Germany and Austria are the first countries where car dealers have exited a total lockdown caused by Covid-19 pandemic. They are seeing the used car sector quickly recover as consumers begin to treat themselves to new wheels according to our latest free-to-download INDICATA Market Watch insights report.
Germany has seen its used market recover to 90% of its March run rate and Austria 80% after dealers started trading again on the 20 and 14 April respectively, with sports cars the biggest growth sector in both countries as consumers treat themselves post lockdown.
Countries that experienced partial lockdowns such as the Netherlands, Sweden and Denmark have also seen a return to 90%, 98% and 102% of pre-lockdown sales activity based on increased consumer activity and confidence.
Sweden, Denmark and Netherlands used car demand grows
In previous INDICATA reports Sweden had been the most resilient country in Europe, with the lightest lockdown. It has moved from 80% of previous sales levels, to 98% on 1 May.
In April Denmark trading volumes had dropped to circa 60% of March, but with progressive easing measures in place, the market has reactivated and risen to 102%. In Netherlands, consumer confidence is also returning with sales recovering to 90% of early March trends.
No major used price movements so far
But despite the sales growth there are still no significant price movements to report across Europe, even in newly opened markets. Sweden, the country most openly trading during the pandemic has only seen prices fall by 4.4%.
INDICATA is also yet to see a movement in large lockdown markets of Italy, Spain, France and UK. In smaller countries such as Portugal and Poland, and to a smaller degree, Belgium dealers appear to be increasingly breaking lockdown rules and selling used cars as consumer demand rises.
Petrol grows in popularity across Europe
One noticeable trend is the growth in popularity of used petrol, hybrid and electric cars at the expense of diesel over the past two months. All six countries on their recovery phase have seen a growth in petrol used cars. In Germany the swing from petrol to diesel was 6.2% and in Poland 9.8%. Sweden meanwhile has experienced a 30%+ growth in hybrid and electric volumes versus a 2% reduction in sales across its entire market.
INDICATA’s business unit director Andy Shields is keen to issue a word of caution for markets yet to exit lockdown.
“The trends we have seen in Germany and Austria are very positive but may not transfer to other markets based on a number of factors. They are both affluent countries with resilient economies and deep financial reserves.
“They have also experienced fewer infections and deaths which impact less on the consumer’s mindset, plus generally their lockdowns were shorter and shallower than other countries. Germany has a resilient economy as it proved during the 2009 recession where the used car market only fell by 5%. How large used car countries like the UK, France, Spain and Italy will bounce back is still too early to tell,” he said.
To download a free copy of Market Watch 4, go to http://www.indicata.com/corona
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Used car sales in Germany, Austria, Netherlands, Sweden and Denmark start to recover, while prices remain static says Market Watch report
INDICATA launches free Market Watch used data in 13 countries
INDICATA has announced the launch of Market Watch, a two-tier free data source for remarketing professionals.
Market Watch features used car market volumes and pricing data in 13 individual countries and provides ongoing analysis and trends at macro and micro level to help manage issues such as the current Covid-19 pandemic.
Market Watch is available as a:
• Regular PDF hosted on individual INDICATA country websites
• Web-based market reporting tool for leasing, rental, OEM and dealer group decision makers
Market Watch has published its most recent data analysis focusing on the impact on used car sales in 13 European countries during March and on used prices during March and April.
Used car sales trends – Europe (6-31 March)
Our graph shows the stark difference between the markets in full lockdown, and those with some residual used car trading. Indexing from week one in March, the resilience of Sweden retaining 80% of its used car volumes and Turkey, Netherlands and Denmark (66% of volumes) contrasts with the lockdown countries where sales have dramatically fallen towards zero.
Used car price changes – Europe (1 Feb–3 April)
Our table shows how prices have changed between 1 February – 3 April using the INDICATA Market Watch benchmark car basket. The Netherlands used car pricing split by segment reinforces the power of Market Watch at a micro level.
The first interesting observation is the lack of overall price movement in some countries and a correlation with the introduction in social distancing.
Looking at UK, Spain, Austria, Italy and France, who went into lockdown with the fastest measures, dealers had minimal time to react before closure and experienced the fewest number of price changes.
Dealers had more time to react to market changes
Denmark, Belgium, Netherlands and Sweden progressed more slowly into social distancing and their volume falls were slower than other countries. As a result, dealers had time to react to market conditions by dropping prices.
Market Watch also looks at individual country data by sector or fuel type. For instance, small cars in the Netherlands sustained values initially better than larger vehicles, both from a € value and a percentage, typical of a market slide.
