Each time we produce our quarterly newsletter we talk about the constant changes in the automotive industry that are affecting the demand and supply of new and used cars.
The most recent challenge is the bad press surrounding diesel cars. After years of Governments encouraging drivers to get into diesels to help reduce CO2 levels they are now trying to penalise the fuel based on the particulates emitted that contribute to poor air quality in our cities.
Cities are penalising diesel cars
Cities like Madrid, Paris and Berlin are already starting to penalise diesels either preventing/restricting them from entering the city centre or forcing older used diesel cars and vans to be scrapped.
Autorola UK survey proved that demand and prices of used petrol cars are strong but diesels are still in high demand with buyers. In fact the UK has seen both petrol and diesel residuals strengthen in the last few months.
There are still millions of used diesels on our roads
The used buyer seems content to still buy used diesels but the air quality challenge is likely to speed up the growth of sales of new EVs and hybrids in and around our cities. As for the used market, there are millions of diesels in service across the globe which will take decades before they all reach the scrapyard.
In the meantime if used demand does change then online cross border sales are likely to help balance out the demand and supply of used petrols and diesels. Our online remarketing portal has been at the forefront of European cross border sales for many years.
INDICATA will help guide dealers on used diesel prices
Our real time used vehicle business intelligence platform INDICATA will also help OEMs and their dealers determine the demand and pricing for petrol and diesel used cars locally and nationally.
Autorola Turkey recently celebrated the launch of INDICATA as the first ever used values guide into Turkey and its forthcoming launch in the UK means the system is now available in all the key European markets.
Helping customers manage change
Autorola Mexico is also showing signs of good growth helping bring process and structure to the country’s used market and in Denmark we are at the forefront of helping asset owners change their inspection and sales processes to respond to the popularity of new short term flexi lease schemes.
One thing we can guarantee is that the automotive industry will continue to change and we aim to keep helping buyers and vendors respond to those changes to continue optimise the management and sale of their assets.
Have a good summer.
Peter Grøftehauge, CEO Autorola Group
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Introduction from Peter Grøftehauge
Each time we produce our quarterly newsletter we talk about the constant changes in the automotive industry that are affecting the demand and supply of new and used cars.
Autorola Denmark country manager Thomas Friis Pedersen explains the growth of short term flexi leases and how tax changes could increase export volumes
The Danish new car market continues to go from strength to strength with 2016 reaching an all time high of 259,555 units (222,927 new car and 36,628 light commercials).
Like so many European countries the leasing market is helping contribute to much of this growth, with leasing volumes growing from 38% in 2015 to 43% at the end of 2016. A reduction in the registration duty on new cars from 180% to 150% has also been introduced over the past 18 months.
Van and personal leasing are growing
There have been two major growth areas, in van leasing and personal leasing, both areas where Autorola is the market leader of inspection and online remarketing services.
”The Danish economy continues to grow and businesses are using leasing as a cost effective way of buying a new light commercial to help fuel their expansion. Van sales have grown by around 25% since 2014,” said Pedersen.
Short term flexi leases are a growing trend
“Manufacturers are making car personal leasing very attractive not just with low interest rates, low deposits and low monthly rentals, but the flexibility of leases are such that a consumer can walk away from a lease after just a year by giving just one month’s notice. Consumers are turning these agreements into short term flexi leases which the Danish market hasn’t seen before.
“This trend is fuelling the growth in 12-18 month old used cars coming from the lease sector, which is traditionally the replacement cycle adopted by rental companies,” he added.
New used car retail brands help reduce the risk of flooding the market
Rather than risk flooding the market full of nearly new used cars both sectors have created new retail brands where consumers can buy a subscription to a nearly new car and then hand it back after a minimum of three months.
Leasing and rental companies are generating three to four more paid subscriptions before they are selling the cars into the used market when the car is still only 30-36 months old.
Each car is inspected a number of times before disposal
“We have had to revise our business model by providing inspection and refurbishment services to the same car a number of different times before it is eventually sold on our online remarketing portal, “ said Pedersen.
“This more flexible approach to car ownership has been greeted positively by the consumer and generally used car prices continue to stay strong in the market.”
Personal lease drivers hand their car back to Autorola
A growing number of personal leasing drivers are returning their end of lease vehicles back to one of Autorola’s eight storage centres in Denmark which process tens of thousands of end of contract lease vehicles each year.
“Generally the Danish driver enjoys being part of the dehire experience. We have worked hard in our vehicle inspection and check in processes to ensure we use language that a consumer will understand. When we take them through their end of contract inspection we have to justify their de hire costs before they will sign their paperwork
Consumers accept dehire costs when they are explained clearly
“Our inspection system automatically generates costed damage repair estimates identical to those used by the insurance industry. When we explain in detail on how a repair works including the cost of labour and materials generally the consumer accepts the dehire costs,” said Pedersen
Used car prices have also been helped by the reduction in registration tax from 180% to 150% as the tax affects used as well as new cars. This has meant a greater demand for Danish cars for export, where previously buyers were put off by the high prices.
