2021 has been another challenging year for the automotive industry – first with the Covid-19 pandemic and then with the global semiconductor shortage which has impacted new car supplies.
However, the used market sector has performed very strongly with demand and prices high, but with stock levels falling in virtually every country we operate in.
Stock falling and prices rising
Our INDICATA Market Watch report confirms a year-on-year stock fall of over 20% and price rises of between 10-20% in some countries.
We have spent a great deal of time with both vendor and buyer customers helping them deal with the current market and prepare them to meet the challenges of 2022. That includes launching a new European stock locator that supports dealers who want to source and buy used vehicles cross border.
How is 2022 likely to shape up?
So, I asked our three business unit directors Morten Holmsten – MarketPlace, Ib Kimose – Solutions and Andy Shields – INDICATA for their views on how 2022 is likely to shape up and the hopes and fears which the markets will bring. They make for interesting reading.
Not surprisingly the speed at which companies are digitising their businesses has risen. More dealer leads are being received online which need to be captured and managed effectively, while asset owners are managing their vehicles via the Cloud as more colleagues switch to home working.
The online dream is becoming reality
We have predicted the move online for all aspects of sourcing, buying, and remarketing used cars for many years and the pandemic has accelerated this vision. The future for many has suddenly become reality and the digitisation of businesses will continue to gather pace.
We wish you a happy and relaxing festive season and look forward to supporting your business during 2022.
Peter Grøftehauge (LinkedIn)
A Welcome from Peter Grofthauge, managing Director at Autorola Group
Morten Holmsten – a look at the year ahead
As 2021 comes to a close and we begin to look forward to the year ahead in 2022, we have experienced an extraordinary year in the used vehicle market, with Autorola continuing to help dealers access the stock needed to trade while more traditional physical avenues have been closed to them.
As we look ahead to 2022, it is clear the stock shortage in the used car market won’t disappear overnight, indeed it looks set to stay for most of the year ahead. Some brands will be better able to manage the production issues than others, meaning that we expect just a few brands to return to full production by Q2 2022, which will start to ease the burden on the used car market by the end of the year.
Changing market share
We are seeing brands’ market shares change, and this will continue into next year. As newer brands, and in particular many of the Korean manufacturers have benefitted from an increase in the quality of new product over the last five years, while also managing their production over the last 12 months, we are seeing a much greater volume of these vehicles entering the young/used market.
As a result of this volume shift into newer brands, I would expect dealers may well diversify their stock choices in the year ahead while relying on new sourcing channels to fulfil their demands and maintain profitability.
Luckily, Autorola remains perfectly placed to help these diversifying dealers, working across all brands and as many territories as it does.
Diverging supply among car markets
A second trend that we foresee emerging in 2022 is one of a divergence of supply across global markets, which may well be felt more acutely within European markets.
Where many used car retail networks are supplied and supported by OEMs and the rental industry combined, both sectors are currently experiencing pressures, which will have a knock-on effect for retailers.
As the supply of young used vehicles will be restricted due to the lack of supply from these two major sectors, we foresee a tendency for OEMs to favour their home markets for the disposal of stock. As a result, we expect that home-market manufacturer owned dealer groups will experience less of a vehicle shortage than some others.
Again however, dealers outside of these parameters will be able to use the Autorola network to source available stock without borders and without manufacturer constraints.
The EV future is coming
I think it is fair to say the demand for EVs will only now increase going forwards, and of these, Battery Electric Vehicles will likely outperform hybrids for most vendors. As a result, dealers who have not yet begun to retail these vehicles should consider doing so in the next year. Demand and supply of these vehicles is only going to go up, and so any investments needed into charging infrastructure at dealerships should be made now, to avoid retailers being left behind the curve.
Overall, the online retail environment is set to continue as it has done, while new players will continue to target online sales channels for 100% of their business. This is certainly the way the industry appears to be heading, although it won’t be an instant shift to digital. As every country has now learned to work around Covid-19, restrictions on trade will continue to ease, and many retailers will be able to breathe a sigh of relief.
Autorola continues to be fully prepared for these changes, as 95% of our processes are already digital. Navigating a changing business landscape will be much easier for Autorola clients, who will continue to benefit from our end-to-end and borderless network proposition.
I wish you all a Merry Christmas, and a Happy New year.
