Article Type: editors-choice

Monthly Market Update: European used-car markets pick up speed in June

Many European markets saw drivers purchase a used car more quickly in June. While absolute residual values (RVs) remained stable, RVs presented as a percentage of retained list price (%RV) saw greater fluctuation.

The average number of days needed to sell a used car shrank across many European markets last month, bucking a recent trend. Compared with May’s figures, Austria, Germany, Italy, Spain and the UK all saw speedier transactions take place for 36-month-old vehicles at 60,000km.

The UK witnessed the fastest turnaround at 38.5 days, falling by 0.1 days month on month. Austria recorded one of the longer periods at 74.1 days, although this was still a drop of 2.4 days on average compared with May. The exceptions were Switzerland and France, with used cars waiting for an additional 3.7 and 3.4 days on average to find a new owner.

Absolute residual values were stable across Europe in June, with the majority of markets enjoying positive momentum. Italy saw the strongest rate of month-on-month RV growth at 3.9%, meaning 36-month-old cars traded for an average of €20,815. At the other end of the spectrum, the UK saw absolute trade RVs dip by 3.3% to £17,792 (€20,775).

Most of the markets under review saw %RVs decline month on month, if only by a marginal amount. The UK took the largest drop at 3%, down to 64%, while France and Italy saw %RV increases. Recording month-on-month growth of 0.5% and 0.3% respectively, both markets hit a %RV of 55.9%.

Comparing the sales-volume and active-market volume indices reveals that used-vehicle supply is still overshadowed by demand. However, this trend was far less pronounced than in May, with only four of the seven markets under review affected.

For example, while France’s active-market volume index saw one of the greatest month-on-month drops at 4.7%, this was still outweighed by its 12.6% fall in demand. But demand did outstrip supply in Italy, Spain and Austria, where the sales-volume index saw respective inclines of 23%, 18% and 6.9%.
Click here to open the interactive dashboard

The interactive monthly market dashboard examines Austria, France, Germany, Italy, Spain, Switzerland, and the UK. It includes a breakdown of key performance indicators by fuel type, including RVs, new-car list prices, selling days, sales volume and active-market volume indices.

Scenario analysis

The current base-case scenario of low supply and falling demand has both positive and negative ramifications. Used-car prices and demand would come under pressure should Europe’s economic situation deteriorate.

If new-car supply suddenly improved as supply-chain issues ease, this outcome would worsen. While the semiconductor shortage appears to have improved, McKinsey analysis points towards a shortage of specific chips persisting until at least the summer of 2025, if not longer.

On the other hand, if new-car supply was disrupted again, the used-car market would likely benefit in the short term as consumers explored alternatives to factory-fresh models. This could occur if supply chains took a hit due to economic turbulence or exceptional energy prices. Conflict would have the same impact, as has been seen with the war in Ukraine.

However, in the longer term, a lack of new car supply would result in a shrivelled supply of young used cars, pushing consumers towards older models. This would create an issue, as environmental regulations look to discourage the uptake of more polluting models.

Austria’s mounting RV pressure

Compared with 2022, living costs continued to climb in Austria as used-car transactions sank. The sales volume index did reveal stronger demand in June compared with May, increasing 6.9% month on month. However, the sales volume index was down 1.9% year on year.

Meanwhile, the supply volume of passenger cars aged two-to-four years was around 11% higher in June than a year earlier. But in 2022, supply was significantly lower than before the COVID-19 pandemic at the beginning of 2020.

Following a steady increase earlier in the year, the average number of days it took to sell a used car decreased to 74.1 days in June, confirming a slowdown in demand. Petrol cars sold the fastest, averaging around 72 days, followed by hybrid-electric vehicles (HEVs), diesel cars and plug-in hybrids (PHEVs) with around 74 days. Battery-electric vehicles (BEVs) took longer to move at around 89 days.

With weakening demand and improving supply, %RVs of 36-month-old cars decreased slightly by 0.2% compared to May, reaching 54.3% on average. This marked a 2.8% year-on-year gain but shows that pressure on RVs is increasing.