Tax changes could increase the amount of used cars exported
A major challenge for motor dealer groups is the change in tax regulations. Normally Danish used car dealers can buy used cars including Tax and VAT, but now the majority of returned vehicles from the leasing industry are without Tax and VAT.
If the Danish used car market does not learn to manage the new tax regulations, then there will be almost no cars available for them to buy in the market and Danish leasing companies will be forced to export them.
Dealers can reduce costs and increase their stock
There are advantages associated with the Danish car dealers being able to buy cars without Tax and VAT including a lower purchasing price for the car because the Tax and VAT is only paid when the car is sold and registered by the Danish authorities.
The used car dealer will have lower financial inventory levels as well as have more cars in stock, giving dealer groups who can manage this new legislation situation a major advantage in the market.
Used petrol prices are rising but diesel is still the buyer’s fuel of choice according to Autorola UK survey
Many of the 19 countries where Autorola has subsidiaries are now suffering from poor urban air quality and diesel cars are being partly blamed for this problem.
Autorola UK surveyed the average prices of used petrols and diesels sold in the country between 2014 and 2017 to understand whether buyers are falling out of love with diesel cars.
Petrol car prices reach four year high in 2017
The price of used petrol cars sold by Autorola actually rose to a four year high of £8,333 in Q1 2017, £1,203 higher than the four-year low of £7,130 recorded in Q4 2014.
Autorola’s survey shows average diesel prices rising from £10,029 in 2014 to £11,493 in 2017, an increase of £1,464. The four-year price high was £11,945 in Q4 2015 against a low of £10,029 in Q1 2014. The smallest gap between average petrol and diesel prices was also in Q1 2017 at £3,160.
Petrol shows a resurgence in demand
“Average petrol prices reached their highest point in Q1 2017, which shows a resurgence in demand and increase in used prices that we have experienced since Q1 2015,” explained Jon Mitchell, Autorola UK’s group sales director.
“However, buyers seem unperturbed by the recent bad publicity around diesels with average prices rising consistently since 2015. Diesel is still firmly the fuel of choice for the 2,000 active buyers on our portal,” he added.
Diesels continue to cover more miles than petrols
Unsurprisingly, diesel cars continue to cover more miles on average than petrol. Average diesel mileage over the 39 months of the survey was 25,357 compared with 20,348 for petrol. Typically, cars sold by Autorola UK are franchised dealer part exchanges and used stock, which means mileages are generally slightly lower than average.
Autorola’s data also shows the average age of both diesel and petrol vehicles have fallen. The average age of diesels was 27 months in Q1 2017, comparing to the previous low of 29 months first seen in Q2 2014. The average age of petrols sold in Q1 2017 was 30 months, bettering the previous low average of 33 months in Q3 2016.
Autorola Turkey’s country manager Oğuzhan Saygı talks about launching the country’s very first used values guide and the popularity of its regional auctions
Models costing 40,000-70,000 lira have seen a price rise of around 3 percent thanks to the introduction of a new special consumption tax in Turkey and the government claims the changes will add around an additional 3 billion lira to its budget.
The move hits those luxury cars that are imported from outside Turkey therefore making the mass-market cars made in the domestic market better value for money.
The new tax has ignited Turkey’s interest in used cars
This tax increase has already stalled new car sales but has ignited consumer demand across the 3.5 million strong used car market.
“Historically much of the used car business has been based just around Istanbul. The used market is now maturing quite quickly and trade buyers have been very open to purchasing used cars online.
It is not economical to move vehicles around to sell them
“We have signed up 10 major vendors in the past 12 months which reinforces the response for online remarketing. Turkey is a big country and it is uneconomical to keep moving vehicles round to sell them. This vendor growth has helped us provide a wide mix of stock for buyers which they have responded to very well,” explained Saygi.
In 2016 756,938 new cars were sold in Turkey, a rise of 4.3% rise over 2015, one in three (32%) of which were manufactured in Turkey.
Automotive producers, such as Toyota, Renault, Fiat and Ford have manufacturing operations in Turkey. The country’s automotive sector was the biggest exporter last year with around $23.9 billion in exports, up from $21.3 billion in 2015.
Autorola’s regional auctions support the investment outside of Istanbul
On the back of this success there has been major investment in the country’s transport infrastructure which will also help take away the focus just on Istanbul as the economic capital of Turkey. Better road networks will help spread the external investment to other cities and Autorola is playing its part by running regional online used car auctions in nine different cities.
“It’s all about local buyers being able to buy used cars from both local and national vendors. The response has been positive from buyers as they are getting the chance to bid on stock that would normally end up in Istanbul,” he added.