“Automotive companies are continuing to dispose of manual systems and processes as more employees work from home and replace them with automated processes that cover every car’s life stage from manufacture to disposal.
That’s where Fleet Monitor comes in. It digitises every single part of the car’s journey for asset owners joining up all of those in-life processes and giving a bank, OEM, leasing company or dealer group complete transparency of a car’s status and value at every life stage.
Fleet Monitor is powering car subscription companies
Orders for Fleet Monitor have more than doubled in 2021 fuelled by new car subscription clients. The subscriptions industry recognises the power of our systems to automate and integrate every step of their process.
From the moment the finance is underwritten, and the order form is signed to when a car is prepared and then delivered to the driver, to when a car is collected, inspected, and refurbished at the end of a contract to go out on a secondary lease, Fleet Monitor gives OEMs complete control.
Car ownership trends are changing
Autorola recognises that the popularity of car subscriptions will continue to grow as car ownership trends change. Younger people are less keen to buy a car and instead prefer to rent a car for a fixed period of 3-6 months and then have the flexibility to change it regularly.
They want to sign up to an all-inclusive monthly fee that includes all maintenance and insurance as they consider themselves as time poor and don’t want to deal with the hassles associated with the buying, upkeep and selling a car. We continue to talk to many other European companies about rolling out Fleet Monitor to support this new car ownership trend.
Mobility service providers
OEMs are now positioning themselves as mobility service providers and as they change their retailing strategy so the relationship with their dealers is also changing. It means selling more cars direct to drivers as they start to own the relationship with drivers.
Dealers will be used more as agents for servicing and maintenance and the OEM owned cars will be directed into this network when their connected car data informs them mechanical attention is needed or when a car receives a recall notice. Fleet Monitor seamlessly manages the needs of an OEM mobility provider including connection with its dealer network.
Dealers are centralising used car trade-in processes
The Covid-19 pandemic and semiconductor crisis have forced many car dealer groups to review the way they manage their used car trade in processes. More used cars are being purchased online by drivers with their part exchange being valued by our INDICATA Lead Generator software as part of this process. With used cars in great demand, dealers want to buy and collect a customer part exchange and put it up for sale on a dealer forecourt as quickly as possible.
Dealer groups are now centralising this process via Fleet Monitor to ensure it is lean and fast and that cars are allocated to the right dealership after they have been refurbished.
Wholesale auction platform
For the used cars that the dealer group doesn’t want to retail based on age, mileage, and condition, it is using Fleet Monitor to offer them out to the wholesale market via our auction platform. The focus once again is on speed, as dealers want to turn these cars into cash as quickly as possible.
So, 2022 looks like it will be as exciting for Solutions as 2021 and we are confident that Fleet Monitor will help businesses future proof their asset management and support those new innovators that are launching new mobility solutions for drivers.”
INDICATA’s pricing and insights data will continue to tracking the European used car market to help buyers and vendors during 2022
During 2021 the attention switched from Covid-19’s reducing impact on the used market to the global shortage of semiconductors which has dramatically restricted new car supplies.
Record used demand and prices
This shortage of new cars has switched buyers’ attention to used cars thus creating record demand and prices in most countries, a trend that will continue some predict into late 2022/early 2023.
The leasing industry started by extending contracts from 2020 to 2021 as new car orders were delayed by many months. Many contracts are now being extended again from 2021 to 2022 which has meant the volume of three-and four-year old used cars coming into the market has dramatically fallen.
Ageing leasing industry car parc
And when these contracts do finally expire the leasing industry will be faced with selling tens of thousands of used cars far older than their normal mix which will be a new experience for them.
Meanwhile, the lack of new car sales has impacted franchised dealers with a shortage of part exchanges reaching the used market. Our experience is that dealers are keeping the majority of their part exchanges to put them back onto their retail forecourts which is further contributing to the shortage in the open trade market.
Helping dealers convert online leads
Our Lead Generator online evaluation tool continues to play a vital role in helping dealers convert the growing number of online leads into sales. The website plug in is empowering drivers to value their part exchange car while they are searching online for their next car which creates a healthy trading environment for the dealer.
