NEWS

INDICATA tracking used car markets across Europe

Sep 17, 2019   written by Dean Bowkett


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.

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Used car sales outperforming new car sales across Europe’s big five car markets

Sep 17, 2019   written by Dean Bowkett


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.

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Market days’ supply sees double-digit decline as demand for used cars increases

Sep 17, 2019   written by Dean Bowkett


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.


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Used diesel car sales fall as supply from new car market drops

Sep 17, 2019   written by Dean Bowkett


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.


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Supply and demand provide ‘stability’ to diesel market

Sep 17, 2019   written by Dean Bowkett


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%.


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Germany and France trading used diesel as market days supply drops sharply

Jun 24, 2019   written by Dean Bowkett

Market days supply (MDS) for online B2C used cars fell in Germany (-7.9%), France (-0.5%) and Italy (-2.3%) for the first two months of Q2 2019 compared to the whole of Q2 2018 according to the latest data from INDICATA.

However, a fall of 11.1% in used car sales in Spain for the first five months of the year saw average used car prices start to fall and MDS increase by seven per cent to 87.4 days for the first two months of Q2 2019 year-on-year.

Used car sales volumes increased by 10.6% in the UK for the year-to-May 2019, compared to the first five months of last year. Used diesel car prices remained almost flat, with a marginal decrease of 0.6%, whilst used petrol car prices rose 3.7%. This resulted in MDS continuing to be relatively stable at 46.2 days for April and May 2019 versus an average of 47.6 days for the whole of 2018.



War on diesel continues to have a significant influence

Drilling down into the data, the war on diesel continues to have a significant influence resulting in dealers trading out of their used diesel stock rather than retailing them to consumers. In some cases, they are even resorting to increasing the levels of export to clear out stock, particularly in Germany and France.

German dealers are currently struggling with stocks of pre-Euro 6 diesel cars which are facing increasing numbers of bans or charges for driving into some of Germany’s major cities and a €2,000-€3,000 cost to convert them to Euro 6 emissions standard.

This issue is starting to appear elsewhere in Europe as dealers are finding it increasingly difficult to sell their older vehicles resulting in ageing stock levels. The aim seems increasingly to avoid being left with unwanted diesel cars, inline with media reports of growing demand for petrol and alternatively powered vehicles. This issue has already seen an increasing number of small independent dealers falling into bankruptcy according to the ‘German Federation for Motor Trades and Repairs’ (Zentralverband Deutsches Kraftfahrzeuggewerbe, ZDK).

Total used diesel car sales show gradual move away from diesel

Total used diesel car sales across the big five European markets captured 49.2% of the online B2C used car market sales for the first five months of 2019 compared to 51.5% for the same period in 2018. This shows there is a move away from diesel but not to the same degree being seen with new car buyers.

However, marketshare only shows part of the story and looking at total sales, both petrol and diesel car sales increased in total year-on-year for the big five countries. Online B2C used petrol car sales rose 10.7%, whilst used diesel car sales saw a one per cent increase according to INDICATA. This proves that whilst the market dynamics are changing there remains a healthy demand for used diesel cars.

Average used car prices rising

This demand for used cars has meant most countries have seen average used car prices rising by as much as 3.5% on average in France or, at the other end of the scale, staying flat with just a 0.1% movement in Spain which is facing other market challenges.

Germany and France both saw average online B2C used diesel car prices rise by 2.7% and 3.4% respectively for the first two months of Q2 2019 versus the whole of Q2 2018.

With used diesel car sales still rising in volume terms and prices still on average increasing, the widening of the gap in MDS in Germany with diesel stock now down to 65.28 days in May 2019 compared to a 2018 average of 78.7 days and a 2018 average for petrol of 76.9 days and a May 2019 average of 77.2 days could be a sign that some dealers have been trading or exporting their diesel stock at a faster rate than needed based on sales volumes, demand and market prices.

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Spanish used car prices continue to fall but mainly due to market corrections

Jun 24, 2019   written by Dean Bowkett



The financial situation in Spain is improving and with the Spanish economy in the healthiest position it has been for some time, despite changing governments, it seems strange that the automotive market is faring so badly. New and used car sales have reduced by 5.12% and 11.1% respectively, and average used car prices flat at 0.1% for the first two months of Q2 2019 versus Q2 2018, then falling sharply in May.

To understand it we need to consider that Spain was not only the worst hit economically of the big five automotive markets in Europe during the financial crisis of just over 10 years ago, but it was the second worst performing market in the whole of the European Union behind Greece. The post-recession recovery has been slow but steady economically and is now making good progress, but this has resulted in an overheating and sudden cooling down in the automotive sector. This became obvious with used petrol car prices last year, whilst the past 12 months has also seen used diesel values creeping up.

Used car prices expected to stabilise

What we are seeing now in the INDICATA data is some market realignment. With a strengthening economy, the used car prices are expected to stabilise again but with new and used car demand so weak and with little sign of improvement, it is likely to take some time before car buyers flock back allowing dealers to start increasing prices significantly.

Looking across Europe the good news is that whilst demand for used diesel cars is falling back a little, used online B2C used diesel prices are not collapsing as some feared. The INDICATA data shows petrol prices strengthening against used diesel values over the past 12 months but the demand for used diesels is helping prices to remain robust.