HEVs are currently leading with a %RV trade value of 57.6% followed by petrol cars (55.3%), diesel cars (54.4%) and PHEVs (53%). Meanwhile, 36-month-old BEVs retained the lowest value, at 48.4%. As demand is expected to weaken while supply recovers, further pressure on RVs can be expected. Therefore, RVs of 36-month-old used cars will remain relatively high but on a decreasing trend.

‘The market’s average %RV of a 36-month-old car at 60,000km is forecast to end 2023 approximately 2.4% down compared to December 2022. For 2024, %RVs are expected to decrease by around 3.4% year on year due to weakening demand and increasing supply,’ said Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland.

Postponed purchasing in France

The French used-car market was stable in June. A slight increase in absolute RVs was observed, likely due to marginally higher list prices. But the sales volume decreased, with the time needed to sell a used car rising. The fastest-selling models were the smallest and cheapest vehicles, such as the Dacia Sandero with less than 30 days. This was followed by A and B-segment cars.

‘Recent high prices on the used-car market have resulted in postponed purchase decisions, a trend which has become more visible each month. This will likely lead to decreasing residual values in the coming months,’ said Ludovic Percier, Autovista Group residual value and market analyst for France.

Petrol-powered models are following the global trend, with a slight increase in absolute RVs. Yet these vehicles did see %RVs stabilise month on month. The RVs of diesel and hybrid powertrains also remained stable in June, but there was a decrease in sales volumes.

Only diesel kept a consistent number of average days to sell, while hybrids took longer. Even with their tarnished reputation and the implementation of low-emission zones, diesel RVs have not fallen very far. High-mileage drivers are not affected by these zones, and they only take effect in cities with 150,000 inhabitants or more. However, from late 2024 and into 2025, the diesel market will be more heavily impacted.

PHEVs saw absolute RVs begin to fall month on month, with a higher volume of sales and cheaper cars on average sold. Compared with May, BEVs saw stable RVs, while sales volumes and average days to sell increased. Fewer private buyers purchased a used vehicle in June. Those who did were budget conscious and looked to older vehicles or a lower segment. Cars over 12 years of age suffered the least.

Government offering needed in Germany

May saw a large increase in new-car registrations, with fleets performing particularly well. The significant increase compared to 2022 was fed by all drive types apart from PHEVs.

In recent years, these vehicles have benefited from a combination of new-car bonuses, tax advantages for the driver and minimal adjustment in day-to-day use, without the obligation of using the electric drive to cut emissions. But this has now changed, and demand has dropped accordingly.

If Germany’s registration recovery continues, petrol could suffer on the used-car market in 2026. This is because, when measured against pre-crisis levels, there were significantly more new petrol cars taking to the roads in May.

Diesel cars remain unaffected and continue to generate less supply, consequently stabilising prices during remarketing. The increasing number of stock days – regardless of fuel type and age – suggests that willingness to buy is dwindling and customers are becoming more reluctant to opt for younger used cars.

However, the resulting price pressure is only likely to have a temporary effect. In the short term, the continued lower market volume will not offer the opportunity to compensate for falling prices, resulting in margins with higher unit numbers.

‘In the coming year, prices are expected to rise again, especially for the currently weak electric vehicles (EVs). A government offering is urgently needed to stimulate demand for used vehicles with plugs,’ said Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

‘Previous measures, which were almost exclusively aimed at new purchases, now need to be replaced by effective support for EV operation and maybe even PHEVs. As long as energy costs, for example, do not become more attractive, it is possible that demand will lag behind rapidly growing supply,’ he added.

Slow turnaround in Italy

In June, the Italian used-car market recovered slightly from the decline observed in May. But with %RVs only increasing by 0.3% month on month, this should be considered as a sign of stability, rather than an indicator of recovery.

‘Year-on-year growth can be expected to slow in the second half of 2023,’ said Marco Pasquetti, head of valuations, Autovista Group Italy. ‘While many crises observed over the past couple of years are fading, such as long new-car delivery times, this turnaround is taking longer than originally hoped. Accordingly, the RV outlook for 2023 has been adjusted marginally to a year-on-year increase of 5.9%.’

Average days to sell sped up in June to 48.3. This is 10.5 days less than a year ago and 14.4 fewer than in May. BEVs, PHEVs and HEVs recorded a particularly good performance, taking less than 40 days on average to sell.

