Article Type: Insights

Video: Incentives improve September registrations in Germany and Italy

Autovista Group Daily Brief editor Phil Curry guides you through the September registration figures of Germany, Italy, Spain, France and the UK, as the industry continues to see mixed results following the relaxation of coronavirus (COVID-19) lockdowns.

To get a notification for the second part of our ‘Keeping up with autonomous cars’ episode, subscribe to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including incentive schemes, safety systems, electrification and event reviews.

Podcast: Stalling sales and Brexit woes

In its latest podcast, the Autovista Group Daily Brief team discusses Europe’s fluctuating registrations, developments in EV battery manufacturing and more complications arising from Brexit…

https://soundcloud.com/autovistagroup/stalling-sales-and-brexit-woes

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Podcast: How design plays a part in car residuals

Zeitgeist, Bauhaus, cartoonesque Fiat 500, impish Mini… The quest to develop the perfect vehicle design, which captures the essence of a brand, sets the vehicle apart and lets it appear fresh and up to date for several years, is a major challenge for all design teams. There have been expensive mistakes and some overwhelming success stories.

Autovista Group’s Chief Economist Christof Engelskirchen talks with Sam Livingstone, director at Car Design Research, about the role of design in the success of a newly launched vehicle, how little things can add a lot of character and the impact design can have on residual values. Sam shares several precise insights that you really should not miss…

https://soundcloud.com/autovistagroup/the-quest-for-perfection-in-vehicle-design

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Infected: COVID-19 in the German LCV market

The market for light commercial vehicles (LCVs) is often somewhat neglected in the automotive industry. Volumes are smaller, it is less price-driven, has fewer distinguishable model ranges and is not as glamorous as the more disparate passenger-car market, writes Andreas Geilenbrügge, head of valuations and insights at Schwacke.

It is therefore worthwhile measuring its pulse separately. On the one hand, this market functions according to its own rules while on the other hand, used vans are almost exclusively for commercial use but have also suffered from the ongoing coronavirus (COVID-19) crisis.

Looking at the German registration figures for new LCVs, the picture appears comparable to that of passenger cars at first glance. LCV registrations were 22% lower year-on-year in the year-to-August 2020 and passenger cars were down 29%, so not that far apart. However, looking in more detail, it is noticeable that passenger cars were still successful at the beginning of the year, whereas LCVs were already lower in January and February 2020 compared to the previous year’s figures. And then the COVID-19 effect from March to May came on top with full force.

Even the immense new-car success in Germany due to extended incentives is scarce in the vans segment. Without the Ford Transit and Transit Custom hybrids, the overall balance of (partly) electric vehicles would even be slightly negative. In addition, although the surplus of tactical registrations in Q3 2019 put a heavy burden on the new-car trade during the shutdown, it is now helping to satisfy unmet demand for new cars, due to production downtime and supply shortages, with young used cars. There was not such a large surplus of young used vans, as there was no need to register produced vehicles quickly, which would have otherwise contributed to CO2 emissions penalties in 2020.

In terms of new registrations, LCVs have therefore been much less affected by the crisis than passenger cars.

Used LCVs in demand

The change-of-ownership data paint an even better picture, with year-to-August growth of almost 4% for LCVs up to six years old and 2.5% growth for all ages. This is even with the lack of supply from trade registrations due to the crisis pulling volumes down this year. Looking at the brands, most large-volume players are in the black (figure 1). The unusually positive outlier Mitsubishi is probably explained by a combination of portfolio peculiarity (almost exclusively pickups) and a shortage of new cars due to production interruptions in Thailand.

Figure 1: Changes of ownership, LCVs by brand, maximum age six years, YTD August 2019 vs YTD 2020

Eigentümerwechsel, LCVs nach Marke, Höchstalter sechs Jahre, YTD August 2019 vs. YTD 2020

Stock management is the key

As can be seen from the development of stock levels on used-vehicle portals, there was an initial accumulation of LCVs during the shutdown, and then, as expected, a significant surge in the outflow of used vehicles (figure 2). In the meantime, stocks have returned to their pre-crisis level in terms of volume (figure 3). Still, the persistently high average level of stock days indicates that although ‘fresh goods’ are entering and exiting quickly, those that remain stay longer and longer.

