European used car dealers increase stock levels as lockdown 2.0 market slowdown begins

Written by Autorola in category 
November 24, 2020

Our October Market Watch insights report reported an average 12.4% year-on-year sales growth across 13 European countries. 11 out of 13 countries saw dealer stock levels increase, with supply now appearing to be coming back into the market. Key movers were Spain, France and the UK, increasing stock levels by 9.0%, 7.9% and 7.4% from the 1 October to the 1 November respectively.

However, just as supply and dealer stock levels start improving Covid levels have increased and tighter lockdowns have been imposed in a number of countries. This means the current used car bull market of short supply and rising prices is coming to an end.

Dealers need to manage their used car stock pricing
The challenge is for dealers to manage their used car stock pricing and stock turn using real time data from INDICATA as demand starts to soften in many countries.
During October countries such as Portugal, Turkey, France, Italy and Germany reported year-on-year sales growth by as much as 31.1%. This was balanced by countries such as Sweden, Austria, Poland and The Netherlands which experienced a year-on-year fall in used car sales.

Petrol and diesel stock turn is strong compared with EVs
Dealer stock turn for diesels and petrols at 7.4 and 6.7 eased back marginally from September but both fuels remain in short supply. That compares with EVs and hybrids which delivered a 4.5 and 5.3 stock turn during the month where supply is freer and prices less stable.

There has been a consistent demand for used cars of all ages with the five-year old car comprising the consumer sweet spot. Meanwhile, sales of sub-12-month old cars continues to struggle due to poor stock levels (illustrated by a 23% year-on-year increase in stock turn).

OEMs show little interest in tactical pre-reg and 0km activity
With EU27, EFTA3 and UK new car sales down by a total of 38.7% in Q3, OEMs are demonstrating little interest in supporting tactical pre-reg and 0km sales campaigns so sub-12-month old car stock levels are not likely to improve any time soon.

“During October we saw dealer stock levels increase as further part exchanges and ex-lease vehicles came into the market. This follows many months where supply has been restricted and dealers scrambled to find stock,” explained Andy Shields, INDICATA’s global business unit director.

Dealers need to balance their used car books carefully
“With the risk that Lockdown 2.0 impacts consumer demand in many countries, some dealers may have overstocked for November. December is traditionally when demand softens so those dealers are going to have balance their used vehicle books very carefully to the end of the year.

“We are already seeing some price adjustment to keep sales ticking over and as we move into 2021 and delayed lease returns start coming on to the market, dealers and remarketers should be revisiting their pricing strategies on a regular basis.

“With specific models showing real signs of oversupply, each vehicle now needs individual pricing based on trade or retail benchmarks and by reviewing saleability in the market.” he added.

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