The RVs of BEVs were among the few to fall in June, dropping by 0.8% month on month, with an absolute trade value of just over €16,000. With the same absolute RVs, it might appear buyers are prepared to pay the same amount for a BEV as a petrol model. However, this is where %RVs need to be accounted for.

Petrol cars retained 53.6% of their list price in June, whereas BEVs only managed 37.5%. So, three years ago a new petrol model might have cost €30,000, but a new BEV would have cost roughly €13,000 more. This suggests that many Italians still fail to recognise the benefits of owning an all-electric vehicle.

Price pressure in Spain

For the fifth consecutive month, new-car sales in Spain were up, growing 8% year on year in May. Accumulating 404,337 registrations in the first five months of 2023, the country saw a 27% increase on the same period in 2022. But uncertainty remains as the private channel is still very subdued.

As in previous months, the rental channel has shown significant growth, with one out of four sales in May going to this market. This impacts the dynamics and profile of the used-car market in terms of age, make and model. The used-car market grew by 4% and did so through younger cars.

The situation also influenced the scenario of best-selling brands and models. This means the promotion of vehicles with a rental profile and brand models such as MG, which are widely available and have a strong presence among rental companies.

‘The greater availability of young used cars puts more pressure on prices, visible in the absolute RVs of cars up to 12 months old. Despite high availability, the older the model, the better its residual value held up. Vehicles over 15 years old still accounted for 40% of transactions,’ commented Ana Azofra, Autovista Group head of valuations and insights, Spain.

In terms of powertrains, the negative evolution of BEVs has intensified, with all-electric cars depreciating faster than any other technology, including PHEVs. The market has not reached maturity in terms of infrastructure and the price war initiated by Tesla is likely to have put downward price pressure on other manufacturers, especially those in the mainstream market.

This slowdown in demand for BEVs was also reflected in stock turnover. A used BEV currently takes 81 days on average to sell. This is 20 days longer than a petrol car and almost twice as long as a HEV at 44 days. Hybrids continue to enjoy positive momentum, with three Toyota models at the top of their respective rankings, taking the least time to sell.

Opposed supply and demand in Switzerland

Switzerland has seen increasing levels of supply in recent months, except for young-used cars when compared with pre-COVID-19 years. Additionally, transactions have slowed since the beginning of this year, with little sign of recovery from a weak 2022.

However, the active market volume index did see a 2.4% month-on-month increase, and a 40.1% incline on June 2022 across all two-to-four-year-old passenger cars. The sales-volume index dropped by 1.7% compared to May but is still up 11.2% year on year.

With increased supply and declining demand, the average %RV of a 36-month-old car hit 50.5% in June, falling 0.7% month on month, but still up 1.5% year on year. PHEVs aged 36-months retained 48% of their original list price. Slightly above this were BEVs (48.2%), diesels (49%), and petrol cars (51.4%). HEVs posted a particularly strong year-on-year %RV gain of 11.4%, reaching 54.6%.

Passenger cars aged two-to-four years were in stock for 81 days, up 3.7 days from May. HEVs sold the quickest after an average of 43 days, followed by petrol cars after 79 days, then diesel cars and BEVs after 84 days, and finally, PHEVs after 98 days.

‘As used-car demand is expected to weaken amid overall high and stable supply, a further and slightly accelerated decreasing trend can be expected, although values of three-year-old used cars remain relatively high,’ said Hans-Peter Annen, head of valuations and insights, Eurotax Switzerland (part of Autovista Group). ‘The %RV is forecast to finish 2023 down roughly 4% on December 2022. In 2024, RVs are expected to fall by around 3.9% year on year due to constant supply and lower demand.’

Seasonal change for UK

The average volume-weighted RV of a three-year-old car in the UK sat at £17,792 in June. This represents 64% of the original cost-new price, which is down from 65.9% in May.

The intensity of used-car activity has slowed in recent weeks too. However, this is a fairly typical market trend in the summer months, with consumer focus seeming to switch to other priorities over the holiday period.