Figure 2: Stock development of LCVs on portals, 2.5 to 4.5 years of age, volume and average stock days

Bestandsentwicklung von LCVs auf Portalen, 2,5 bis 4,5 Jahre alt, Volumen und durchschnittliche Bestandstage

Figure 3: Stock development of LCVs on portals, less than and above 60 stock days

Bestandsentwicklung von LCVs auf Portalen, weniger als und über 60 Lagertage

With a view to the approaching year-end business, the risk of a price war is building because of the long-standing vehicles. In addition, the approximately 25,000 fewer new sales to end customers in the year-to-date have torn a large sales hole in the books of commercial vehicle dealers, despite the 6,000 more sales of used vehicles. So, in December, every used van that is somehow paid for and rolls off the lot, will count even more than usual.

Insight: Keeping up with autonomous cars

In the first part of our latest insight episode, Phil Curry talks with Autovista Group’s chief economist Christof Engelskirchen and Daily Brief journalist Tom Geggus about the rapidly advancing pace of autonomous technology, and the reality of self-driving cars…

To get a notification for the second part of our ‘Keeping up with autonomous cars’ episode, You can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including incentive schemes, safety systems, electrification and event reviews.

New-car registrations fluctuate across Europe in September

Automotive associations in France and Spain have reported declines in their September registrations, while Italy has recorded its first increase of 2020, largely thanks to government-backed incentives finally boosting registration figures. Autovista Group Daily Brief editor Phil Curry assesses the results.

Following the lifting of coronavirus (COVID-19) related lockdowns, the automotive industry in some of Europe’s biggest markets has shown signs of recovery. However, as the year goes on, pent-up demand and incentive schemes are making way for a drop in consumer spending due to economic woes, while a second wave could also impact sales.

New-car registrations, France, Italy and Spain, year-on-year percentage change, September and year-to-date 2020

Pkw-Neuzulassungen, Frankreich, Italien und Spanien, Veränderung gegenüber dem Vorjahr in Prozent, September und seit Jahresbeginn 2020

Source: CCFA, ANFAC, ANFIA

New-car registrations in France fell 3% during September, according to the latest data released by the country’s automotive authority, the CCFA. Taking into account the number of working days in September 2020 compared to the same month last year (22 days compared to 21), this decline increases to 7.4%

Despite positive increases in June and July, thanks to a comprehensive incentive scheme, the removal of financial bonuses, following the cap in the budget being reached, have seen sales drop in the last two months.

Although a 3% decline is an improvement over August results, the market is still 28.9% down year-to-date. Over nine months, registrations stood at 1,166,699 units. The CCFA is forecasting the market as declining by 25-30% over the whole of 2020, amounting to the lowest number of registrations in 15 years.

Spain too logged a decline in registrations, with the market down 13.5% in September, according to the latest data from ANFAC. This is a decrease from August, despite the introduction of an incentive scheme in the country. Just 81,746 units were registered in the month.

Spain was one of the worst-hit markets in Europe, and the country’s government has recently introduced a number of local lockdowns, including the city of Madrid, as COVID-19 cases start to increase again.

While this move may not have impacted heavily on September figures, it highlights the changing situation in Europe, and how the automotive industry may struggle for the rest of the year. The Spanish market is down 38.3% year-to-date, according to the latest figures, with 595,435 registrations.

‘The drop in registrations worsened again in September compared to August,’ explained Noemi Navas, communications director of ANFAC. ‘Sales continue to fall in all channels, and this has a serious impact on employment, industry (because one in four cars manufactured in Spain stays in the country) and society as a whole. Without forgetting, due to its impact, that the renovation of the parc is slowed down and with it, the necessary reduction of CO2 emissions that we have to undertake. The RENOVE Plan [Spain’s incentive scheme] still has sufficient funds to boost sales for the last quarter, and we hope that the evolution of the virus will not slow down the market even more.’