The rental industry continues to work with OEMS to extend their buy back vehicles beyond the typical 6-12 months which is further restricting supplies of nearly new used cars coming back into franchised dealers. Rental companies are buying used cars from auctions to keep their fleets at optimum working levels which is adding to the increased demand and high prices we are likely to see for at least another year.
More EVs coming into the market
OEMS are using this current new car supply challenge to focus on feeding more EVs into the markets at the expense of petrol and diesel cars. This fits in with their continued strategy to combat the Clean Air For Europe (CAFE) fines, where 95% of a vehicle manufacturer’s fleet needed to emit below 95g/km CO2.
In November and December our Market Watch report has identified how EV sales are rising while stocking days are coming down as an increasing number of consumers look to buy zero emission used cars for the first time. Within just two months the market has swallowed up the stocks of used cars in the market and now they are in short supply which should keep prices very healthy.
INDICATA continues to roll out new features
So, in 2022 the changing dynamics of the used market will be led by how quickly semiconductor production starts to feed into OEMs building more new cars. The INDICATA team continues to develop its products and services to meet its customer’s ever-changing needs and we promise wider and broader data provision, more forecasting functionality while our series of user guides have been rolled out to provide greater training resources including videos for our customers.
Creating a perfect storm for rising prices
The perfect storm for rising prices has been created with new car sales continuing to be constrained by semiconductor shortages and increased used cars demand which has created a shortage of stock.
INDICATA’s Market Days’ Supply analysis confirms how stock has fallen dramatically in 2021 across all fuel types.
Increasing demand for used EVs
The biggest change is the increased demand for used EVs with European countries ending December 2020 with a Market Days’ Supply (MDS) of 112 days and entering December 2021 with just 61 days of stock available. Used hybrids have also seen a rise in demand moving from an MDS of 100 days to 59 days during the same period.
Used diesel stock is lower than any fuel type with demand across Europe remaining strong. Its MDS figure has fallen from 71 days to just 43 days, while the MDS for petrol has fallen the least from 77 days to 55 days.
It’s easy to see why prices have risen
“The market has seen record price rises during 2021 but when you review the levels of stock it is easy to see why they have risen. Stock levels are the lowest many countries have ever experienced as consumers turn to used cars as new car production continues to be affected by the global semiconductor shortages,” explained Andy Shields, INDICATA’s global business unit director.
“EVs continue to show signs that they are becoming a mainstream used car option as demand increases and stock levels have halved during 2021,” he added.
The Golf is Europe’s most popular used car
When reviewing the most popular used cars, the Volkswagen Golf remains both Europe’s overall best-seller and best-selling internal combustion engine car for the fourth consecutive month. Toyota’s C-HR remained the best-selling hybrid and the Renault Zoe the top selling BEV.
The fastest-selling used car under 4-years-old in November by Market Days’ Supply was the Toyota Prius + (27.3 days MDS) with the MG 3 second (32.2 days) and the Škoda Enyaq iV in third place (32.6 days).
Go to www.indicata.com/corona for a free download of the 13 country report www.indicata.com/corona
New European stock locator helps dealers source cross border used cars more easily
INDICATA has launched a new pan-European stock locator to help speed up the time it takes for dealers to source new used car and van stock.
With new car supplies continuing to be impacted by the global semiconductor shortage the demand for used cars continues to rise to record levels across Europe. This is causing dealers more challenges in sourcing used stock which is where a subscription to INDICATA’s European stock locator is invaluable.
Filtering used stock
The new stock locator helps dealers filter the used stock they are searching for either in their own country or cross border by the make and model, fuel type, age, and mileage, how long a vehicle has been in stock and importantly price.
Once the search of INDICATA’s database of 9m live used vehicles in 13 European countries is complete the stock locator automatically plots the locations of dealers which hold the required vehicles onto a map complete with their contact details.
Sourcing used vehicles cross border
The wider Autorola Group is seeing more larger franchised dealers sourcing more used vehicle stock cross border now to meet their group needs. The European stock locator is speeding up the time it takes to identify those individual vehicles in countries, particularly where the group buyers have no experience of individual countries.
“In many cases there is not sufficient used stock in individual countries to meet dealers’ needs due to the ongoing new car supply challenge. That has meant dealers spending a great deal of time and effort locating that stock in other countries.” explained Andy Shields, INDICATA Europe’s global business unit director.