Turkey’s market price bubble
Turkey’s 7.5% rise appears to show remarkable growth, however, if we overlaid recent market growth rates, we would have expected a 10% rise. A move to used cars as ‘a safe asset’ fuelled by a new car sales fall and relatively cheap consumer finance potentially creates a market price bubble.
“Market Watch gives further support to the used car industry to help make sense of how to manage the impact of Covid-19. Our PDF and web portal provide used car decision makers with the best real time data to help build a short term and long-term strategy to efficiently manage used car supply and demand,” explained Andy Shields, INDICATA’s global business unit director.
Go to www.indicata.com/corona to sign up to your free PDF or web-based data feed.
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European used diesel supply falls while hybrid and EV demand and supply continues to grow
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In the used car market of Europe’s top five countries (Germany, United Kingdom, France, Italy and Spain) plus Belgium, you can see from the INDICATA data in the chart above that used diesel car sales have been steadily losing market share to petrol cars since July 2019. When you factor in our other article on new car sales trends, supply will significantly reduce over the coming months and years but using INDICATA data we can see that demand is still there.
Used diesel car sales appeared to close the gap a little in September mainly due to used diesel fleet vehicles in the used car market. Petrol has now reversed the move to diesel and shows no sign of losing the top position in the next 4-5 years.
Gap between used diesel and petrol sales grows
The gap between used diesel and used petrol car sales was 1:1.01 in October 2018 according to INDICATA. Just one year later and it is 1:1.10 a 9% increase in just 12 months. The ratio is set to continue to widen, driven by the reduced supply from the new car market, but also due to demand changes, particularly amongst buyers of younger used vehicles who are making similar decisions on powertrain to new car buyers, particularly where they live near the growing number of clean air zones.
The total online B2C used car market is up 9.4% in October year-on-year. Despite diesel losing market share it still saw a 4.2% increase in volume with used petrol car sales up 13.1% over the same period.
Used hybrid sales grow by an additional 8,742 cars
The growth in new hybrid sales over the last few years is also now impacting the used car market with hybrid sales up from a 1.6% market share in October 2018 to 2.2% one year later. In volume terms that’s an increase of 50.3% or an additional 8,742 used hybrid cars.
With new car sales of Plug-in Hybrid Electric Vehicles (PHEVs) falling we could see used PHEV values starting to rise as increased demand is met with a reduced supply.
Used EVs volumes rise by 55.5%
Over the last 12 months EVs haven’t managed to take more than a 0.4% market share. Whilst there is only a relatively small supply of used EVs available, due to limited sales in the new car market, the reality seems to be that demand is also low. In growth terms the volume of EVs sold in the online B2C used car market has risen by 55.5%, but that still equates to just 5,195 cars sold across the six countries in October 2019.
We have seen the new car market hit by yet more bad diesel media coverage and legislative actions but INDICATA’s data is showing demand for used diesel cars remains strong. You will need to subscribe to INDICATA’s data to get the full lowdown but used diesel car sales are rising.
Used diesel prices are actually outperforming used petrol prices over the last 12 months in Germany, France, Spain and Belgium, and in all six markets reviewed in this article used diesel car stock levels are selling faster than used petrol car stock.
Andy Shields appointed as INDICATA’s new business unit director
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Andy Shields has been appointed as business unit director of INDICATA, the global leaders in used vehicle pricing and market analysis.
Andy will have responsibility for INDICATA which is currently in 14 countries.
Andy said, ‘I am very familiar with INDICATA having used it extensively throughout my career both during my time at Avis Europe and whilst consulting for OEMs and major dealer groups.’
Supporting asset managers implement change
‘As a global leader in real time, used car pricing it is not just about data provision but supporting asset managers to implement ongoing pricing management, where the whole organisation embraces and executes it from sales executives to the CEO,’ he added.
Full data integration with Sofico
Andy recently supported VW Bank GmbH leasing company VWFS Ireland’s adoption of Sofico’s Miles lease management system.
Andy said: ‘As I join INDICATA, I am delighted we have announced full data integration into Sofico across all 14 countries. This contributes real time pricing insights at individual vehicle and portfolio levels for Sofico leasing and finance customers.’
Prior to joining INDICATA, Andy held roles such as director of fleet and remarketing at Avis Europe, VP sales and supply for an online car supermarket, and spent 10 years consulting for OEMs, dealer groups and leasing companies.
INDICATA transforms used-car decision making power
Peter Grøftehauge, Autorola Group’s CEO said: “INDICATA has made excellent inroads into providing data that transforms company’s business revenues and used car decision-making power.