Positive aspects

Italy offered an exception to the trend currently being seen in Europe, posting an increase in registrations of 9.5% in September, according to Italian industry association ANFIA. This is likely due to the country’s incentive scheme, which began in August. While sales in that month declined, delivery times would likely have pushed registrations back into September, boosting figures.

The country was the first to go into lockdown, doing so in March of this year. Since these measures were lifted, the Italian automotive market has shown a slow but steady increase in registrations, leading to the increase over the same month last year. This is in contrast to other markets, which have shown rapid increases followed by further declines.

‘The incentives introduced have contributed to this result,’ said Paolo Scudieri, chairman of ANFIA. ‘Funding for the 91-110g/km CO2 vehicle band was quickly exhausted, while those available for the 61-90g/km CO2 bracket will soon be depleted.’

Year-to-date figures show the Italian market is still down 34.2%, with 966,017 passenger cars registered.

Incentive burnout

The results show a mixed impact of incentive results. In France, the scheme was well received and depleted quickly, leaving the market at the mercy of a drop in consumer spending.

New-car registrations, France, Italy and Spain, year-on-year percentage change, January to September 2020

Pkw-Neuzulassungen, Frankreich, Italien und Spanien, Veränderung gegenüber dem Vorjahr in Prozent, Januar bis September 2020

Source: CCFA, ANFIA, ANFAC

However, in Spain, the RENOVE scheme seems to have passed many buyers by, with funding still available, but a minimal impact on sales. The market saw a 1.1% increase in July, the first month of the MOVES II and RENOVE scheme introduction, but since then has posted declines of 10.1% (August) and now 13.5%. With funding still available, it is clear that consumer demand is the problem in the country. With the implementation of local measures to deal with a second-wave of COVID-19 infections, a further complication to recovery is being added.

‘In September there was a market slowdown,’ said Raúl Morales, communications director of Faconauto. ‘The evolution is not good, but we are still at a registration volume that is better than expected thanks largely to the effect of the RENOVE.

‘Undoubtedly, the worsening of the health situation and a new decline in confidence is already weighing on consumers, who view not only the present but also the future with suspicion. This slowdown was the fear we had, and that leaves us facing a last quarter of the year marked by uncertainty.’

Values of older used cars rise above pre-crisis levels across Europe

The golden age of the used car continues in many markets, with residual values at, or even above, pre-coronavirus (COVID-19) crisis levels. This is partly driven by higher demand and prices for older used cars, the so-called ‘budget cars.’ Senior data journalist Neil King explores the reasons behind the positive pricing developments.

In the 12 markets featured in Autovista Group’s COVID-19 tracker, residual values (RVs) of cars aged 91 months or more are already above pre-crisis levels except in just three countries – Portugal, Finland and Italy. The broader ‘three-speed’ development of RVs, which has prevailed across the region following the emergence of Europe’s automotive sector from lockdowns, is less pronounced, but the UK still stands out from the crowd. The index of RVs for this used-car age group has risen since mid-May, peaking at 108.4 (an 8.4% rise) in the UK in the week to 27 September. The start month was February, with a value of 100.

Residual-value index of cars aged 91 months or more, February to September 2020

Restwertindex von Autos mit einem Alter von 91 Monaten oder mehr, Februar bis September 2020

Source: Autovista Group, Residual Value Intelligence, COVID-19 tracker

Similarly, the RVs of used cars aged 54-90 months are higher than before the COVID-19 pandemic took hold except in Portugal, Finland and Italy. The most robust performance is again in the UK, where the index peaked at 107.4 (a 7.4% rise) in the week to 27 September.

‘New and used stock is the biggest issue in the UK. This is driving up used prices and we don’t see the bubble bursting quite yet. It is September, and even convertible demand is still high, with values increasing,’ commented Anthony Machin, head of content and product at Glass’s.

