In the recent Indicata Automotive Market Trends Report November Fleet Europe special we showed how the data can be useful in analysing market days’ supply and contrasting stock levels against sales to give an average ratio. This month we thought it would be useful to show how quickly, or slowly things can change.
Sales up, stocks static
Across the UK B2C used car market total sales in October for the 15 brands shown in the chart rose by seven per cent to 286,014 units over the previous month, whilst online stock levels were up just 0.7% to 420,720 cars according to Indicata’s database.
This pushed up the average sales/stock ratio to 68% from 64% last month as dealers pushed sales hard in the run-up to the Christmas break.
Ford holds top-spot but ratios slip
Ford remained the highest selling B2C used car brand by volume, although sales fell two per cent in October. Vauxhall retained second place in volume terms with 34,052 B2C used car sales, whilst Volkswagen leapfrogged BMW to take third place with 27,917 cars, almost eight per cent more than BMW.
Looking at the sales-to-stock ratio, Ford slipped to second place behind Volkswagen which achieved a 77% sales/stock ratio compared to 75.6% for Ford. Some 18.7% separated Volkswagen at the top and MINI at the bottom of the 15 brands.
Data analysis key to avoiding risks
The key to ensuring the right stock and sales mix is to drill down deeper into Indicata’s data and analyse the vehicles at a model and fuel type by region. This will avoid the risks of overpaying for slow-moving vehicles and getting the right cars in the right place to meet demand.
NEWS
Used car sales in the UK increase by 7% in October
B2C used petrol car prices rising sharply in Spain
With petrol MDS falling sharply in Spain but diesel B2C used car market share remaining high, the next logical place to look at Indicata’s data is used car pricing by fuel type.
Since October 2017 the average B2C used petrol car price in Spain has risen by 39.6% to €27,931 compared to an average 6.5% rise seen in used petrol prices in the other four large European markets.
Rising petrol prices well ahead of diesel
The rise in petrol prices are well ahead of diesel which rose 8.1% over the last year in Spain and three per cent across all five markets. The trend was depressed by a 1.9% fall in the Italian diesel B2C used car prices where compressed natural gas (CNG) and liquefied petroleum gas (LPG) are becoming increasingly popular.
Used petrol cars are also gaining popularity in Italy with prices rising 8.1% in October 2018 compared to October 2017, making it the second highest rising market after Spain.
C-segment petrol prices rise sharply 
The medium sized car C-segment is very popular in most countries. A review of the Indicata Index shows how B2C used petrol car prices have been rising sharply during the second half of 2018 in Spain compared to the decline in average diesel used car prices throughout the year.
The same pattern can even be seen in the Spanish SUV segment as demand for the smaller petrol SUVs have seen used prices rising against falling diesel used car values.
Germany’s new car sales fall as B2C used car sales rise
The slump in new car sales in Germany following the introduction of WLTP in September has seen the sale of business to consumer (B2C) used cars continue to rise once the traditional holiday season slump has been normalised.
The new car sales fall in September, a result of the WLTP introduction, meant German dealers and traders sold 2.1 used cars for every single new car. Whilst October saw that gap close to 1.7 it was still 10% higher than October 2017 and well above the 1.4 average for the first half of the year. 
Demand strong for petrol
Demand in the German used car market has been particularly strong for petrol cars where B2C used car sales have risen by 15.7% in October 2018, compared to the same month last year. By comparison, diesel B2C used car sales fell by 14.8% according to the latest Indicata data.
The UK is the other European country where traders and dealers usually sell significantly more used than new cars. It has been running at an average of 1.9 B2C used cars for every new car this year.
In the remaining three largest European car markets – France, Italy and Spain – used car sales generally followed their usual seasonal patterns, although France has yet to recover from the impact of WLTP and used cars continue to outsell new cars.
Spanish car buyers more willing to buy new
The conservative decision by Spanish car buyers to buy used instead of new cars during the height of its economic crisis continues to unwind as car buyer prosperity is leading to growing new car sales. The net effect is B2C used car sales are continuing to fall, but even in a market like Spain, which has been quite resilient against the diesel backlash, diesel is taking the brunt of the decline falling 28.9% in October 2018 versus October 2017, whilst petrol used car sales dropped 25.3% over the same period.
Petrol sales overtake diesel in the B2C used car market
The political and media war on diesel has seen sales of used petrol cars in the B2C markets within Europe’s five largest car markets overtake diesel used car sales in August 2018, according to Indicata’s market data.
Ignoring the very small volumes of alternative fuels, across Germany, UK, France, Italy and Spain B2C, used petrol cars took 51.7% of the market in August and continue to be the most popular fuel type bought by used car buyers.
German B2C market driving diesel decline
But the devil is in the detail and the fall in diesel market share below 50% is mainly being driven by the German B2C used car market with diesel market share falling by two per cent in August to 39.5%. By the end of October 2018 diesels accounted for just 37.9% of the German B2C used car market, compared to 45.3% in October 2017 and 41.6% average for the last 12 months.
Germany and the UK both have petrol as the most popular fuel in the B2C used car market. Whilst the UK has seen diesel falling to 46% in October 2018, compared to 49.7% a year earlier and 47.9% on a rolling 12-month average, the 3.7% fall is exactly half the 7.4% drop seen in Germany over the same period.
In contrast sales of B2C used diesel cars in Spain remain strong and accounted for 71.6% of B2C used car sales in October 2018, just one percent lower than October 2018 and 0.4% higher than the 12-month rolling average.
Diesel MDS rising, petrol falling
Whilst diesel B2C used car market share remains high, other Indicata data shows how diesel market days’ supply is increasing whilst petrol MDS has fallen sharply. This means the Spanish market is becoming more of a push market as used car buyers are facing limited used petrol car stock, leaving them with no choice but to buy a used diesel from dealers and traders.
Used car price stability masks petrol diesel divergence
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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Sales of used cars strengthen across most major markets
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 1st 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.
Used stock levels starting to fall as demand eats into supply
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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