July’s used car growth should give dealers confidence to increase prices says INDICATA
Sales of used cars in Europe rose again in July by an average of 13.5% year-on-year following the June increase of 13.2% according to the latest insights from INDICATA, reinforcing that the sector is alive and well following the Covid-19 pandemic.
Twelve out of the 13 countries, where INDICATA provides real time used car insights, reported a rise in sales, except for the UK which experienced a 1.8% fall, primarily down to a shortage of stock.
12 out of 13 countries saw sales increases in July
Turkey saw a healthy 64% in sales in July while Portugal and Spain reported a 25% and 30% respective sales growth.
Stock shortages continues to be a problem and on average are running at 14% across Europe when comparing 1 August with 1 April, which equates to around half a million cars according to INDICATA data.
UK saw sales fall based on stock shortages
The worst hit markets are in the UK where dealers have 22% fewer cars in stock while Sweden and Poland stock levels have fallen by 26% and 21% respectively. Italy has experienced the strongest stock levels with a fall of just 5% since April.
A number of the countries are turning this stock shortage to their advantage with the likes of Sweden increasing prices by 2.5%, Poland by 1.8% and Turkey experiencing a massive 10% in the last month due to major inflation.
Dealers are passing up chances to increase profits
However, many of the countries are still not increasing prices to reflect reduced stock availability and dealers are passing up chances to increase used car profitability.
INDICATA is encouraging dealers to increase prices on fast moving stock before the opportunity is lost, but to remain cautious on slow moving stock as this should be cleared out whilst demand remains.
Hybrid and electric cars are in high demand
The move to environmental powertrains has continued with the year-on-year sales of hybrid and electric increasing by 98% and 114%. Many companies were waiting for used car buyers to embrace low or zero emission cars and the Covid-19 pandemic seems to be the tipping point required.
Popularity of models varies dramatically country by country but the initial surge in sports cars is falling in place of a growth in SUVs with luxury and small cars strong.
Stock shortages are putting a brake on sales
“With a strong second consecutive used car sales month we are definitely witnessing a major turn in the sector’s fortunes. Indeed, it is stock shortages that is putting a brake on sales, not a slowing down of pent-up demand,” explained Andy Shields, INDICATA’s Global Business Unit Director.
“The strength of the used car market looks encouraging for the rest of the summer, but dealers must now take a hard look at their stock. Caution may return to the market in September. Now is the time to ensure your pricing strategies truly identify fast moving stock and take advantage. If, however, particular stock has not sold in the current market then don’t be greedy as it certainly will not sell if the market turns.”