Used car sales down across Europe – but prices keep rising

As prices rise for everything from food to energy, consumers across Europe are postponing major purchases, including cars – new and used. Yet new figures from Autovista show that used car residual values ​​(RVs) are rising.

New car sales have been weak in Europe for some time now. This had a double impact on the used car market. In the short term, demand is shifting from the new car market to the used car market. And in the longer term, fewer new cars now means fewer used cars in the near future. Both factors support strong RVs.

Decrease in demand

But the current cost of living crisis is changing this scenario, with European consumers increasingly reluctant to even buy used cars. “Despite the supply challenges (of used cars), the prospect of lower demand means that prices may have already peaked in some countries, and the %RV (the retained percentage of list price, editor’s note) is expected to decline, or at best stabilize, in European markets in 2023 and 2024,” writes Autovista in its monthly market update.

A few weeks ago, Autovista announced that used car sales fell in the first half of 2022 in the five major European markets, with a double-digit drop in Germany (-14.6% year-on-year) and in France (-12.4%), and with considerable declines in the United Kingdom (-8.3%), Italy (-7.1%) and Spain (-4.5%).

Monthly growth

Framing this, the broader context of supply and demand produces a picture that shows how, despite the slowdown in used car sales across Europe in August, motorhomes still rose slightly more faster than list prices; resulting in monthly growth in average used car prices, albeit from just 0.1% in Spain to 1.3% in Austria.

Rejoice while you can, because as mentioned: this may be a peak in VR, and things could get worse in the months and years to come. Here is an overview of some of Autovista’s main European markets.

Germany: recreational vehicles could peak

  • On the German used car market, there are currently more vehicles entering than leaving, with the more expensive vehicles not advancing. This may be a sign that RVs are reaching their peak right now. However, a rapid and sharp drop in prices is not expected – at least not this year.
  • With new car registrations down 11% in July (compared to the same month last year) and tactical registrations at an all-time low, the outlook for very young used cars in 2022 and 2023 is bleak.
  • The near-future used-car market will have a volume problem, but it will be more diverse, with newcomers like MG, Polestar and Lynk&Co outselling established players like Honda, Jaguar and Alfa Romeo, respectively.

Italy: sales slowdown, RV growth

  • In August, the %RV in Italy rose by 0.3% compared to July, despite an 8.1% drop in the volume sales index.
  • Compared to the same month last year, %RV increased by 16.2%, but the sales volume index was also 29.2% higher than in August last year.
  • Average days of stock increased slightly to 62 days, with the Toyota C-HR and Nissan Qashqai being the fastest movers in August.
  • Used diesels are doing surprisingly well, with August %RV up 1.5% from July and volume up 19.6% from the same month last year.
  • In contrast, the %RV for BEVs was down 2.2% month-on-month – but was still higher than in August 2021.
  • Recreational vehicles for used LPG and CNG cars increased by around 14% compared to August 2021. Both fuel types are well established in the Italian market.

Spain: Going Cheaper, Smaller and Older

  • In August, inventory volumes available on the Spanish used car market were around half of what they were a year ago. This helps explain the 12.1% year-on-year drop in the sales volume index.
  • Economic uncertainty is shifting consumer demand towards cheaper, smaller and older cars. So far, four out of 10 used cars sold in Spain in 2022 are over 10 years old. Such an aging fleet makes the transition to a less polluting fleet difficult.
  • Reduced supply leads to higher prices. Buyers are paying 30% more today for a vehicle over seven years old than in August 2021.
  • The shortage continues to affect vehicles for up to four years. Dealerships can’t source enough ‘new’ used cars from lease renewals and rental fleets, so imports have become a major source of sales, up 50% so far This year.
  • Recreational vehicles rose less than 1% in August, the slowest rate in months. The average price of a three-year-old car with 60,000 km has increased by 22% compared to August 2022.

United Kingdom: the cost of living affects the propensity to buy

  • RV for the average three-year-old car in the UK rose 3.8% in August (month-on-month) – but this is more a reflection of the shortage of these models than the overall used-car market.
  • As new cars remain scarce, contract extensions are used to keep fleets at the required number. This reduces the number of vehicles – especially those three years old – that are retired from the fleet and creates an imbalance between supply and demand for vehicles of that age.
  • Overall, the low supply of the UK used car market is offset by its weak demand. Average trading days were 47.2 days in August, same as July, but 9.5 days longer than August 2021. Cost of living pressures are likely to affect UK consumers’ willingness to buy .

Austria: Restricted supply remains essential for motorhomes

  • The supply of two- to four-year-old used cars in Austria was 0.8% lower than in August last year.
  • The volume of diesel cars in August decreased by 8.3% compared to the same month last year. However, BEV volume decreased by 46.6%. Demand for BEVs and hybrids is weakening, but their supply remains a challenge.
  • Overall supply improved 2.8% month-on-month, but as sales slowed the average days of stock rose to 58.2 days. BEVs sell fastest (55.3 days), followed by gasoline cars (56.8 days), HEVs (58.9 days), diesel cars (59.1 days) and PHEVs (the sellers the slowest, at 65.2 days).
  • RVs for three-year-old cars increased slightly, both in absolute terms and as a percentage of list price (%RV). The latter increased by 1.3% (month-on-month) and 21.7% (year-on-year), with an average value retention of 53.7%. ORVs had the highest recovery value (55%), BEVs the lowest (48.3%).
  • With new car sales still significantly below pre-pandemic levels, the undersupply of used cars will continue to drive RV levels in Austria well into 2023.

Switzerland: motorhomes exceed list prices

  • Strong demand, weak supply, rising used car prices: that is the Swiss used car market in a nutshell over the past two years.
  • In August, the sales volume index was down 17.7% from July and 14.8% from August 2021. Still, RVs rose faster than list prices, even slightly.
  • Thus, the value retention of three-year-old vehicles reached 50.8% (+18.5% compared to the previous month of August). For BEVs, %RV gains were 21.4% (to 48.6%), for diesel cars they were up 20.1% (to 49.7%) and for petrol cars , they were up 17.6% (to 51.6%).
  • The supply of diesels in the used car market was down 8.7% compared to August 2021, but for BEVs the figure was 31.6%. Given the high demand for used BEVs and other hybrids, this leaves the Swiss used car market short of stock.
  • The average number of trading days for passenger cars two to four years old fell from July to August to 64 days. Gas cars (63 days) are selling the fastest, followed by diesel cars (66 days), BEVs (69 days), PHEVs (80 days) and HEVs (85 days).
  • With new car registrations in 2022 being lower than before Covid 2019, market supply will remain tight, even if demand cools. Three-year-old used car values ​​are expected to increase by 11% by the end of the year compared to December 2021, but will decline again in 2023 and the following year.

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