‘Andy’s vast experience in used cars, e-commerce and finance means he has a perfect combination of skills for his new role as head of INDICATA.”
For more information, please contact Andrew Shields, Business , Mobile: +44 0 77 75 844 311, Email: firstname.lastname@example.org
Tracking the new car winners and losers across Europe by fuel type
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In the first 9 months of 2019 Battery Electric Vehicle (BEV) sales grew in Europe by 93.1% but this still equates to just 2.1% of the total new car market. Hybrid vehicles have also grown by a healthy 42.7% in the first half of 2019 and now account for just over 5.5% of new car sales.
Other powertrains such as Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) have seen their market share hold at around 1.6%, mainly due to its popularity in Italy. However, Plug-in Hybrid EVs (PHEVs) have seen sales drop by 12.7%, accounting for just 1% of the new car market across Europe for the first 9 months of 2019. The decline in demand from fleet operators is part of the reason.
Fleets see increased costs of fuelling PHEVs
Several countries have or had a beneficial taxation system for company drivers choosing a PHEV over a diesel vehicle, making them a popular choice from a personal perspective. However, fleet operators noticed a significant increase in fuel costs as drivers were commonly not charging them, just using them as a petrol vehicle. This meant cars were performing worse than a straight petrol version of the car as the PHEV also boasted added battery weight.
Feedback from auction houses like Autorola confirmed that many PHEVs were coming off fleet having never been charged and with the charging cable still in its original sealed bag.
Bristol city centre moves sets a worrying precedent
On 5th November the UK port town of Bristol became Europe’s first city to approve a ban on all privately-owned diesel cars from 2021 between the hours of 7am and 3pm every day.
Whilst Clean Air Zones (CAZs) are appearing across Europe, the difference here is that the local council has not distinguished the considerable difference between old, high emission diesels of the past and new, clean, Euro 6 engines with little to no NOx and low CO2 emissions. The full details of the fines and charges have yet to be published but the ban includes parts of the city centre as well as the nearby M32 motorway.
We will need to wait until February 2020 to see if the national government approves the business plan, which is predicted to cost £113.5 million, but it does set a worrying precedent.
INDICATA sees impact on new and used diesel market
Some cities already have bans or restrictions on older diesel cars, pre-Euro 6, whilst Oslo has legislation in place to ban all diesel cars from certain roads on days with acute levels of air pollution. This progression to a blanket ban on all diesels will impact the new and used diesel car market as INDICATA data is seeing.
Despite reports and data about how clean the latest Euro 6 diesel engines are, the press continues to use the phrase “Dirty Diesel” with gusto, whilst politicians and lobbyists continue to talk about introducing more clean air zones. The message received by many drivers and consumers is a clear one to “not buy diesel.”
The high-level view is that drivers would choose electric or hybrid vehicles, the reality is most lost diesel sales have gone to petrol engine cars.
European used EV/hybrid stock levels rise while diesel stocks fall
The increased number of new hybrid and EV cars registered over the past few years is now flowing through into the used car market according to the latest market insights data from Indicata for the five largest European countries plus Belgium.
Stock levels of hybrids have jumped 72% in the last twelve months whilst EV stock levels have more than doubled, jumping 220% although both are seeing longer stocking days as demand fails to keep up with supply.
Used diesels/petrol demand outweighs EVs/hybrids
When combining Indicata sales and stock data there is good EV and hybrid availability, but demand remains strongest for the traditional internal combustion engine.
Data from October 2018 to September 2019 shows online B2C used car stock levels are up 4.9% across all powertrains in September 2019 compared to the same period last year.
Dealers de-stock used diesels at a fast rate
Dealers appear to be de-stocking used diesel cars at a faster rate than demand is changing, but diesel remains the fastest selling powertrain. Used petrol car stock has also risen by 14% as dealers move away from used diesels.
Used car prices and demand for used diesels is still relatively strong according to Indicata, however, dealer stock levels are down 7.5% in September 2019 compared with 2018.
Petrol accounts for 51.6% of used stock
Used diesel cars now comprise just 43.8% of online B2C used car stock, versus 49.7% 12 months ago while used petrol car stock now accounts for 51.6% of Europe’s total used stock.
While it may seem a logical move for dealers to de-stock used diesel cars the reality is there are only enough used diesel cars to cover 58.9 days of demand at current run rates compared to 63.1 days of used petrol cars.
INDICATA tracking used car markets across Europe
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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.
Used car sales outperforming new car sales across Europe’s big five car markets
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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.
Market days’ supply sees double-digit decline as demand for used cars increases
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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.
Used diesel car sales fall as supply from new car market drops
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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.