 18.4% in Q1 2018 versus Q4 2017 and used car sales rose 9.8%.

Except for Spain, which has seen online B2C used car sales falling by 18.8% in Q1 2019 over the same period last year, the remaining four largest European car markets have all seen used car sales volumes increase as buyers switch from new to used according to Indicata.

Europe’s largest new car market, Germany, has seen new car sales stagnate for the first quarter of this year with just a 0.5% year-on-year increase whilst online B2C used car sales have jumped up 5.0% over the same period. With tense global trade conditions and uncertainty over Brexit pushing Germany into its deepest manufacturing slump for six years, new car sales are likely to continue to struggle with conservative consumers in Germany opting to buy cheaper nearly new cars instead.

It is a similar story in the UK where new car sales are down 2.4% in Q1 2019 compared to a rise of 14.7% of online B2C used car sales. Once again, we see Brexit weighing heavily on consumer confidence with neither Brexiteers nor Remainers happy with any of the proposals. From an employment prospective, the recent announcement from Honda about shutting down its UK plant along with further insolvencies and closures of High Street stores is creating concerns about employment prospects. Whilst there are many other factors at play the upshot is that consumers continue to be wary about spending on big ticket items and this is likely to continue to support the sale of used cars over new ones.

Used car sales in France have now been outstripping new car sales for the last three quarters, a reversal of fortunes compared to 2018 in total. This leaves just Italy and Spain where new car sales continue to outperform the used car market.

The French economy is currently struggling to grow as fast as it needs to, according to the OECD with its Secretary-General, Angel Gurría recently stating: “There is a real need to address the social challenges of long-term unemployment, difficulty in joining the labour market and weak social mobility.”

With this, it is difficult to imagine new cars outselling online B2C used cars at least during the remainder of 2019 and into 2020 when we have the added burden of Real Driving Emissions (RDE) tests to contend with and the risk that new car sales will be hit in the same way that the Worldwide Harmonised Light Vehicle Test Procedure (‘WLTP’) did.


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Diesel marketshare in the B2C used car market down 2.8%

Apr 15, 2019   written by Dean Bowkett


The war on diesel has seen the marketshare of online B2C used diesel cars fall by 2.8% in the quarter one (Q1) 2019 compared to the first quarter of 2018 with buyers switching to petrol alternatives according to INDICATA.

In volume terms, total online B2C used diesel car sales were almost flat for the quarter with Q1 2019 seeing 1.590 million used diesel cars sold compared to 1.593 million sold across the big 5 European car markets the previous year.

But this only tells half of the story as online B2C used petrol car sales shot up by 11.4% over the same timeframe, with 1.64 million cars sold in the first three months of this year compared to just 1.47 million sold last year over the same period.

Germany (-7.2%) and the UK (-6.7%) saw the biggest fall in used diesel car marketshare with Spain a close third as diesel lost 4.4% of its market for Q1 2019 compared to a year earlier.

Spain has historically been the strongest used diesel car market with diesel sales representing 72.2% of online B2C used car sales in the country but this has fallen to 69.0% in Q1 2019. With used diesel car sales losing just 1.2% marketshare year-on-year in France and currently standing at 65.1% for Q1 and Italy seeing diesel losing just a 0.1% marketshare and used diesel cars now representing 68.1% of the market it would seem the inconsistency in the war on diesel may change the way and location international used car sellers choose to trade out of their used stocks.

At a country level, in absolute terms, Spain has seen the sharpest fall in used cars, down 18.8% for Q1 2019 over the same period last year but diesel has taken the brunt of that drop. Sales of online B2C used diesel cars have fallen by 22.9% in Spain Q1 2019 versus Q1 2018 whilst used petrol car sales fell by just 10.1%.

Germany and France both saw quarterly used diesel cars falling by 3.5% and 2.1% respectively compared to the previous year whilst used petrol car sales rose by 9.4% in Germany and 1.5% in France.

The UK and Italy saw strong demand for used car sales resulting in both fuel types increasing total sales. Used diesel car sales in the UK rose by 5.6% to 465,949 units in Q1 2019 compared to a year earlier, whilst Italian used diesel car sales rose by 9.2% to 207,282 units.


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Spanish used petrol car prices falling sharply

Apr 15, 2019   written by Dean Bowkett


According to the latest data from INDICATA even though new and used car sales are falling sharply in Spain, with used diesel car sales particularly suffering, it is the price of used petrol cars which have been dropping the sharpest since the third quarter of last year. It appears that dealers pushed up prices as demand for used petrol cars increased but then the market overheated.

Since then, dealers have been correcting stock levels and prices to meet demand in the face of a declining market. However, used petrol car prices in Spain remain 11.8% higher on average in Q1 2019 compared to the same quarter last year whilst used diesel prices are 7.4% up year-on-year.

Used petrol car prices in Italy have jumped by 9.2% to €18,861 for Q1 2019 compared to the previous year whilst used diesel prices fell by 1.7%. This means the premium used diesel cars historically enjoyed in Italy has now been seriously eroded even though used diesel cars remain more popular amongst used car buyers. With total used diesel car sales volumes in Italy rising at a similar rate to used petrol car sales and marketshare of petrol versus diesel remaining almost static we could be seeing used petrol car prices being artificially pushed up which may explain why the Italian used car market is not following the move away from diesel being seen in other countries.

