European used car market grows on the back of improved supply
Supply has been constricting the size of the European market, not demand, so with more balanced supply the market grew in September.
Dealer stock level fall by 15%
Dealer stock levels had fallen on average by 15% from June to end August, but in September this flattened and growth in UK and France (5% and 6% respectively) allowed these larger markets to power forward.
Turkey, Portugal and Italy experienced the strongest used market growth at 59.6%, 36.2% and 29.6% respectively, while overall prices remained firm during September at a time when countries would expect a small price fall. This suggests the market remains nicely balanced with underlying demand exceeding any increases in supply.
EVs and hybrids sales volumes continue to increase
Environmental powertrain (BEVs and hybrids) volumes continued to increase significantly in September up 123% and 104% year-on-year respectively. However, stock turn of environmental cars is well below the market norm (4.4x and 5.4x respectively) suggesting the growth is driven by oversupply as much as underlying demand. Accordingly, prices are less stable.
Conversely, diesels and petrols are now both in short supply with high average stock turns of 7.9x and 7.3x which is up 35% and 37% respectively.
Supply shortages in sub 12-month market
Sub-12-month old volumes are down significantly (7.0%), but their level of stock turn increased year-on-year (34%) suggesting low volumes are still driven by supply shortages caused by OEMs not forcing the market through demonstrators and pre-reg cars.
“Growth in the September used car market was extremely healthy but was still tempered by tight levels of dealer stock”, explained Andy Shields, INDICATA’s global business unit director.
Market in good shape but dealers should remain cautious
“The market is very stable with prices firm and demand continuing to exceed supply. As we move into Quarter 4, the used market looks in good shape. However, with the second wave of virus infections now seemingly inevitable and new lockdowns happening, dealers and remarketers should remain cautious.
“Combine OEM new supply coming back online and an increased number of trade-ins, the market could switch quickly from under to oversupply,” he added.
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