23 Jul 21

High demand still pushing up used-car prices across Europe

Across Europe, used-car sales in the first half of 2021 were up 11% over the same period in 2019, figures released by Indicata show. Due to global trends, the used-car market in most of Europe remains hot, with dealers facing both dwindling stock levels and rising prices. 

Recently released national figures hinted at the continued, Europe-wide upward pressure on used-car prices. New data from Indicata confirms the trend – which is far from over, it predicts.

Highest monthly increase

In the Netherlands, used-car prices normally drop as the year progresses. However, demand remains high and stocks low. In July 2021, used-car stocks in the Netherlands were 2.9% lower than the previous month, and 7.5% lower than the same month last year. Indicata’s price index for used cars in the Netherlands, based on a pool of 200,000 vehicles in February 2020, stood at 101.3, a full percentage point higher than in June.

In the UK, used-car prices shot up 4.4% in June, the highest monthly increase since records began in 1996. That unprecedented price increase was a major factor in driving up overall consumer prices by 2.5%. According to the Office for National Statistics, the price rise is the result of increased demand. 

And that is partly due to a smaller supply of new vehicles. In the first five months of 2021, OEMs in the UK produced just 360,000 vehicles, which is up 39% from the pandemic year 2020, but still down 23% from pre-pandemic 2019. With economies reopening and more consumers ready to buy cars, the limited supply of new ones is driving them towards the second-hand market.

Two trends

Two trends are at play, across Europe and around the world. On the one hand, there’s the pandemic itself. Initially, it drove consumers from public transport – shared with others – to the best-priced individual transport alternative: used cars. And currently, with many feeling the health crisis is nearing its end, there is a surge in consumers willing to splash out on a car. 

The fact that this is more likely than ever to be a used car, is the result of the other trend: a lack of new cars. That is due to the ongoing microchip shortage (which itself is also an indirect result of the pandemic).

Used-car prices are similarly trading high in the United States, where they have contributed a third to the rise in the consumer price figures released earlier this month; and in Japan, where used-car prices are higher than they have been in a decade.

Mixed picture

On the European mainland, however, the trends are similar but the picture is a bit more mixed, as figures released by Indicata just now show. The company reports an average used-car stock fall of 5.8% from June to July 2021. Stocks fell in 11 of the 13 countries it surveys across Europe. The largest stock falls were reported in Turkey (-14.9%), Portugal (-11.8%), and Poland (-8.3%). However, Denmark and Sweden both experienced small stock rises (both less than 1%). 
Some highlights from Indicata’s half-year overview:

  • Spain’s new-car market in the first half of 2021 was 35.9% lower than in H1 2019. Conversely, its used-car sales increased by 39.5%.
  • Used-car sales for June were up in Italy (+17.2%), the UK (+17%), and Germany (+16.2%). However, Denmark, Sweden, and Poland reported a drop in used-car sales. 
  • In June, the best-selling ICE was the VW Golf (both diesel and petrol), the best-selling hybrid was the Toyota C-HR and the best-selling full-electric was the Renault Zoe. 
  • The fastest-selling used ICEs under four years were the Opel/Vauxhall Mokka X (diesel) and the Zafira (petrol). The fastest-selling hybrid was the Toyota Auris, while the MG ZS was the fastest-selling full-electric. 

Stocking problem

With European used-car sales in the first half of this year 11% higher than in 2019, stocking challenges are 22% higher year-on-year than in 2020. And due to sheer lack of supply, it doesn’t look like the situation is going to improve anytime soon, observes Andy Shields, Business Unit Director for Indicata Europe: 

“Daily rental companies have long since tidied up their car fleets, and there looks to be no sign of cars being defleeted anytime soon. Leasing companies continue to extend contracts for fleets as they struggle to get hold of new cars, which is adding to the dealer stocking problem.”

“As used-car prices rise, dealers would love to sell more used cars, but often can’t get hold of the stock they need. And if they can, they are paying considerably more for the vehicles than earlier in 2021. In the current market dynamic, used-car vendors are much happier than used-car buyers…”

Image: Shutterstock

Authored by: Frank Jacobs