‘The sales-volume index certainly points towards slowing activity,’ said Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles. With May’s transactions represented as 100%, the index indicated 91.2% observed retail sales in June.

‘It is therefore unsurprising to see the volume of cars being offered by dealers increasing, with 4.5% more units advertised compared to the previous month. It is encouraging to see, however, that 4.3% more retail sales were generated compared to the same period last year,’ Whittington added.

The average movement of a three-year-old BEV followed the general market trend last month, settling at a new price point and falling from 47% of the cost-new price in May to 45% in June.

The average absolute RV now sits at £19,962, which is still £2,170 greater than the average value of combined fuel types. This is despite BEV %RV sitting at 45% in June, compared with all combined fuel types which retained 64% of the original list price.

This content is brought to you by Autovista24.

Launch Report: MG4 proves budget BEVs can work in Europe’s growing market

When MG returned to Europe’s automotive market, it was not the marque of old. Instead, this was a new brand, owned by Chinese carmaker SAIC, that took aim at the neglected budget end of the sector.

The electrification of the industry presented MG with an opportunity, and the MG4 is its latest offering. The medium-sized battery-electric vehicle (BEV) appeals with its styling, practicality, and price.

Autovista Group experts from Austria, France, Italy, and the UK analysed the strengths, weaknesses, opportunities, and threats in their respective markets, benchmarking the MG4 against rivals and outlining both new-price points and forecast residual values (RVs). Click on the image below to view their insights in the latest dashboard.

Click here to open the interactive dashboard

Styling beyond the price

From the outside, the MG4 does not look like a budget BEV. It utilises the unique design aesthetics of electric vehicles (EVs) perfectly. The grill-free front end provides an angular point that emphasises a dynamic style while also acting as an aerodynamic influence. The front bumper sweeps out to two side grills, housing fog lights in premium versions, with a design reminiscent of the nose on a 2000’s-era Formula 1 car.

At the rear, the light bar extends beyond the vehicle hatchback, providing a boat-like deck that allows better visibility for the LED lighting, with an angular rear cluster wrapped around the side of the vehicle. The C-pillar is offered in gloss black, creating a floating roofline that flows across the top of the car when viewed from the side.

This side profile is let down a little by the lack of styling, with plastic sills and minimal body lines, while the wheels are lost within the large arches. However, its design still offers an impressive stance, well beyond its price point.

Comfortable and practical

Taking to the interior, the MG4 offers its occupants comfort, even on longer journeys. The 10.25-inch infotainment screen is a big improvement on earlier MG models, although it is not as refined as those offered by its competitors, and at times requires more pressure on the touchscreen. Most of the vehicle’s controls are housed in this system, with few physical buttons.

Another screen ‘floats’ behind the steering wheel, providing speed information, battery data as well as regenerative systems, and turn-by-turn navigation (an optional extra). Controls on the wheel itself allow for infotainment control. Meanwhile, taller drivers will benefit from the flat-bottom design.

The dashboard styling is futuristic, with a floating centre console offering the drive controls alongside the electronic parking brake. There is also a phone-storage space, with cable or wireless charging available in some options. There is plenty of storage for front passengers, with a cubby in the lower part of the console, as well as within the armrest.

Practicality continues to the rear, where a 363-litre boot can easily swallow up a couple of suitcases. Top-spec versions get a false floor, which is handy for EV-cable storage, especially as the MG4 does not feature a ‘frunk’.

The materials used in the interior may be cheaper than those of premium rivals and could be more prone to marks. However, it is not particularly noticeable and is overall a pleasant environment for both the driver and passengers.

Handling against its competition

MG has opted for rear-wheel drive with the MG4, and the battery arrangement gives a good centre of gravity. This means the car is very stable, with no rocking under acceleration and braking.

There is slight roll in the corners, but it is not dramatic and easy to get used to, while the softer suspension soaks up bumps. The MG4’s steering responds quickly, with the placement of electric motors in the rear providing a short turning circle, which makes light work of city streets.

The MG4 can cover around 450km on a single charge (according to WLTP figures), which is competitive against its more-expensive rivals. While the EV market is developing, and concerns remain about the price of BEVs compared to petrol and diesel vehicles, MG is proving that budget-electric motoring is not just possible, but practical and fun as well.

