European new and used EV sales are growing, but residuals are falling. INDICATA’s director Andy Shields puts this market trend into perspective

Written by Autorola in category 
October 28, 2020

Since August, used EV sales volumes have been going well year-on-year across INDICATA’s 13 European countries with our data showing a significant switch to environmental powertrains since lockdowns were lifted.

At the same time European used car markets are generally being constrained by supply, with an increase in volumes by 10.3% in August year-on-year, but a contraction in stock supply since June of 15%. This is creating a generally stable market price or a price increase as supply outstrips demand.

EV prices are softening
However, EVs are not following this trend. Since February, in Germany the Indicata EV price index for petrol used cars in August was 97.6%, however used EVs were down to index 90%. In the UK used petrol prices are at 103.5%, while used EVs are priced at 99.6%.

Indeed, INDICATA sees similar price lag trends in almost all European markets, with EV prices worse off than their petrol and diesel counterparts.

INDICATA analyses not only sales but assesses market attractiveness by comparing sales to stock availability, and here the issue is clear. In August diesel cars had an annualised stock turn of 10.2x, up 30% year-on-year and petrol cars a stock turn of 9.5x, up 29%.

EV supply still outstrips demand
EVs however have had only a 5.3x turn in 2020 and whilst marginally up versus 2019, this is a sign that EV supply still outstrips demand, hence the poor performance residual values.

There are several factors causing this poor stock turn? The gap in range and speed performance of newer EVs versus older ones is greater now than between new and old petrol cars, is one reason.

OEMs have a vested interest to push EVs into the market and after slowly setting up production capacity and launching new models into the market, many have finally caught up and started to benefit from free supply.

EV new car sales rise 3-fold
ACEA’s new car statistics show that EV registration share in August had increased three-fold (7.2% vs 2.4%) compared to the used car EV market only doubling. This suggests that sales volume increases are supply pushed and not matched by a corresponding demand in the used market.

As a sign of the times, INDICATA’s recent work with a 50-outlet dealer group demonstrated an optimisation of price and stock mix. Overall, they were in a good shape, apart from EVs, where sales were slow, stock aging and unit profitability was starting to become a challenge.

EVs face a tough time in the used market
Therefore, INDICATA anticipates a tough time for EVs going forward with a healthy increase in sales not lulling the market into a false sense of security. As always, INDICATA encourages dealers not to look at sales alone, vehicle attractiveness led by KPIs such as market day’s supply and stock turn are the true measures to make decisions on what stock they should buy.

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