In 2022, Remarketing will be about tech, trust and EVs

It’s been a funny old year for Remarketing. The chip shortage drove up demand for used vehicles, but few used-car professionals benefited from the increased prices. The industry focused on automatization as a panacea for progress, but the million-euro question is: can we crack the problem of EV RVs? The answer will, perhaps, start taking shape in 2022.

By Frank Jacobs, Editor, Fleet Europe (pictured)

To the casual observer, 2021 must have seemed like a great year for the Remarketing industry. Short of chips, OEMs couldn’t turn out new vehicles fast enough to satisfy demand. That demand then turned to used vehicles, which shot up in value. 

Profit margins

True, some parties benefited – for instance lease companies, who saw their previous estimates for the residual value of their end-of-lease vehicles exceeded by a wide margin. The difference will help pad out profit margins in this year’s financial reports. 

But dealers and traders involved in both buying and selling used vehicles had to deal with higher prices on both ends. On top of which came a general lack of stock. Due to higher demand, remarketers are competing for a shrinking supply of used vehicles, by offering higher and higher prices. 

It’s safe to say that most in the industry would like a return to normal. Except, normal isn’t coming back. The chip shortage and its consequences for new-vehicle supply should peter out some time in 2022, in the worst case towards the end of the year. Meanwhile other paradigm-shifting megatrends continue to eat away at “business as usual”, guaranteeing that Remarketing at the end of 2022 will be a very different beast from the same industry at the end of 2019. 

Short-sighted policies

The most consequential megatrend, in our opinion, is electrification. Remarketers are rightly angered by the short-sightedness of manufacturers and policy-makers alike. If the goal is to make the switch from ICEs to EVs as swift and painless as possible, the powers that be should do more than concentrate on forcing new EVs onto the market. OEMs and legislators should also pay attention to what happens to EVs at the end of their first lifecycle. 

As it is, remarketers are left alone to manage the peculiar risk of re-selling the first generations of vehicles powered by a fast-evolving new motorisation. Of particular concern are PHEVs. Once seen as an indispensable ‘bridge’ between ICEs and full EVs, they may soon be seen as virtually obsolete, an almost un-remarketable ‘missing link’. 

Purchase subsidies for used EVs – so, not just for new ones – would be provide a huge contribution to reducing the residual-value risk of used EVs, and boost the electrification of the entire transport ecosystem. It would be great if European policy makers could get used to that idea in 2022. 

Artificial Intelligence

Faced with a decent portion of uncertainty in the foreseeable future, it’s understandable that remarketers are looking to shore up the predictability and profitability of as many parts of their business as possible. It’s no coincidence that all three finalists for the 2021 Fleet Europe Car Remarketing Award presented products that used Artificial Intelligence to automate the valuation of used vehicles. 

In that same vein, one of the more interesting crusades of the year to come is the nuanced position developed by CARA, the European car remarketing association, that would allow certain types of in-car data to be used in re-selling the vehicle. That would benefit both remarketers and end users, who would get transparency on the maintenance and other essential aspects of the vehicle’s history. OEMs are in the other camp: they want to keep all the data for themselves. 

There’s an obvious link between this topic and CARA’s other ‘deliverable’, which they’ll also be working on in 2022: a battery health passport for used EVs, which would establish, beyond dispute, the remaining potential – and value – of used EV batteries. 

Sword of Damocles

Seen in that light, 2022 will be about increasing via digital way that quality so elusive in the bygone times of ‘analog’ used-vehicle trading: trust. It is heartening that the Remarketing industry is racing to establish the parameters of certainty, accuracy and transparency that will lift the used-vehicle business up to a level of consumer confidence that rivals the new-vehicle trade. 

Let’s hope those ambitions don’t get wrecked by the a collapse of EV residual values, which looms like a Sword of Damocles over the industry. For that reason alone, European governments and its automotive industry should wake up and smell the coffee – and take measures to ensure the used-vehicle market isn’t permanently, structurally oversupplied with used EVs. 

Because a collapse of the residual values of PHEVs (let alone EVs in general) would help no one – not remarketers, but neither OEMs, fleets, governments, or the sustainability targets they all aim for. 

Want to learn more about this topic? Join us on 27 January at the first Fleet Europe Remarketing Expert Track of the new year.

Image: Shutterstock

Authored by: Frank Jacobs