View the Autovista Group dashboard, which benchmarks the new MG4 in Austria, France, Italy, and the UK for more details. The interactive launch report presents new prices, forecast residual values, and SWOT (strengths, weaknesses, opportunities, and threats) analysis.

This content is brought to you by Autovista24.

Monthly Market Update: Demand overshadowed by supply in May

Absolute residual values (RVs) in many European markets maintained a trend of double-digit year-on-year growth last month. Values represented as a percentage of retained list price (%RV) also rose when compared with May 2022, although this was primarily at a slower, single-digit rate.

Meanwhile, month on month, RVs were broadly stable. Italy saw the highest absolute growth at 0.8% and France felt a %RV improvement of 0.8%. Absolute RVs in Switzerland’s used-car market took the greatest fall at 1.3%. However, RV fluctuations do not tell the full story of how European used-car markets performed in May.

As indicated by the sales volume index, demand saw double-digit year-on-year drops in France (down 38.4%), Spain (down 23.6%), Italy (down 22%) and Austria (down 19.7%). While Germany, Switzerland and the UK saw demand rise, up 15.6%, 4.3% and 1.6% respectively, this was still below their respective levels of supply.

Switzerland (up 36.4%), Austria (up 19.7%), Germany (up 16.1%) and Spain (up 8.3%) saw greater supply than in May 2022. While France and Italy noted negative year-on-year results from the active market volume index, down 28.9% and 11.6% respectively, supply to their used-car markets still outstripped demand. The UK was the only country to see this trend inverted, with supply falling 12.4% year on year.

Compared to May 2022, the average number of days needed to sell a used car last month increased in Austria, France, Germany, Spain and Switzerland. This further confirms the observed trend of falling used-car demand.

Carmakers are continuing to surmount supply-chain challenges initiated at the beginning of the COVID-19 pandemic. This means the volume of young used cars entering the market will likely keep growing. However, if demand does not keep pace, RVs will face increasing pressure as more models hit the market.

Click here to open the interactive dashboard

The interactive monthly market dashboard examines Austria, France, Germany, Italy, Spain, Switzerland, and the UK. It includes a breakdown of key performance indicators by fuel type, including RVs, new-car list prices, selling days, sales volume and active market volume indices.

Scenario analysis

Defined by undersupply and falling demand, the current base-case scenario contains the potential for positive and negative outcomes. Should Europe’s economic situation worsen, used-car prices would experience greater pressure, with demand taking a bigger hit. Should the supply situation suddenly experience significant improvement, this would only compound the situation.

The semiconductor crisis is still sending sizeable ripples across the automotive industry. However, if this situation were to become inverted by lower demand for consumer electronics, carmakers could see a deluge of essential electronic components. This would mean a greater supply of vehicles, but without a corresponding upswing in demand, RVs would suffer.

On the other hand, if new-car supply was disrupted, the used market would benefit as more consumers explore available alternatives to factory-fresh models. Should automotive suppliers hit economic turbulence, this could also happen.

Conflicts around the world threaten stability too, with the war in Ukraine a key example. Europe’s already weakened supply chains would see additional disruption should the war escalate even further.

RV pressure increases in Austria

In May, Austria saw the continuation of a trend of rising living costs and slowing used-car transactions compared to 2022. The sales volume index confirmed demand shrank, declining 9.4% compared to the previous month and a drop of 19.7% compared to May 2022. Conversely, the supply of passenger cars aged two-to-four years was around 19% higher in May 2023 than a year earlier. But last year, supply was significantly lower than before the COVID-19 pandemic.

Average days to sell increased again to 75.7 days, confirming a slowdown in used-car demand. Hybrid-electric vehicles (HEVs) sold the fastest, averaging around 49 days, followed by diesel cars and plug-in hybrids (PHEVs) with 75 days. Battery-electric vehicles (BEVs) sold slightly slower at around 76 days, only just ahead of petrol cars with 78 days.

‘Despite weakening demand and improving supply, RVs of 36-month-old cars have remained stable compared to April,’ said Robert Madas, Eurotax (part of Autovista Group) regional head of valuations, Austria, Switzerland, and Poland. ‘The retained percentage of original list price was 54.4% on average. This marked a 4.5% year-on-year gain but shows that pressure on RVs is increasing.’

