11 Nov 20

Used-car sales up 12% in October

Used-car sales across Europe were up by more than 12% in October, compared to the same month last year, INDICATA figures show. But as a continent-wide wave of second lockdowns dampens demand, dealers face a sustained drop in prices. 

According to INDICATA’s Market Watch, which collects sales data from 13 key used-car markets across the continent, October was a strong month for used-car sales (+12.4%), but not as strong as September (+18.4%).

Bull market

Key fact: stock levels are up 4.2% (and in 11 out 13 markets) between 1 October and 1 November, with the biggest gains noted in Spain (+9%), France (+7.9%) and the UK (+7.4%). Combine that with the tighter lockdowns now taking hold, and it is safe to predict that “the current used-car bull market of short supply and rising prices is coming to an end,” says Andy Shields, INDICATA’s global business unit director. 

That bull market saw October used-car sales increase markedly – in some instances by more than 30% - across Portugal, Turkey, France, Italy and Germany. However, it was not all good news: Sweden, Austria, Poland and the Netherlands already experienced a year-on-year fall in sales. 

Stock turns

Some other observations:

  • Dealer stock turn for diesels and petrols at 7.4x and 6.7x eased back marginally from September, but both fuels remained in short supply. 
  • EVs and hybrids delivered a 4.5x and 5.3x stock turn during the month, with supply freer and prices less stable.
  • October saw a consistent demand for used cars of all ages, with the five-year old car comprising the consumer sweet spot. 
  • Sub-12-month-old market sales continue to struggle due to poor stock levels (illustrated by a 23% year-on-year increase in stock turn).

The third quarter saw a significant drop in new-car sales across the Europe: -38.7% across the EU, UK and EFTA (combined). For used-car dealers, the challenge is to manage their growing stock as demand – and prices – soften in their segment as well. 

Pricing strategies

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

Prices are already being adjusted downward to keep up sales, he observes. “Dealers and remarketers should now re-visit their pricing strategies. With specific models showing real signs of oversupply, each vehicle now needs individual pricing based not just on trade or retail benchmarks, but also reviewing to saleability in the market.” 

INDICATA’s Andy Shields will contribute his insights to the Remarketing Forum 2020, which will take place online next week, on 17 November 2020. Click here for more information and to register.

(Image: Shutterstock)

Authored by: Frank Jacobs