Residual-value index of cars aged 54-90 months, February to September 2020

Restwertindex von Autos im Alter von 54-90 Monaten, Februar bis September 2020

Source: Autovista Group, Residual Value Intelligence, COVID-19 tracker

Cheaper, safer private transport

A key factor behind the increased popularity of older used cars is consumer aversion to public transport, which Autovista Group highlighted as one of the side effects of COVID-19 back in April. In many countries, governments are still advising against using public transport. Furthermore, car-rental companies are suffering too and the mobility trend towards car-sharing has also been dampened.

Johan Trus, head of data and valuations for the Nordics at Autovista Group, commented that in Finland and Sweden, where lockdowns were not observed and dealerships remained open, ‘both markets have been in recovery since April, and have experienced high demand for used cars as people were asked to avoid public transport when commuting.’

‘In Poland, we observe and also receive feedback from dealerships that asking prices are rising due to very good demand. At the moment I guess it is the consequence of public transport being replaced with private cars. Cheap fuel further supports this solution,’ said Marcin Kardas, head of the Autovista Group editorial team in Poland.

Ana Azofra, valuation and insights manager at Autovista Group, reiterated the point. ‘In Spain, part of the population, which used public transport until now – especially in the big cities – is moving or returning to car ownership as a more hygienic and safer form of mobility.’

A second factor is purely economic as consumers tighten their financial belts and look for a lower financial risk.

‘As in past economic crises, COVID-19 has diverted demand towards cheaper, smaller, older cars, favouring their performance in the market,’ said Azofra.

With the full economic impact of COVID-19 yet to be unleashed in Europe, this trend is expected to continue and may amplify, albeit nuanced by market.

Stock shortages

Finally, scrappage schemes and new-car supply challenges have further supported RVs of older used cars as stock levels reduce.

‘The halt in sales activity and production of new cars has also reduced dealer stock of older cars, as this usually comes from trade-ins. This is boosting stock turnover and taking the pressure off prices. The new RENOVE fleet-renewal plan in Spain incentivises the scrappage of older cars – always an easier disposal option than selling – which is further reducing supply,’ Azofra explained.

As a second wave of COVID-19 threatens Europe – cases are rising and tighter restrictions have been introduced in France, Spain and the UK for example – this may further boost the demand for older used cars.

This may be good for the used-car business but not necessarily for the environment, especially as manufacturers and countries seek to boost demand for clean new cars to lower emissions levels.

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.

TCO Dashboard: B-segment BEVs only competitive because of incentives

In the second of a new series that considers total cost of ownership (TCO), Autovista Group has created a dashboard comparing the retail prices (including taxes) and TCO of leading B-segment battery-electric vehicles (BEVs) in France, Germany, Spain and the UK. Senior data journalist Neil King explores the findings.

Autovista Group’s TCO analysis reveals that B-segment BEVs are only competitive compared to petrol models because of government incentives. However, hybrids still offer a lower TCO in all markets, except Germany, and list prices of small BEVs therefore need to be lower for them to gain momentum – especially if incentives are lowered (as has been announced in France) or even withdrawn entirely.

Under normal circumstances, the price positioning of B-segment BEVs (Opel/Vauxhall e-Corsa, Peugeot e-208 and Renault Zoe), at around €32,000 (£30,000 in the UK), means they struggle to be competitive from a cost perspective.

Government subsidies in France, Germany, Spain and, to a lesser extent, the UK, help to close the pricing gap. Nevertheless, the BEVs are at least 24% more expensive than our reference hybrid model, the Toyota Yaris, and 7% costlier than the 1.2-litre Peugeot 208 in France. In Germany, the price premium over the Yaris for the cheapest B-segment BEV, the Opel e-Corsa, is reduced to just 5% and the model is 11% cheaper than the petrol Peugeot 208.

B-segment BEVs can therefore only compete on price against petrol and hybrid rivals if attractive list price positioning is combined with healthy government support.

‘OEMs need to leverage the government incentives but make an effort to bring list prices down over the next 12-18 months,’ commented Christof Engelskirchen, chief economist at Autovista Group.

