September – Latest whitepaper update: How will COVID-19 shape used car markets?

In the latest edition of Autovista Group’s whitepaper: How will COVID-19 shape used car markets?, an increasing number of markets have an improved probability of more positive economic scenarios, but scenario 3 is the most likely one in 12 out of 18 markets. There are improved RV outlooks for Austria, Czech Republic, Finland, Hungary, Netherlands, Slovakia, Sweden and Switzerland.

In our August update of this whitepaper, 12 out of 18 markets were allocated to our ‘medium risk – slow u-shaped recovery’ scenario (SC3). That view has been confirmed for this September update. The same 12 countries expect that scenario to materialise with the highest probability.

The whitepaper reveals that the Netherlands is the first country out of those monitored to move into scenario 1, with strong signs of a lasting V-shaped recovery, while in the UK, the increase in residual values (RVs) may not last too long once the double whammy of Brexit and coronavirus (COVID-19) materialises. In Eastern European countries, the strength of the Euro and rising list prices of new cars means that used-car prices should not come under too much pressure, according to the analysis.

The golden age of the used car continues in many markets, with used-car values – on average – at, or even above, pre-crisis levels. But in many markets, this is driven by highly-priced older used cars, the so-called ‘budget cars’, which are in demand as people take steps to avoid public transport and seek a reliable used car over the autumn and winter period.

There is a degree of caution as uncertainties crowd the forecasts and the speed of Europe’s recovery. The current unknowns that could impact scenarios include:

• The reactions of dealers when pent-up demand has been met;
• The impact on used-car prices if OEMs push more new cars into the markets at higher discounts towards the end of the year;
• The impact on private demand once government support programmes end and, consequently, stop masking structural and deeper issues within the automotive sector; and
• What would a second wave of COVID-19 mean for Europe – France and Spain have already been hit hard a second time and restrictions are back; will more markets be similarly affected?

You can find more information about how different markets are shaping up, and the various economic scenarios across the region, in the latest update of the Autovista Group whitepaper – ‘How will COVID-19 shape used car markets’ – which can be viewed here.