INDICATA is the country’s first used vehicle values guide
Typically smaller used cars between 50-60,000 lira are most popular in Turkey at an average age of 24 months/50-60,000km.
One challenge for the Turkish market is to know what used cars are worth. Until the recent launch of Autorola’s INDICATA real time used vehicle pricing system in January the country did not have a used vehicle guide for the industry to refer to.
Dealers know the value of used cars based on local demand and supply
INDICATA will help both the OEM and local dealer understand the true value of used cars based on local demand and supply.
“Dealers can use the data proactively to sell more used cars and importantly reduce stocking days. They will be able to adjust prices up or down on a weekly basis to ensure their used stock remains competitive and only buy in new stock that they know is in high demand. INDICATA gives the market the most dynamic insight into the used industry and OEMs and their dealers are already actively piloting the system,” said Saygi.
News from around the Autorola family
Traxio has announced a partnership with INDICATA in Belgium to offer the real time used car business intelligence service to its 8,800 companies representing over 2,500 car dealerships.
First contract for Autorola Mexico
Autorola Mexico has just celebrated its first major customer win just over 12 months after opening for business. The OEM will be using the Fleet Monitor asset management system and our online auction system to sell cars to its dealer network.
We are now working with a major finance house in Germany and Autorola Netherlands has expanded its agreement with the Wensink Automotive dealer group to sell more used vehicles online.
Otokoc goes from strength to strength
Our Otokoc contract in Turkey goes from strength to strength and we have an exciting e-repair pilot in operation for a global rental company.
In the UK we are soon to sign up to yet another manufacturer to our Autofind online trade to trade auction service and we hope to be able to announce a major partnership with a global car maker in Italy, Spain, France and Portugal very soon.
If you want to hear regular news from the Autorola Group sign up to our Linked page or visit our Group website at www.autorolagroup.com.
Autorola launches mobile bidding in 12 countries
Buyers who are signed up to buy vehicles on Autorola’s global online remarketing platform can now bid through their mobile device.
Buyers can bid via a smartphone or tablet and to ensure they do not miss out on stock, they receive an email or SMS when they have been outbid or when the auction is just about to end.
Mobile bidding is live in 12 countries
Currently buyers in 12 countries (FR, AT, BE, DE, DK, ES, UK, IT, PL, PT, AU, NL) can take advantage of mobile bidding, with other geographies being launched soon.
During its two-month pilot, Mobile Bidding saw a high volume of bids and sales, especially from smaller national and international buyers with broader roles than just buying.
Online bidding is very popular with cross border buyers
“Buyers are often very time-poor and we have seen they have really benefitted from this initiative. The biggest trend so far is buyers purchasing used vehicles cross-border,” explained Morten Holmsten, Autorola Group’s global sales director.
“We hope to have the rest of our countries up and running in the next few months,” he added.
Introduction from Peter Grøftehauge, Autorola Group CEO
A belated Happy New Year from all at Autorola as we move into our 21st year of trading. We’ve made a fast start to the year – in January alone we have launched our new global website www.autorolagroup.com, our INDICATA business has gone live in Turkey and our team attended the ENG Remarketing Forum in Berlin.
Our global Marketplace sales director Morten Holmsten focussed his 20-minute slot at ENG on ‘How big data is helping vendors optimise their remarketing process.’ As with so many industries remarketing allows asset owners to collect data at a number of different points during a vehicle’s lifecycle. Our real time used vehicle business intelligence platform INDICATA sweeps a country’s online used vehicle data overnight to give OEMs and their dealers the most up to date intelligence to use to optimise their values and reduce stocking times.
Big Data helps optimise prices and reduce stocking days
He discussed the challenges of data accuracy on the Internet and How Big Data has to be collected and managed in a structured fashion to ensure the accuracy when it is evaluated to optimise prices and reduce stocking days.
He finished by posing the question -Will Big Data in the future be able to tell exactly which buyer will pay the most for a specific car, will this be the end of auctions? Check out his slides here and let us know what you think. (www.engevents.com/remarketingpresentations2017)
Amazon is already launching into the online automotive space which shows that the future is online. The efficient use of Big Data can help reduce many of the inefficiencies in the remarketing process.
We offered over 450,000 used vehicles for sale online across out online Autorola platform in 2016 and we expect that to grow to 500,000 by 2018. With the global new car market forecast to hit 100m by 2020 used car volumes will continue to grow providing much more scope for growth. Our portal is easily scaleable and is multi lingual so we are in a good place to benefit from these record sales volumes.
Cross border used volumes increase
Our article on European cross border vehicle sales in this edition of our newsletter also puts the movement of used vehicles into perspective. A record 21% of the used vehicles sold on our portal in 2016 ended up being imported or exported away from their country of registration.