 

France market data shows that used diesel car prices have actually increased

Taking a deep dive into INDICATA’s data in France shows that used diesel car prices have actually increased on average year-on-year, rising 3.4% for April and May 2019 compared to Q2 2018, whilst used petrol prices rose just 0.2%.

However, if you look at the data at a more granular level you can see significantly different trends to the average movements. Even just going down to segment and fuel type per the INDICATA used car price index graph you can see how used petrol car prices have significantly outperformed used diesel car values over the last 12 months for C-segment medium sized vehicles like Focus and Golf.

Moving to the larger vehicles like the M-Segment MPVs and D-segment large cars you can see how the initial clamour to move to petrol which pushed up petrol prices has now been met by reality as buyers realise diesel is still the more sensible option for these bigger vehicles doing higher mileage and diesel values are performing better year-on-year.

This variation even extends down to make, model and bodystyle according to INDICATA’s data.

 


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Diesel B2C used car market sales up but market share still declining

Jun 24, 2019   written by Dean Bowkett

For the first five months of 2019 online B2C used car sales rose 5.7% to 5,358,094. The shifting market dynamic saw used diesel sales up just one per cent to 2,637,026 compared to used petrol car sales which rose 10.7% to 2,721,068 units according to INDICATA.


In volume terms, only Germany and Spain saw total used diesel sales falling for the first five months of this year. Germany saw used diesel sales drop by 2.3% to 824,964 whilst Spain saw a 16.1% decline in used diesel car sales. This means used online B2C diesel cars now account for just 39.3% of the German used car market so far in 2019, compared to 41.6% for the period ended May 2018. In contrast used diesel car sales still accounted for 68.5% of the Spanish used car market although that is down from the 71.8% for the first five months of last year.

France has seen a similar decline to Spain, with used diesel car sales accounting for 64.1% of the total 962,554 online B2C used car sales for the first five months of this year compared to a 66.1% share of the 889,118 online B2C used car sales for the same period last year.

Diesel car sales represent less than half of the UK online B2C used car market

According to INDICATA’s data, used diesel car sales have represented less than half of the UK online B2C used car market for almost two years now. However, they are still losing marketshare, dropping to 45.7% of the market for the first five months of this year’s 1.6 million used cars sold versus 48.7% of the 1.5 million online B2C used cars sold to end of May 2018.

One country which seems to be defying the other major market’s trends is Italy. It saw 478,776 online B2C used cars sold this year (to end of May). That is a 5.3% increase in total used car sales but unlike the other major automotive countries in Europe the marketshare of used diesel cars in Italy rose by 0.3% to 68.2% compared to the same period last year. This apparent ‘love’ of diesel cars in Italy ties in with a report from the German Federal Statistical Office which reported a 20.5% increase in used diesel car exports from Germany in 2017 with Italy being the largest importer of those vehicles.


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Ageing stock profiles creating issues for some countries

Jun 24, 2019   written by Dean Bowkett

The challenges faced by sellers of non-Euro 6 diesels and other market pressures caused by economic uncertainty in countries such as Italy is creating an aged stock issue in some countries.

A sneak preview at INDICATA’s average stock days by age across multiple markets shows the diversity of stock ages and ageing profile across Europe.

Whilst countries like Austria, the UK and Sweden carry an ageing level of one- to two-year-old used stock, places like Germany, Spain, Poland and Belgium tend to carry a more aged level of 25-36-month-old vehicles. Some of these stock levels are concerning given the age in stock but it is countries such as Italy and Portugal where very high levels of stock and high levels of aged stock of older vehicles are apparent. This causes difficulties with pricing in a way to recover stocking costs and retain a healthy margin, a cause for real concern.

Looking deeper into the INDICATA data at a manufacturer, model and fuel type level highlights some interesting challenges but you need to subscribe to INDICATA data to find out more.


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New car sales fall across most of Europe’s big five as used car demand strengthens

Jun 24, 2019   written by Dean Bowkett

INDICATA’s latest data shows online B2C used car sales are up 7.5% to 5.5 million units in the first five months of 2019 for the big five European car markets compared to the same period last year.



Only Spain saw used car sales volumes fall, down 11.1% so far this year. France saw the largest rise as sales jumped 13.8%, closely followed by a 10.6% increase in the UK year-on-year. Italy (+5.4%) and Germany (+4.6%) also saw a healthy increase in used car sales.

Germany is the only country to see new car sales increase over the same period as sales rose 1.74% for the five months to May 2019, compared to the same period in 2018. New car sales in France remain flat, down 0.05%, whilst sales in the UK dropped 3.1%; Italy fell 4.1%; and Spain saw a 5.1% decline as yet another change in government has knocked some of the car buyer’s confidence out of the economy.

Continued trend for used car sales

Except for Spain, this data highlights a continuing trend to move from new car sales to used car sales which happened for most of last year and shows little sign of abating.

Online B2C used car sales were 140% higher than new car sales in Germany for the period January to May 2019 compared to 137% for the first five months of 2018. In the UK that ratio went from 140% in 2018 to 160% in 2019 over like for like periods.

 

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