With a %RV trade value of 57.4%, HEVs are currently leading the way, followed by petrol cars (55.3%), diesel cars (54.3%) and PHEVs (53.5%). Meanwhile, 36-month-old BEVs retained the lowest value, at 49.5%. As demand is expected to weaken while supply recovers, further pressure on RVs can be expected. The RVs of three-year-old used cars will remain relatively high but with a decreasing trend.

‘The %RV is forecast to end 2023 down approximately 2.4% on December 2022,’ said Madas. ‘In 2024, %RV is expected to decrease further by around 3.5% year on year, due to weakening demand and increasing supply.’

Electric RVs to drop in France

Stability continued for France’s used-car market last month, with higher absolute RVs and marginally larger values in %RV terms. Climbing prices in the past did not influence RVs owing to the steep nature of increases. The average time to sell was slightly longer, as price continued to influence buyers. Those who did pursue a purchase were budget conscious and looked to older vehicles or a lower segment. Cars over 12 years of age suffered the least.

‘A homogeneously priced range of EVs entered the used-car market in May, which explains the lower absolute RVs and list prices compared with April,’ said Ludovic Percier, Autovista Group residual value and market analyst for France. ‘Regarding Tesla, absolute RVs will likely drop in the coming months, especially for the Model 3 and Model Y. Other manufacturers have already dropped their list prices to stay competitive, which will result in an overall decrease in their absolute RVs as well.’

Petrol and diesel RVs remained stable month on month in both absolute and percentage terms. Diesel models did see a marginal RV increase, with figures stable globally, but sales volumes experienced a drop. As new-car buyers have been switching from diesel to petrol (or other powertrains), the fuel type’s availability has been lower on the used-car market due to this drop in registrations. However, lower used-car demand for the powertrain has compensated for this.

Diesel RVs have seen little movement, even with the fuel type’s tarnished reputation and the implementation of low-emission zones (ZFEs). These zones only impact cities with 150,000 inhabitants or more and high-mileage drivers are unaffected. Diesel vehicles will be more heavily impacted from late 2024 and into 2025.

Once again, HEVs saw RV stability, with %RVs growing marginally and absolute RVs dropping because of lower list prices. PHEVs saw steady volume, but more premium and SUV models were present. These vehicles are capable of longer ranges in full-electric mode which explains the higher RVs in absolute and percentage terms. A major decrease is still expected in the coming months.

High-price points in Germany

New-car figures in the first four months of 2023 show that production appears to be recovering slowly. With just under 8% growth compared to the previous year, there is a glimmer of hope. However, this should not obscure the fact that with some 870,000 units, the first four months of 2023 are still far below the seven-digit figures recorded before the COVID-19 pandemic.

In particular, the number of PHEV registrations, which collapsed due to the discontinuation of government incentives at the turn of the year, are weighing on the overall balance. Meanwhile, internal-combustion engine (ICE) vehicles continue to see production and market demand. BEVs are also increasingly joining the roads and continue to benefit from the country’s eco-bonus.

There are, however, a few registration losers. First, the Tesla Model 3 has seen its numbers halved, while its stablemate, the Model Y, was registered three times as often. On the upside, some newcomer brands such as BYD, Lucid, Maxus, Nio, Ora and Wey, are now appearing and will enrich the used-car market.

‘A few older-generation models that used to see strong registrations have finally been phased out, such as the BMW i3 and Smart forfour, so that they will only be encountered on the used-car market,’ said Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

‘RVs of expensive used cars are declining, which could be due to their low age, premium brands, or expensive segments. However, their more premium prices are straining already reduced purchasing power,’ he added.

Meanwhile, used cars with lower prices and combustion engines continue to see demand and are capable of maintaining their price position. The declining inflation forecast after 2023, rising new-car prices and ongoing low volumes mean the used-car market is likely to see higher prices remain in the coming years, and maybe even rise further.