Competitive TCO ‘on paper’

Pricing data is provided in the local currency for the same five models in each market, including retail list prices (including taxes), incentives, discounts, and a final adjusted retail price. The TCO is calculated as the sum of total acquisition costs and total utilisation costs. Acquisition costs cover depreciation, financing and acquisition taxes. Total utilisation costs consist of servicing, fuel, wear, tyres, insurance, and utilisation taxes.

The TCO of B-segment BEVs is competitive with petrol-powered cars in both the 36 months/45,000 km and 36 months/60,000 km scenarios (36 months/30,000 miles and 36 months/45,000 miles in the UK). Nevertheless, these TCO results are only ‘on paper’, as buyers can often negotiate discounts on petrol competitors such as the Peugeot 208. For this reason, TCO calculations are also provided with discounts of 10% and 20% applied to the 1.2-litre, 130-hp petrol Peugeot 208 in this analysis.

Moreover, small BEVs only have a competitive TCO compared to the Yaris in Germany, even without factoring in potential discounts for the hybrid Toyota.

TCO Dashboard B-Segment September 2020

Changing incentives

France introduced new incentives on 1 June, with the bonus for BEVs (and plug-in hybrids (PHEVs) with CO2 emissions less than 20g/km) costing less than €45,000 now at €5,000 for fleet users, compared to €3,000 previously, as shown in the TCO dashboard. For private buyers, the BEV/PHEV subsidy is €7,000, instead of €6,000 previously. For both private and fleet buyers, the subsidy is still €3,000 if the BEV or PHEV (<20g/km) car is priced between €45,000 and €60,000 (including taxes). For PHEV models costing less than €50,000, and with CO2 emissions between 20g and 50g/km, there is now also a €2,000 bonus.

Similarly, from 1 July, Germany increased its incentives for BEVs costing up to €40,000. The one-off payment rose from €6,000 to €9,000 and for models costing between €40,000 and €65,000, the incentive is now €7,500. PHEVs still benefit from the scheme and are now eligible for a €6,750 subsidy.

The incentives are provided in equal halves by the German Government and the carmaker. From 1 July, the governmental element doubled to €6,000 for BEVs and hydrogen fuel-cell electric vehicles (FCEVs) costing less than €40,000. When paired with the manufacturer bonus of €3,000, customers are therefore able to save €9,000 on zero-emission cars. Meanwhile, BEVs and FCEVs costing above €40,000 but below €65,000, are eligible for €5,000 in government subsidies, alongside a €2,500 OEM bonus. PHEVs costing €40,000 or less will be eligible for an increased federal contribution of €4,500 and the manufacturer bonus of €2,250. Where they cost €40,000 to €65,000, they will receive a €3,750 government subsidy and a €1,875 OEM bonus. These incentives will be available until December 2021.

Given the incentives offered in the other major European markets, it was clear from our TCO analysis of C-segment models, conducted in June, that Spain also required incentives to make BEVs competitive.

The MOVES II incentive scheme for new BEVs and PHEVs, and the RENOVE scrappage scheme, were introduced in early July and boosted new-car registrations in the month.

Under the MOVES II scheme, large companies purchasing new BEVs and PHEVs costing less than €45,000 are entitled to a total subsidy of €3,800 (€2,800 from the government and €1,000 from the manufacturer). For small companies, the subsidy is €4,200 and for private buyers it is €5,000. Customers can also receive an additional bonus of €500 if they trade in a car to be scrapped that is over seven years of age.

Cars with other fuel types are not eligible for the MOVES II new-car incentive but can still benefit from the RENOVE scrappage scheme. When scrapping a car over ten years of age, buyers of hybrids, mild-hybrids and CNG or LPG cars costing less than €35,000 receive a bonus up to €2,000 – half provided by the government and half by the manufacturer. For cars with internal combustion engines (ICE) costing less than €35,000 and with CO2 emissions lower than 120g per kilometre, the maximum bonus is €1,600.

Both the MOVES II and RENOVE schemes have been applied retroactively to 1 January 2020, and so both new and young used cars are eligible for the subsidies in order to avoid potential stock problems.

