NEWS

Used retail car prices have remained relatively stable across Germany, the UK and Italy with average prices increasing by just 1.3%, 1.1% and -0.1% respectively, although the underlying Indicata data shows some interesting market dynamics as you drill down.

Average used car prices in France increased from €19,136 in October 2017 to €20,391 whilst used car prices in Spain have jumped by 17.4% over the same period to €21,147. Part of the reason for the increase, particularly in Spain, is the mix of vehicles as buyers are changing their cars at younger ages and now feel able to upgrade to more premium and larger vehicles without fear of looking ostentatious to their peers.

Petrol is outperforming diesel according to Indicata
A review of Indicata’s used car index, which normalises for mix and inflation, shows a common theme of petrol outperforming diesel over the last 12 months.

In Spain and France, the markets are both showing prices for used petrol cars strengthening whilst used diesel prices are relatively flat.

Spain experiences used car price increases
Spain has seen particularly strong growth in used car prices for F segment petrol cars with luxury car buyers typically paying up to 10% more than they were a year ago. Whilst buyers of B-segment (small cars), C-segment (medium cars) and D-segment (large cars) are paying anything from 3% to 6% more than they were last year.

The growth in French used car values is also being powered by demand for petrol vehicles. Petrol car values for B-segment rose 5% whilst D-segment, E-segment (Executive cars), M-segment (MPVs) and S-segment (sports cars) rose 8%, 3%, 3% and 4% respectively compared to diesel values which remained generally flat.

Across the other markets we are still seeing petrol performing better than diesel but it is a case of used petrol cars remaining stable as diesel prices are falling by 3% to 5% on average.

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The latest data from Indicata shows that despite the drop in new car sales in September the used car market remains strong, with sales rising in the UK, France and Italy after the traditional lull in sales during the holiday period.

In the chart adjacent shows the traditional fall in sales in July and August in Germany, France and Italy as consumers look to spend their money on holidays rather than considering buying a replacement car.

German used car sales reverse in Germany
Whilst used car sales in Germany went into reverse in September, falling by around 4% this is partly due to the rush to change cars in the run up to WLTP and sales are not expected to fall any sharper than one would expect in the run up to the festive period and the year end. However, it should be noted that the Indicata Germany specific market report does show used car sales volumes marginally down in August and September 2018 over the same months in 2017.

Spain is showing minimal movement in volumes throughout the period, but this is in line with how the market has recovered from being one of the worst hit during the economic crisis. It is also a market where a lot of used vehicles are exported, and this helps balance the supply and demand equation.

UK has its own used car micro climate
Even though WLTP has been introduced across Europe from the 1^st September the UK, being the only major right-hand-drive (RHD) market, means it has its own micro-climate for cars. This is because exports into the other four RHD markets of Ireland, Malta and Cyprus are limited by their market sizes. The result of this saw the usual seasonality in used car sales being distorted by the rush to register new cars in the run up to September, and with it the need to sell used cars to free up dealer stocking plans.

Whilst not visible from the chart the underlying data from Indicata also demonstrates the impact the “war on diesel” has had on used car sales in some of the markets. For example, in Germany in October 2017 petrol used cars were already 54% of the 425,00 used car sales identified in the month, but by September 2018 petrol now accounts for 60% of all used car sales according to Indicata.

Diesel demonisation impacts UK market
The UK has also been impacted by diesel demonisation, with used petrol car sales moving away from a parity in volume terms with diesel from October 2017 through to March 2018 where it is now 6% higher than diesel cars in volume terms.

Used diesel cars continue to outsell petrol in France, Spain and Italy but this is a legacy issue due to the previously higher volume of new diesel cars being bought and the longer average retention periods by consumers. Looking ahead the situation is expected to follow what we are already seeing in Germany, and the UK as buyers move away from diesel due to the change in the supply mix coming from the new car market.