Signs of trend reversal in Italy

While months of steady growth brought double-digit year-on-year %RV increases (up 11.4%) in May, a small, but expected, change is worth highlighting. Compared to April, May saw %RVs drop by 0.2%. This is too slight a change to indicate a rapid return to pre-crisis levels, but it is likely the first sign of a reversing trend that will be monitored closely in the coming months. Nevertheless, the decline is proving slower than expected, which has informed a revision in the 2023 RV outlook to an increase of 4.7%.

This trend is observable across almost all fuel types, with the exception of HEVs and PHEVs, both of which grew by 0.5% compared to April 2023. PHEVs saw their list prices increase 44% year-on-year, which is significant compared to an average growth of 9.5%.

‘However, this is not due to any particularly aggressive pricing strategies, but rather that the technology features in larger and more expensive segments, where its advantages are easier to appreciate,’ explained Marco Pasquetti, head of valuations, Autovista Group Italy. ‘Even if transactions are few, it is not surprising that the Porsche Cayenne or BMW X3 are among the fastest-selling models.’

Compared to April, the average sale time increased by 10.7 days, so that the cars sold in May remained in stock for around two months. Finally, the second-hand market for CNG-powered cars is becoming increasingly difficult, with models taking 140 days on average to be sold.

Rentals reign in Spain

The end of April saw new-vehicle sales stay on a positive trajectory established in the first few months of 2023, with an accumulated growth of 34%. According to ANFAC data, sales of EVs continued to rise, up 45% compared to 2022.

This means they are already equal in weight to petrol vehicle sales, although this is still far from the government target. By channels, fleets brought stability, while rental channel renewals brought dynamism to the second-hand market.

‘Rental sales have sustained the second-hand market in recent months, which continues to rapidly absorb these in-demand young vehicles,’ said Ana Azofra, Autovista Group head of valuations and insights, Spain. ‘Despite this, the market is down 2%, due to a shortage of stock in the other channels.’

Meanwhile, previously reported transaction price trends continued, with some stability amidst small negative adjustments for petrol and diesel vehicles. There were improvements in the average transaction price of HEVs and slightly positive adjustments for BEVs. This was more related to the change in mix, with additional weight from premium models and better performance.

In recent weeks a negative trend in PHEV offer prices has been observed. But PHEVs are not alone, with BEVs also coming under pressure. This will eventually be reflected in a fall in transaction prices.

‘This early trend is already being observed in other important European markets, such as Germany and neighbouring Portugal, a market that is further down the electric road than Spain,’ Azofra added. ‘The need for brands to comply with emissions targets, meet infrastructure requirements to enable electric-vehicle development, alongside a certain price war in the new market, might be behind this drop.’

Switzerland sees transaction slump

The Swiss used-car market has experienced significantly increasing supply for several months and is only at a lower level for young-used cars when compared to the pre-COVID-19 era.

The active market volume index for two-to-four-year-old passenger cars was 1.3% lower in May than in April, but 36.4% higher than a year earlier. Additionally, as the cost of living increased, used-car transactions dropped at the beginning of 2023 and show no clear sign of making a recovery from a weak 2022.

Compared to April, the sales volume index dropped by 12.3% but went up 4.3% year on year. With higher supply and diminished demand, the average value retention of a 36-month-old passenger car fell once more to 50.9% in May, down 0.4% month on month, but up 3.6% year on year.

The %RV of HEVs posted a particularly strong year-on-year gain of 18.6%, to 55.7%. This was followed by petrol cars (51.7%), diesel models (49.6%) and BEVs (48.6%). 36-month-old PHEVs retained 48.4% of their original list price.

The average days to sell increased slightly in May, with a passenger car aged two-to-four years in stock for 77 days. HEVs sold the quickest after an average of 43 days, followed by diesel cars after 74 days and petrol cars after 77 days, then PHEVs with 81 days and finally, BEVs after 91 days.

‘As used-car demand is expected to weaken amid overall increasing supply, a further and slightly accelerated decreasing trend can be expected, although values of three-year-old used cars remain relatively high,’ said Hans-Peter Annen, head of valuations and insights, Eurotax Switzerland (part of Autovista Group). ‘The %RV is forecast to finish 2023 down roughly 4% on December 2022. In 2024, RVs are expected to fall by around 3.7% year on year due to increasing supply and lower demand.’