Lower list prices for long-term competitiveness

The upshot is that existing and enhanced incentives across Europe provide a short-term boost as the automotive industry contends with the fallout from the coronavirus (COVID-19) pandemic. However, they may be lowered or, ultimately, fully withdrawn.

As a case in point, the French government has announced a reduction in the €7,000 incentives for private buyers of BEVs and PHEVs to €6,000 in 2021 and €5,000 in 2022. There has not been an announcement concerning changes to the incentives for fleet buyers. Nevertheless, Yoann Taitz, operations director at Autovista Group in France commented ‘we could think that it should be €2,000 lower for fleet buyers too but this is just my assumption.’

A reduction in the list prices of BEVs is therefore still the only long-term solution to make electromobility viable from a TCO perspective.

Click here or on the screenshot above to view the pricing and TCO dashboard for the B-segment models under review in France, Germany, Spain and the UK. Click here for the TCO dashboard for C-segment models.

Podcast: Back to basics with Brexit, emissions and electric vehicles

The Autovista Group Daily Brief team takes a look at some of the challenges the automotive industry is facing, besides the ongoing complications caused by the coronavirus (COVID-19) pandemic. In this episode, emissions regulations, Brexit and the increased need for electric vehicles are up for discussion.

https://soundcloud.com/autovistagroup/non-covid-challenges-impacting-the-automotive-industry

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

European automotive market facing slow u-shaped recovery from COVID-19

As the coronavirus (COVID-19) situation across Europe remains fluid, and infection rates start to rise again, many of the continent’s key automotive markets are still expecting a slow, u-shaped recovery, despite recent rebounds in economic activity. The potential for a v-shaped recovery is diminishing with a second wave coming in.

With cases starting to rise across the continent, it is likely that the automotive market will again be affected in some way – either through new lockdowns, restrictions in manufacturing or an impact on consumer confidence when it comes to large purchases. The new-car market saw sales rise following the lifting of lockdowns, as pent-up demand drove customers to dealerships. However, this demand has now waned. Incentive schemes are still helping to keep some markets afloat.

In June 2020, economic trade value was only 10% below levels seen in February, highlighting the beginning of economic recovery – a process that took eight months to begin in the financial crisis of 2008-2009. Shipping activity in the US, Asia and Europe had also normalised to previous levels in August.

In addition, an economic sentiment indicator, published by the EU commission has grown in the Eurozone, to 87.7 in August from 82.4 in July. However, in the UK it has slid to 75.1 from 75.5 in the same period.

Risk potential

Some of this economic rebound could be short-lived, as current consumer behaviour is driven by pent-up demand, and there is a risk that joblessness increases in coming months as furlough schemes come to an end. This will suppress spending. The pace of recovery should slow down.

Autovista Group’s European research and analysis on the economic impact of the pandemic on Europe’s used-car markets and residual values (RVs) was discussed in a recent web seminar.

Six of the company’s top experts came together in an online discussion chaired by Autovista Group Daily Brief editor Phil Curry, discussing how markets are reacting to the COVID-19 downturn and the scenarios that some countries may find themselves in. You can watch the entire seminar broadcast below.

In a poll held during the pan-European conference, 45% of attendees felt the automotive market would see a slow, u-shaped recovery. This showed a drop in confidence compared to an identical poll held during July, where 55% felt this path would be the most likely scenario. The most significant increase in likelihood scenarios came in the ‘deep recession, slow recovery’ category, where 34% felt this path would be the most likely outcome of the COVID-19 impact on the automotive market, compared to just 14% in July. This increase could be down to the threat of a second wave of infections, with many countries across the continent starting to see cases rise, a situation that might lead to further lockdowns or restrictions.

Robert Madas, valuations and insights manager Austria & Switzerland, Eurotax, noted that in Austria, new car sales had suffered, 33% down year-to-date. At the same time, the used-car market is also off-track, with an 8.2% decline in the first seven months of the year. However, government electric vehicle (EV) purchase incentives have stimulated demand for plug-in hybrids (PHEVs) and battery-electric vehicles (BEVs). Switzerland is seeing a similar pattern, although used-car sales have only declined by 3.5% in the same seven-month period.