Apart from Italy, the UK is the only other one of the big 5 European car markets to see average online B2C used diesel car prices falling, down 12.4% in Q1 2019 compared to Q1 2018. Over the same period the UK saw petrol prices rise 4.3% although a drill-down into Indicata’s data shows that significant variances at a segment level exist in all countries and this should be considered before taking any pricing action.

Germany and France saw used cars of both fuel types rising. Germany continues to be the market which has fallen out of love with diesel more than most and with used petrol prices rising 4.0%, compared to used diesel prices rising 1.6%, the diesel premium is continuing to be eroded.

Despite some of the economic challenges in France both used petrol and used diesel cars saw above inflation average price increases with used petrol prices rising by 5.8% and used diesel car prices increasing by 5.6%.

Being able to look at the Indicata data in more detail you can understand how the overall averages start to diverge as you get into the different segments and also down to brand and model specific issues.

A quick review of just three segments in Germany shows how the large sized cars are showing strong pricing for used petrol cars and a sharp decline in used diesel car prices compared to last year and yet looking at the smaller, medium-sized cars and also SUVs the overall pricing dynamics for petrol and diesel vehicles have been relatively consistent at a segment level.

Whilst we won’t get into the detail at brand level it is also worth reviewing the segments at a brand and even model level in order to adjust pricing and to help understand the best markets to optimise your revenue.

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Young used diesel car stock massively outstripping sales in the UK

Feb 8, 2019   written by Dean Bowkett

The stock of used diesel cars in the UK during November was reasonably well balanced across all ages from 13 months old through to 72 months old but there is a significant stock issue for cars under 12 months old which varies by brand.

Used diesel cars aged between two to four years are responsible for the bulk of online business to consumer (B2C) used car sales, with much of that stock coming from ex-fleet vehicles. However, by November dealers were sitting on 74 days of market days supply (MDS) of used diesel cars aged six-12 months old.

Latest clean Euro-6 diesel engines and CAZ
These younger used diesel cars will all be fitted with the latest clean Euro-6 diesel engines and therefore should not be a problem for any car buyers wishing to use them in the emerging clean air zone (CAZs) regions springing up across the UK. They also meet the requirements for use in London’s Ultra Low Emission ZONE (ULEZ) but INDICATA data has already shown how the political and media spin in the UK is putting car buyers off both new and used diesel cars.

Sales and prices continue to rise
Despite the rhetoric against diesel both sales and prices of online B2C used diesel cars are rising. Sales increased by 3.5% to 392,676 in Q4 2018 whilst prices were around 1.3% higher than a year earlier. But putting that into context, online B2C used petrol car sales grew by 19.3% to 461,996 in Q4 2018 whilst used petrol car prices shot up 6.0%.

This means dealers may well have to consider how quickly and at what price they clear out these young used diesel cars before the market starts to take a downward turn. This issue is also not unique to the UK with other European countries having varying degrees of the same issue and with a variety of different brands.

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Market days supply shows typical year-end rise but petrol rising sharply

Feb 8, 2019   written by Dean Bowkett

2018 ended with the usual rise in market days supply (MDS) as dealers increased their stock levels during the quiet year-end selling months, ready to kick start their new year sales push.

MDS saw the sharpest rise in Germany as online business to consumer (B2C) used car sales fell sharply in Q4, down 7.3% over the previous quarter. There was an 11.1% quarterly fall in used diesel car sales and a drop of five per cent for used petrol car sales. Despite the fall in sales, dealers in Germany have been trying to manage their used car stock levels and are adjusting them for the increasing demand for petrol cars in the used market.

Online stock of used diesel lowers
At the end of December 2018 online stock of used diesel cars in Germany were 18% lower than the same period in 2017 whilst petrol vehicle stock levels were up 11.8%.

At the end of 2018, year-on-year MDS fell in Germany (-2.4%), the UK (-6.3%) and Italy (-17.1%) which could be an indication dealers are worried about used car buying demand falling in 2019.

MDS up by 15.6% in Spain
In contrast, MDS was 15.6% up in December 2018 year-on-year in Spain as demand switched from used cars into new cars leaving dealers with an excess of used stock, even though the stock of online B2C used cars in Spain was 18.2% lower by the year end.

A deep dive into INDICATA’s data in the last newsletter revealed that the problem in Spain was being caused by diesel cars. Dealers seem to have realised the change in market demand with the stock of online B2C used diesel cars at the end of the year down 21.1% year-on-year whilst petrol car stock levels fell by just 11.4%.

Petrol MDS rises in France
MDS also rose in France, increasing by 6.8% for the whole used car market with petrol MDS rising by 8.1% in December 2018 compared to December 2017. France has historically always been Europe’s strongest diesel market but used diesel car MDS hit a record 72.55 in December 2018 which is a third higher than the 54.31 MDS for petrol used cars – an indication of how much quicker French dealers are able to sell the relatively short supply of used petrol cars.