UK used market stays strong

‘The UK’s used-car market remained strong in May,’ said Jayson Whittington, Glass’s (part of Autovista Group) chief editor, cars and leisure vehicles. ‘An average three-year-old car retained 65.9% of its original price, an increase of 8.2% compared to a year ago. That said, compared to April, RVs fell by 0.5%, although this is below the depreciation normally expect at this time of year.’

The sales volume index reveals that retail activity calmed a little in May, falling 4.1% compared to April. The active market volume index showed 5.5% more used cars were available month on month, so the market appears to be slowing slightly which is not uncommon in the run up to summer. At 38.9 days, the average days to sell indicator backs up this change, although this is only an increase of one day.

The %RV of BEVs fell again in May, but this time by only 1.4% month on month, so it could be that they are beginning to find a new price level. BEV models still appear to be a retail challenge, however, with their average days to sell increasing by 5.6 days, up to 58.7 days. That is over 25 days longer than May last year. Their rate of sale also suffered in May, falling by almost 19%, although 256% more BEVs were sold than last year, so it is clear that there remains reasonable demand, just not enough to cope with the increased supply.

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How could Russia’s invasion of Ukraine impact the European automotive industry?

With Russia escalating its aggression towards Ukraine into an invasion, severe sanctions are inevitable. Depending on how the situation plays out in the coming weeks or months, the European automotive market will see an impact as well. In this special episode, Autovista24 editor Phil Curry, Autovista Group chief economist Christof Engelskirchen, and Autovista Group director of valuations Roland Strilka discuss the possible scenarios for the industry.

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Episode synopsis

The escalating situation between Russia and Ukraine, which has seen the former send troops across borders and launch air and sea attacks, has the potential to destabilise many markets, including automotive.

Further sanctions are inevitable, and they will be severe. This will have an economic impact, not just on Russia but also those countries declaring them. They may include a ban on exports of high-technology into Russia, which will also impact the companies that trade in this field.

While there are already some impacts of the escalation being felt, such as an increase in the price of oil and energy, other issues will take moretime to unfold. There are two possible scenarios, and each has a differing influence on the automotive market.

In the first scenario, where Russia largely retracts to the separatist regions of Donetsk and Luhansk without conflicts escalating much further, there will be no lasting impact on Europe’s new-car markets, other than the Russian market, as there is an ongoing supply shortage. Lack of supply into Russia can be compensated by selling to other countries.

There will, however, be a small impact on used-car markets, as there might initially be a slight dent in demand for cars, in particular in Eastern Europe, but this will be short-lived in this scenario, especially since weakened exchange rates support current residual values

Most severe

The second scenario sees Russia occupying Ukraine. This is the maximum level of aggression that we believe Russia believes it can afford. Ultimately in this outcome, the most severe sanctions will be imposed, and these will more negatively economically impact both Russia, and those countries declaring them.

Western Europe will be more affected economically by this than for example the US. Not only will the region need to re-align economies towards other areas of the world for some time, it will also need to deal quickly with the rising energy, gas, oil and food prices, as well as supporting Eastern European markets financially and economically to support in their stabilisation. Eastern Europe will be more negatively affected in this scenario, as they are more dependent on economic relations with Russia.

There will be very little impact on new-car markets in Western Europe, as there is an ongoing supply shortage. Even if there will be lower demand for new cars in Russia and Eastern Europe, it is unlikely that this cannot be compensated by selling to other countries.

Several used-car markets in Eastern Europe may still see fewer transaction, yet stable, possibly even rising residual values, as inflation and exchange rate pressure will overcompensate the reduced demand.  This would come after a period of severely rising prices. The market in Western Europe will be less affected, but the expected increases in RVs for 2022 and 2023, in particular for internal-combustion engine (ICE) vehicles, may be slightly lower than initially forecast.

The automotive industry has spent the last two years dealing with a supply chain disruptions. In this time, supply chains should have become more resilient , meaning should problems arise with the supply of components out of Russia, other suppliers   have a vested interest to sell at rising prices. Supply shortage and supply chain disruptions may end up being less impactful in the medium term than during the COVID-19 crisis.