As European used car supply and demand balances itself out there is likely to be continued movement of stock between countries. Online is the most efficient method of buying and selling used cars across multiple geographies and I still believe that within the next five years all used cars could be sold online. Let’s continue this debate over the next five years and see what comes of my prediction in 2022.
New global website goes live
Autorola has launched its very first Group website which highlights our ever growing range of online vehicle remarketing and business intelligence services.
www.autorolagroup.com guides you through the world of Autorola from online Vehicle Auctions and Vehicle Workflow Systems to Real Time Market Insights.Our group employs 350 colleagues across 19 countries globally across three business units;
- Solutions provides customized solutions for large fleet owners to help them manage their assets at every single touch point through the vehicle management process.
- Marketplace offers a wide range of online auctions. In 2016 we offered over 450,000 vehicles on behalf of 6,000 vendors to 70,000 active buyers. With over 20 years of experience we offer open auctions, closed auctions, buy now auctions and white label auctions that can be set up to run on our online platform in any country and language.
- INDICATA provides real time business intelligence for OEMs and their dealers to drive used vehicles growth at the same time as protecting residual values. Now in 11 countries globally it is already providing a valuable muli region service for the likes of Volvo and Kia.
2016 witnessed record levels of cross border European used vehicle sales
In 2016 the Autorola group saw one in five (21%) of its used vehicles sold on its online remarketing platform during 2016 were cross border: ie were imported or exported from their country of origin.
Autorola has seen cross border volumes continue to rise year on year as Europe’s used vehicle volumes balance themselves out between countries.
Last year we offered over 450,000 used vehicles for sale through our online remarketing platform across more than 20 countries with cross border sales reaching record levels.
Countries are getting their used industries back on their feet via imports
“Countries like Portugal and Spain whose new car market suffered badly at the hands of the recession are now being forced to import used cars from other European countries to satisfy consumer demand,” explained Morten Holmsten, Autorola’s Marketplace global sales director.
“The European used market is very well established; but is still changing dramatically, particularly as individual countries strive to get their automotive industries back on their feet after the recession of 2008 and 2009,” he added.
Our portal is at the heart of many cross border imports/exports
Portugal imported around 55,000 used vehicles in 2016, many through the Autorola portal. Cars like the Renault Mégane, Peugeot 508 and BMW 1 Series are all proving popular.
Spain and France are importing more used vehicles as both markets look to satisfy consumer demand as they shake off the effects of the most recent recession.
Countries are importing high spec used cars from Italy
Private buyers are slowly returning to the used market in Italy on the back of a tough economy, some changing their used car for the first time in a few years. The trend has been to export its higher value cars. Many offer good value and a high specification and are being snapped up by German dealers, while Austrian dealers are buying and selling cars both for their home market and for export to the Czech Republic, Slovakia and Slovenia.
Eastern Europe’s demand for used cars continues as consumer’s disposal income continues to grow, a trend that is likely to continue for many years to come. Many countries like Poland are buying up Europe’s older used cars, while Russian demand for aging 4x4s is strong.
Normally conservative Swedish dealers are importing used cars
The Swedish new and used markets are very buoyant with demand reaching a level that has forced traditionally conservative retailers into importing used cars to satisfy retail demand.
Norwegian dealers are using the country’s zero import duty rate for electric cars to import EVs from Sweden, Germany and the Netherlands to satisfy consumer demand.
New Zealand used car import rules are being relaxed
Further afield Autorola has received enquiries from used buyers in New Zealand for right hand drive used cars from the UK, as the country introduces a more flexible import policy.
“It is a remarkable dynamic that cross border sales continue to help balance the continent’s used vehicle supply and demand. Within just a few days of a used dealer buying a car online, they can have it delivered and put it on their forecourt for sale,” said Holmsten.
Autorola Australia builds online car and motorcycle websites for Swann Insurance
A major bike and car insurer has appointed Autorola Australia to build an online remarketing website to assist its customers in selling their used cars or motorcycles.
Swann Insurance, part of the global IAG Group approached Autorola to fulfil its strategy of extending its customer service portfolio beyond just insurance.
Used car and motorcycle websites go live
The used motorcycle website went live in 2016 and the used car website has also just been launched at swannmotomarket.com.au
Customers can apply for a free valuation for their used car or motorcycle and then Autorola will upload it onto its online portal to offer to its network of 4,500 active trade buyers.
Selling to trade buyers is more straightforward
“Selling to trade buyers is often much simpler and quicker than selling to a retail buyer,” explained Philip Browne, Autorola Australia’s country manager.
“Offering the car or motorcycle to our nationwide buyers ensures the consumer receives a strong price and they receive their money within just two days of the sale. Response so far from consumers has been very positive and Swann is set to launch a marketing programme to reinforce its new service offering,” he added.For further information contact Autorola Australia at email@example.com