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With used car sales volumes increasing and used car values generally remaining relatively flat one might expect used car stock levels to be falling sharply. However, the influx of used vehicles into the market from WLTP has created some market distortion.

The micro-climate of the UK right-hand-drive (RHD) car market demonstrates the true extent of the impact of WLTP with used car stock levels in September of just under half a million cars which is over 7% higher than the same time last year.

UK and German dealers increase used petrol stocks
The increase in sales volumes of petrol cars noted previously in Germany and the UK is also being met by a change in used car stocks. Dealers are increasing the volume of used petrol cars on their forecourts whilst reducing their volume of used diesel cars in both markets according to Indicata.

Used car stock levels in Spain having been dropping for most of 2018 and a significant part of 2017. Total Spanish used car stock levels of 79,468 in September 2018 is 26.3% lower than the same time in 2017. To understand what is causing this you need to remember that whilst new car sales in Spain for 2018 are forecast to be 1.3 million cars, just four years earlier it was just 0.86 million. Despite this many fleet operators are continuing to export their vehicles out of the country as they come off fleet resulting in a shortage of supply and this is also helping to push up used car prices.

Indicata reveals market days’ supply by country
According to Indicata data Market Days’ Supply (MDS) has remained relatively steady as dealers try to match their stock levels with sales. Germany, Spain and Italy are all showing around 80 days’ worth of used car supply, although the previously mentioned situation in Spain has meant quite a bit of volatility over the last twelve months.

French dealers are currently running at a leaner 60 days MDS whilst the UK is currently at just over 40 days.

WLTP has put quite a lot of nearly new used vehicles into the market. Once they are available for sale, the fact that so many new cars are not available to order or have long lead times as manufacturers wait for certification means we could start seeing a shortage of used cars coming back into the market as part exchanges. Reduced fleet cars coming back off contract could also drive down MDS further as supply may fail to match demand.

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Around 68,000 used cars were imported in 2017 to help satisfy consumer demand. It has been the only way the industry has been able to balance the supply with demand.

Used car imports help satisfy consumer demand
Many of these used cars are imported via Autorola’s online remarketing portal with cars being purchased predominantly from France, Germany, Belgium and Holland. Within a few days of buying online the used cars can be on a dealer’s forecourt ready for sale.

New WLTP regulations could impact new car sales
One key spoiler in the new car market could be the new WLTP regulations set go live on 1 September. WLTP affects the global automotive sector and will put all OEMs on the same band width and the Portugese government is yet to announce the fiscal impact of the new legislation.

With new car taxes already very high in Portugal it could be very harmful for some brands, however they could choose to introduce a new transitional legal framework to control the taxes impact based on CO2 which would help support new car sales.

Autorola is at the heart of the digital transformation of the industry 
Autorola has been at the heart of the used car industry for many years and been a key contributor to the digital transformation of the motor industry. Portugal continues to grow its reputation as having a high technology infrastructure and used car vendors from dealers and leasing companies, to banks and rental companies have embraced online selling.
Over the past five to six years around 50% of business cars have been sold online. Companies such as leasing, rentals and dealer groups have had great results online across the Autorola group and in Portugal hold regular weekly online sales to dispose of their cars.

Traders market their used cars via social media
Trade buyers have been switched onto buying used cars online for many years. Many use their smart phone to bid online, while the smaller independents market many of their used cars via social media. The technology revolution is alive and well across all industries in Portugal which explains the country’s acceptance to adopt the INDICATA real time used vehicle management portal.

Agreements are already in place for our INDICATA real time used vehicle management with Renault, Toyota, Kia and the VW Group. Dealer groups value the real-time insights the system provides to enable them to run their used vehicle businesses as efficiently as possible.

Used market insights have been welcomed by dealers
Having access to detailed insights about their local used market and that of their close rivals has been welcomed by dealers. OEMs are also using it to create a country-wide picture of their entire used car stock, in particular average stocking times, both locally and nationally.


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