Introduction from CEO Peter Grøftehauge

Oct 28, 2020   written by Autorola

Welcome to our October newsletter, we hope Q3 was a healthy quarter for your business as countries moved out of lockdown.

There are signs that Q4 will be another good quarter for the used car sector, although we are starting to see the big new car sales push for EVs and hybrids impact on pricing of used cars.

Stock turn of EVs and hybrids is slowing
Pricing is starting to slow, and stock turn is also considerably lower than petrol and diesel cars which are in short supply. It will be interesting to see how this pans out to the end of the year and our INDICATA director Andy Shields looks at these insights in a little more detail.

He will also be speaking at the virtual Fleet Europe Summit which has been announced for mid-November. All three divisions of the Autorola Group will be in attendance and while we are sad we can’t see you in person, the summit will be the next best thing.

Our Marketplace director Morten Holmsten will also be on the jury and our Solutions director Ib Kimose will be in attendance.

We look forward to networking with you and encourage you all to stay safe.

Best regards
Peter (LinkedIn)

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European used car market grows on the back of improved supply

Oct 28, 2020   written by Autorola

The European used market grew by 18.4% year-on-year in September a significant improvement on August’s 10.3% growth according to insights from our latest INDICATA Market Watch 9 report.

Supply has been constricting the size of the European market, not demand, so with more balanced supply the market grew in September.

Dealer stock level fall by 15%
Dealer stock levels had fallen on average by 15% from June to end August, but in September this flattened and growth in UK and France (5% and 6% respectively) allowed these larger markets to power forward.

Turkey, Portugal and Italy experienced the strongest used market growth at 59.6%, 36.2% and 29.6% respectively, while overall prices remained firm during September at a time when countries would expect a small price fall. This suggests the market remains nicely balanced with underlying demand exceeding any increases in supply.

EVs and hybrids sales volumes continue to increase
Environmental powertrain (BEVs and hybrids) volumes continued to increase significantly in September up 123% and 104% year-on-year respectively. However, stock turn of environmental cars is well below the market norm (4.4x and 5.4x respectively) suggesting the growth is driven by oversupply as much as underlying demand. Accordingly, prices are less stable.

Conversely, diesels and petrols are now both in short supply with high average stock turns of 7.9x and 7.3x which is up 35% and 37% respectively.

Supply shortages in sub 12-month market
Sub-12-month old volumes are down significantly (7.0%), but their level of stock turn increased year-on-year (34%) suggesting low volumes are still driven by supply shortages caused by OEMs not forcing the market through demonstrators and pre-reg cars.

“Growth in the September used car market was extremely healthy but was still tempered by tight levels of dealer stock”, explained Andy Shields, INDICATA’s global business unit director.

Market in good shape but dealers should remain cautious
“The market is very stable with prices firm and demand continuing to exceed supply. As we move into Quarter 4, the used market looks in good shape. However, with the second wave of virus infections now seemingly inevitable and new lockdowns happening, dealers and remarketers should remain cautious.

“Combine OEM new supply coming back online and an increased number of trade-ins, the market could switch quickly from under to oversupply,” he added.

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European new and used EV sales are growing, but residuals are falling. INDICATA’s director Andy Shields puts this market trend into perspective

Oct 28, 2020   written by Autorola

Since August, used EV sales volumes have been going well year-on-year across INDICATA’s 13 European countries with our data showing a significant switch to environmental powertrains since lockdowns were lifted.

At the same time European used car markets are generally being constrained by supply, with an increase in volumes by 10.3% in August year-on-year, but a contraction in stock supply since June of 15%. This is creating a generally stable market price or a price increase as supply outstrips demand.

EV prices are softening
However, EVs are not following this trend. Since February, in Germany the Indicata EV price index for petrol used cars in August was 97.6%, however used EVs were down to index 90%. In the UK used petrol prices are at 103.5%, while used EVs are priced at 99.6%.

Indeed, INDICATA sees similar price lag trends in almost all European markets, with EV prices worse off than their petrol and diesel counterparts.

INDICATA analyses not only sales but assesses market attractiveness by comparing sales to stock availability, and here the issue is clear. In August diesel cars had an annualised stock turn of 10.2x, up 30% year-on-year and petrol cars a stock turn of 9.5x, up 29%.

EV supply still outstrips demand
EVs however have had only a 5.3x turn in 2020 and whilst marginally up versus 2019, this is a sign that EV supply still outstrips demand, hence the poor performance residual values.

There are several factors causing this poor stock turn? The gap in range and speed performance of newer EVs versus older ones is greater now than between new and old petrol cars, is one reason.

OEMs have a vested interest to push EVs into the market and after slowly setting up production capacity and launching new models into the market, many have finally caught up and started to benefit from free supply.

EV new car sales rise 3-fold
ACEA’s new car statistics show that EV registration share in August had increased three-fold (7.2% vs 2.4%) compared to the used car EV market only doubling. This suggests that sales volume increases are supply pushed and not matched by a corresponding demand in the used market.

As a sign of the times, INDICATA’s recent work with a 50-outlet dealer group demonstrated an optimisation of price and stock mix. Overall, they were in a good shape, apart from EVs, where sales were slow, stock aging and unit profitability was starting to become a challenge.

EVs face a tough time in the used market
Therefore, INDICATA anticipates a tough time for EVs going forward with a healthy increase in sales not lulling the market into a false sense of security. As always, INDICATA encourages dealers not to look at sales alone, vehicle attractiveness led by KPIs such as market day’s supply and stock turn are the true measures to make decisions on what stock they should buy.

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Autorola Group confirms virtual attendance at the Fleet Europe Summit 2020

Oct 28, 2020   written by Autorola

We are looking forward to attending the digital Fleet Europe Summit on the 17 and 18 of November.

Our three business units – MarketPlace, INDICATA and Solutions will all be represented so please come and see us on our digital booth.

Our global INDICATA director Andy Shields will also be speaking, Morten Holmsten, our global MarketPlace director will be on the jury and Ib Kimose, our global Solutions director will also be in attendance.

Pleased to support this annual event
While we are sad not to be able to meet up with our customers, colleagues and friends in person we are pleased that Fleet Europe is able to host this important annual coming together of the fleet and remarketing industry.

“It is important that we all continue communicating and stay together as we fight this pandemic so what better way than supporting the Fleet Europe Summit. We look forward to seeing you online in November,” said Autorola Group CEO Peter Grøftehauge.

Please also look out for our forthcoming article in the Fleet Europe magazine.

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