Monthly Market Dashboard: RVs start to fall in Europe

Autovista Group’s interactive monthly market dashboard (MMD) suggests that pressure is increasing on residual values. Senior data journalist Neil King explores this month’s analytics.

This month’s MMD reveals that the average residual value (RV) of cars aged 36 months and with 60,000km grew year on year in all the Big 5 European markets in December. However, there are early indications that RVs are coming under pressure, with values lower than reported for November in Italy and the UK, and essentially stable in Germany in Spain. France bucked the trend, albeit with month-on-month pricing growth of just 1.3%. The downward trend looks set to continue in 2021.

RV retention, represented as RV%, grew year on year in all markets except Germany. The highest growth in RV% terms was in the UK, where the average RV% was 46%, equating to a 9.2% change compared to December 2019. Nevertheless, even RVs in the UK were lower than in November in terms of both value and retention.

The UK enjoyed the strongest rally in used-car prices after Europe emerged from lockdowns. This was driven by the release of pent-up demand, and a starker vehicle-supply challenge than any other market, which translated into higher RVs as used-car demand outstripped supply.

However, as reported in our latest coverage of the ‘three-speed’ development of RVs across Europe, RVs in the UK have been descending from their great height since late October as pent-up demand is broadly satisfied and new-car supply has improved. With the UK under restrictions as it seeks to stem the sharp rise in COVID-19 cases, like most of Europe, and the Brexit transition period ending on 31 December, a further descent is expected going into 2021.

Lockdown slowdown in France and the UK

Despite the pressure on RVs, three-year-old cars are selling quicker than a year ago in all the major European markets, except the UK. However, the average number of stock days over the last month, compared to the November MMD snapshot, rose by 14.9% in France and 16.6% in the UK as both countries have been in strict lockdowns, including the closure of dealerships. Nevertheless, three-year-old cars are still selling the quickest in the UK, moving on after an average of less than 40 days.

The greatest reduction in the average number of days for 36-month-old cars to sell, compared to the December 2019 snapshot, was in Italy. These vehicles now have to wait on average only 45 days to find a new buyer, sitting idle for 13% fewer days than in November 2019.

Two of the three fastest-selling cars in the major markets in December 2020 are Audi models in France. The A6 is taking less than 16 days to find a new home and the A4 sells after about 18 days on average. In second place is the Volvo XC90 in Italy, which needs just under 18 days to be rehomed.

Negative RV outlook

The new MMD also features the latest Autovista Group RV outlook for the major European markets. The new downward trend for RVs is unfortunately forecast to continue in 2021, with prices of used cars in the 36 month/60,000km scenario declining in all the Big 5 European markets.

In the December update, the RV outlook has improved slightly in France and the UK but values are still forecast to decline in 2021, by 0.4% and 1.4% respectively. Used-car prices are forecast to decline by 0.7% in Germany and 1.1% in Spain. The weakest outlook is for Italy, where RVs are forecast to be 3.9% lower than their current level at the end of 2021.

Click here or on the screenshot above to view the monthly market dashboard for December 2020.