Purchasing power uncertainty

‘Asking prices in the used-car market have decreased after the lockdown, but we have now seen a recovery to pre-coronavirus levels,’ Madas commented. ‘However, in both markets, there is uncertainty regarding purchasing power and general economic outlook. Higher discounts and government incentives for new EVs will affect used-car values in Austria.’

Zsolt Horvath, operations manager at Eurotax Hungary, highlighted that the Central European region saw less-severe lockdown conditions than Western Europe, leading to less impact on RVs in the area. However, he added that car-rental companies had suffered due to cancellations, and supply of used-cars had also been impacted due to border restrictions. With a potential second wave incoming, the likelihood of a slow u-shaped recovery in the region has increased from 35% to 45%.

Yoann Taitz, operations and valuations director at Autovista France, pointed to the country’s strong market recovery since June in both the new and used-car markets, mainly due to the country’s COVID-19 recovery plan. Used-cars saw sales growth of 29.2% in June as pent-up demand helped the market, with a 12.1% increase in July and 15.6% in August, leaving the sector down just 9.6% year-to-date.

The government incentive scheme has led to a positive RV impact, since it supported also the purchase of used cars. However, some risks remain, especially with EV sales, as growth will be driven by the new-car market, and coupled with an increase in grants for their purchase, any supply stronger than demand would negatively impact EV RVs.

In Italy, Marco Pasquetti, forecast & data specialist at Autovista Italy, pointed to the country’s gloomier economic outlook, with GDP likely to be down 11.2%, as a significant impact on the automotive market, with a 65% probability of a medium-risk, slow u-shaped recovery. The market will likely see pent-up demand continue to drive sales, however, due to longer lockdowns and a drop in public transport use, estimated at around 35%-40% compared to pre-COVID-19 usage.

Johan Trus, head of data and valuations Nordics at Autovista, discussed the situation in Finland and Sweden, where no lockdown was observed, and dealerships remained open. Both markets have been in recovery since April, with a high demand for used-cars when people were asked to avoid public transport when commuting.

With various parameters for different scenarios taken into account, including a potential second wave of infections, continuing fluctuations in GDP, supply issues and country-specific factors, the landscape for scenarios in all countries is continuously changing. Autovista Group experts continue to monitor developments and will update their expectations accordingly.

You can find the information presented in the Autovista Group web seminar here. There are further details in the whitepaper: How will COVID-19 shape used-car markets?

Podcast: Up in the air – software updates and the future of vehicles

Special guest Szabolcs Jánky, head of product management for aiSim at AImotive, talks with Autovista Group Daily Brief journalist Tom Geggus. The topic up for discussion: how over-the-air-software updates are changing the future of vehicles…

https://soundcloud.com/autovistagroup/up-in-the-air

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify and Google Podcasts.

Facing autonomous disillusionment

A growing number of stakeholders has begun to address the legal, ethical and technological challenges around autonomous vehicles. The limited-use cases for autonomously driving vehicles may prove to be even more challenging. Autovista Group’s chief economist, Christof Engelskirchen, covers the top five issues with autonomous technology – from a use case perspective – and what ‘level’ of autonomy we should expect in our next vehicle.

The electric car, the connected car, the autonomous car… all great ideas take time. Like the battery-electric vehicle (BEV) that was conceived in the 1880s. Some 140 years later and it is far from being a breakthrough success. On that basis, the self-driving car still has around 132 years to go, if you consider 2012 as the starting point of the autonomous revolution. In that year, it became legal for Google’s autonomous car to drive on the roads of Nevada under one condition: a human driver had to be on board.

Since then, a lot has happened with respect to technology and legislation. A completely new universe of high-tech companies, traditional car manufacturers, suppliers and startups has emerged around autonomous driving technology (Figure 1).