It makes sourcing used stock quick and easy
“That’s where our stock locator comes in. It aims to make it quick and easy to locate stock across 13 European countries which not only opens up a dealer’s choice, but it also enables them to find the most relevant stock at the best price,” he added.
Dealers can find out further information and receive a demonstration by approaching their local country INDICATA sales team.
Introduction from Peter Grøftehauge
Used EVs have seen a big rise in demand and sales over the past two months according to our INDICATA insights data. The feeling is that they have started to establish themselves in the used market which is vital for any new vehicle type or new car.
So many things rely on a healthy residual value such as leasing rates and salability in the secondhand market.
Increase in cross border sale of EVs
Our MarketPlace business unit director Morten Holmsten is also seeing a heavy flow of EVs between countries to meet the demand of the consumer. The Netherlands and Denmark for instance are importing used EVs while Germany is exporting EVs. He has written an article about how cross border used sales are shaping up at the end of the year across Europe.
Another trend which has remained since the beginning of the Covid-19 pandemic country lockdowns is the increased number of used cars being bought online both in the wholesale and retail markets. In this newsletter Mercedes-Benz Belgium tells us how they are using our Lead Generator used car valuation plug-in on their retail dealer websites as more showroom traffic moves online.
Winning Business Leader of the Year
We are also still celebrating after I received the ‘Business Leader of the Year’ award for the Fyn region of Denmark. Presented to me by PwC Danmark it celebrates our commitment to online remarketing and is testament to the hard work of our colleagues around the globe.
I hope you enjoy the film which we have translated into English, and for some it will be the first chance you have to take a tour round our new global headquarters in Odense, Denmark.
Peter Grøftehauge (LinkedIn)
Peter Groftehauge receives leader of the Year Award
Our Group CEO has been presented with an important business award by PwC Danmark.
Congratulations to our Group CEO for his business award win
Our Autorola Group CEO Peter Grøftehauge has been presented with a major award by PwC Danmark.
He won the Leader of the Year award for the Fyn region of Denmark for his outstanding commitment to changing the landscape of used car remarketing with his ‘online’ approach.
Peter said: “I would like to accept this on behalf of our 500 colleagues around the world who work hard every day to meet our customers’ needs in an ever-changing market. I am very proud, humble, and honoured. Thank you to PwC, Nykredit, Dansk Erhverv and Finans for the nomination.”
Watch the video of Peter taking a tour of Autorola’s global HQ in Odense, Denmark.
When it comes to trade, territories are a thing of the past
Keeping vehicles flowing
Now more than ever, cross border trading is crucial to keeping used vehicles flowing across mainland Europe. While it always allowed dealers to profit from different market needs across the continent, it wasn’t until last year and the pandemic really became key to ongoing trade in all markets.
During the many lockdowns last year and now the new car scarcity caused by the microprocessor shortage, when certain countries have been closed for business, or certain markets have lacked stock, the ability to trade without borders has truly come into its own.
Local markets are key
Currently, all markets across Europe are in need of used vehicles, which means that across our markets, we are seeing less cars than usual being exported, as stock prices and transport costs have risen, markets have increasingly been fed from within the local area. Where we usually expect to see export percentages of around 30%, right now this figure is just below 25%.
With the ongoing microprocessor shortage, and the global demand for raw materials having squeezed or halted new car production, we can only see this focus on used vehicles continuing for a while to come, which is great news for Autorola both now and in the future.
Interestingly, while the number of new vehicles coming onto our platform has decreased by 30%, which is split across OEMs, rental and leasing companies who are all now holding on to vehicles which they might have previously de-fleeted through our platform, our sale / conversion rate has remained steady, with sales volumes unchanged, and the market having adjusted to older used stock instead.
EVs are still crossing borders
The one area where cross border trading is still operating much as it did pre-covid, is with EVs. We see a heavy flow of these vehicles into countries with heavy governments subsidies on these used vehicles, away from regions in which subsidies are only offered on new EV stock – from Germany and into the Netherlands and Denmark, for example.
While December and the holiday season usually sees a softening marketplace for used stock, overall, we are expecting the market to continue to soar, and we expect prices to rise again in January and February. As Autorola has always been an entirely online platform, with a focus on international markets, we are well placed to continue to help maintain the liquidity of the used car market in the months to come.