COVID-19: INDICATA charts losses – and lessons – for Remarketers
How is the Coronavirus crisis impacting the European Remarketing industry? In a whitepaper published today, INDICATA provides the first detailed and comprehensive overview. Looking back to the 2008 while also taking in the latest evolutions in China, the study also offers lessons and predictions that may prove vital to the industry’s various stakeholders.
As will surprise nobody, the whitepaper finds that the COVID-19 crisis has a detrimental impact on Remarketing across Europe. However, the value of the report is in the detail it provides. Some findings:
- Between 11 and 18 March, used-car sales fell by 21.5% in Northern Europe. During the same period, they fell by 44% in Southern Europe.
- There is a direct correlation between infection rates and the fall in used-car sales, with as yet less-affected countries like Poland or Turkey showing the least change in used-vehicle sales volume.
- Other factors are at play as well. For instance, the immediate sales drop in Austria from 11 March is directly related to the government’s decision to close the borders.
“Countries will have different challenges at different times and we’re all about equipping companies with the right data to make fast decisions,” says Andy Shields (pictured), director of INDICATA’s global business unit and author of the whitepaper.
Mr Shields didn’t just analyse current figures, but also looked back at the effects of the 2008 financial crisis on new and used car sales, and the lessons this can teach today’s Remarketing industry.
So, what lessons does the whitepaper have? Here are a few.
For dealers and dealer groups:
- The market will be challenging and hostile. Stock turn is the most powerful weapon for defending profitability.
- Used-vehicle prices are falling, sales rates are slowing. Buying the right stock and constantly repricing vehicles to the market is the key to success.
- Showroom traffic will reduce, customer will resort to online purchasing even more than before. Increasing web leads is key to start the sales process, online trade-in valuation can double effectiveness.
For OEMS and their banks:
- Hit with larger than expected rental volume to defleet, OEMs must make quick decisions before the impact of social distancing on used prices will require ‘bold actions’.
- OEM banks need to find new routes to remarket the increasing number of returned vehicles. Two options: either target customers to change vehicles quickly to help minimise residual-value risk, or find new, potentially non-franchise disposal routes for returning vehicles.
For Rental companies:
- The loss of demand for Rental companies is such that many current contracts with OEMs will be defaulted on. This will leave OEMs with a stock of new vehicles, while de-fleeting will continue.
- Rental companies may try and hold risk vehicles until after the initial wave of social distancing. Volatility in and variation between markets will make it more challenging to absorb stock.
For Leasing companies:
- Main challenge is to manage current market volatility
- While also acknowledging that residual values may not recover in the short term.
INDICATA is a global leader in used-vehicle pricing and market analysis. Each day, it analyses nine million used-vehicle advertisements across Europe, enabling it to gain deep, country-by-country insight into demand and retail pricing. This provides remarketers with live, actionable information on Europe’s various used-vehicle markets.
To read INDICATA’s whitepaper on Corona in full, go to: www.indicata.com/corona.