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New car sales outperform used car sales in three of the five biggest car markets

Feb 8, 2019   written by Dean Bowkett

According to INDICATA data, 2018 saw 12.2 million online business to consumer (B2C) used cars sales compared to just 11.2 million new car sales in Europe’s five largest car markets.

This was heavily influenced by used car sales in the two largest markets of Germany and the UK where used car sales are running at a rate of 1.5 online B2C used cars for every one new car.

New sales continue to outperform used
In France, Italy and Spain the new car sales continue to outperform the used car market despite the hiatus caused by Worldwide Harmonised Light Vehicle Test Procedure (WLTP) in the second half of the year.

The 12.2 million used car sales was supported by a 3.8% increase in Q4 sales as total online B2C used car sales in the five countries topped 2.9 million in the last three months of the year.

Diesel demand continues to fall
Demand for diesel continues to fall in Europe, with diesel marketshare dropping 4.6% by December 2018 compared to December 2017 for the big five markets combined. Four of the five markets saw diesel marketshare fall between 2017 and 2018 with Italy being the exception as online B2C used diesel car sales marginally increased marketshare by 0.6% to 68.5% of all used car sales.

Sales down by 30.5% in Spain
Whilst not instantly obvious from the chart due to the scale, not only is stock influencing market days supply (MDS) in Spain but so is used car sales. Online B2C used car sales in Spain were down 28.9% in December 2018 over the same month in 2017 with Q4 sales in 2018 down 30.5% over Q4 2017.

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Diesel marketshare stabilising in the B2C used car market

Feb 8, 2019   written by Dean Bowkett

The sharp decline in new diesel car sales is still not having a dramatic effect on the used car market according to the latest INDICATA data.

Whilst used diesel cars now represent just under half of all online business to consumer (B2C) used car sales, compared to a 54.3% marketshare at the end of 2017, the rate of marketshare decline has slowed down and stabilised since August 2018.

B2C used diesel sales top 1.4 million
Quarter 4 2018 saw total online B2C used diesel car sales top 1.4 million across all five markets compared to 1.5 million for Q4 2017 but, after a two per cent fall from Q4 2017 to Q1 2018, diesel marketshare fell at a rate of just one per cent for the three remaining quarters with December seeing a slight increase in diesel marketshare.

Despite diesel marketshare in the online B2C sales market falling in four of the five major European markets it is still the most popular in three of them. In Spain 71.3% of online B2C used car sales in December were diesel according to INDICATA data. Italian diesel cars took 68.5% of the December market, whilst in France used diesel cars accounted for 65.1% of the online B2C used car market.

Absolute diesel volumes falling in some markets
Online B2C used diesel car’s absolute volumes are also falling in some markets. Total sales for Q4 2018 were down by 17.2% in Germany compared to Q4 2017 and 32.1% down over the same period in Spain. However, the other three countries all saw total diesel car sales volumes in the online B2C market increase between Q4 2017 and Q4 2018. Italy saw an additional 15,690 diesel cars sold, an increase of 7.2%; whilst the UK saw a 3.5% increase, equating to an extra 13,113 units; and France sales rose by 2.7% to 335,087 online B2C used diesel car sales in Q4 2018.

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French used car buyers paying a premium for petrol

Feb 8, 2019   written by Dean Bowkett

 

Diesel cars are continuing to be priced, on average, at a premium in the German market according to the analysis from INDICATA. This comes despite online business to consumer (B2C) used diesel car sales seeing marketshare erode in favour of petrol cars and total sales falling in absolute terms.

Whilst market day supply (MDS) for diesel cars was higher than for petrol in Germany for the first half of 2018 dealers seemed to take steps to change it with used diesel cars running at an average 2.2 days lower than petrol cars from June to December 2018.

But diesel prices in Germany have started to ease back and are now at their lowest level since July 2018. Meanwhile, average online B2C used petrol car prices have been steadily increasing and by December 2018 were at a 12-month high of €20,972.

Italian diesel demand remains strong
In Italy demand for diesel remains strong with used diesel car sales still well ahead of used petrol cars but it is in online B2C used petrol cars where prices are rising the fastest. MDS in Italy saw used diesel cars hit 80.39 days in December 2018 compared to just 72.24 days for petrol. This was a key factor in the increase in used petrol prices and also resulted in the premium for diesel reducing to €950 by the end of 2018.

French market changing
The used car market in France may still be dominated by used diesel cars but the gap between the MDS of petrol cars (54.31 days) compared to diesel cars (72.55 days) shows that the market is changing. With such a difference in MDS it is not surprising that the average online B2C used petrol car prices are now showing a premium over used diesel cars.

Even in the J-segment, which is the term used by INDICATA for SUVs, INDICATA’s price index shows that average online B2C used diesel car prices have fallen in 2018 whilst used petrol car prices have risen.

The Paris ban on pre-2005 diesel cars entering the city, along with the proposed 2024 ban on all diesel cars is the perfect example of why we are seeing such a strong increase in the price of used petrol cars in France and why this shows little sign of changing anytime soon.

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Market days supply sees break from seasonal trend

Dec 6, 2018   written by Autorola

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.

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