Figure 1: Participating and exhibiting companies at Automotive Lidar 2020, 22-24 September

Participating and exhibiting companies at Automotive Lidar 2020, 22-24 September

This impressive line-up of companies has made strong progress in driving technological development and standards forward. However they have not yet been able to overcome the autonomous disillusionment we are facing collectively as an industry, namely that autonomous cars have a limited-use case for the near future. So what are the top five issues from a use case perspective?

  • The full Level 5 autonomous vehicle – in other words, a vehicle that does not have a steering wheel and never requires an intervention from a driver – is science fiction. There will always be circumstances where intervention from the driver will be required. Fog, rain, snow, lack of connectivity, other non-autonomous traffic, emergencies and peculiar traffic situations beyond the norm (such as passing the Arc de Triomphe in Paris) represent obstacles that have pushed Level 5 off the technology roadmap.
  • If driver intervention is still required, the cost for autonomous-driving technology comes on top of everything else. A combination of LiDARs, cameras, radar systems anddriver-monitoring technology will be required. At present, this means a medium-to-high five-digit figure of additional expenses will be added to the bill. In addition, the commercial vehicle fleet, including buses, trucks and taxis, will need to continue to pay a driver.
  • The business case for the autonomous car in a commercial setup only works if you can take the driver out of the equation. That requires Level 4 autonomous technology, where no driver intervention is required in specific areas; e.g. driving a certain route on the highway or on a campus would be possible, even in cities with very specific routes. Legally, and from a certification perspective, there will be performance and safety standards that need to be met. There cannot be performance differences at Level 4 autonomous technology. Just to reiterate, if the car is on a Level 4 route or in a Level 4 area, there is no driver required. That means that the car needs to fully manage any upcoming challenges or emergencies independently. There is no human intervention on a Level 4 route or in a Level 4 area. Once this cannot be guaranteed, you are effectively talking about Level 3 autonomous driving.
  • Physical lane separation will likely be a requirement for the coming years of Level 4 autonomous technology. Any unnecessary challenges will need to be avoided (for example, a non-Level 4 vehicle driver interfering with a Level 4 vehicle) both for safety reasons but also as they would disrupt the flow. A physically separated lane, that hosts Level 4 vehicles exclusively, is expensive. Dubai is considering establishing such a system as an addition to its public transport infrastructure. A train on rails would serve the same purpose.
  • Level 3 technology – a system where intervention from a driver may be required – is questionable as a concept. Asking drivers to monitor an autonomous driving system could be a stretch. Imagine dosing off while driving 130 km/h on a highway when an engagement request suddenly sounds. This hypothetical situation may leave drivers feeling unsafe. Not to mention questioning whether they would be willing to pay a medium-to-high five-digit Euro premium to equip such a system? Moreover, what would that mean for used-car values? For those reasons, Level 3 is currently not a concern for many OEMs. Level 4 is and Level 3 could be a spin-off, as it would not make sense to develop a Level 3 system as a stand-alone technology.

Gartner publishes a hype cycle for emerging technologies (Figure 2). Last year’s curve already shows Autonomous Driving Level 4 is post-hype and Level 5 almost at its peak. In their next update, the disillusionment might be even more visible.

Figure 2: Gartner Hype Cycle for Emerging Technologies 2019

Gartner Hype Cycle for Emerging Technologies 2019

To conclude, autonomous driving Level 4 is the desirable technology as there are business cases that could work.

Take the following example. A non-autonomous truck delivers goods to a hub, where the trailer is hooked to a Level 4 truck. That truck drives a distance of 500-1,000km in a dedicated lane, autonomously and without a driver, to the next hub. From there, a non-autonomous truck delivers the goods to the final destination. On university campuses,factory sites, or places like airports, transport could be organised with Level 4 people movers. For private individuals and their vehicles, consumers can look forward to improved ADAS, or Level 2+ technologies as expensive features: for example a 60km/h hands-offsteering wheel and eyes-off-road traffic jam assistant.

Autonomous cars will continue to be insured by the vehicle holder

Under the scenarios described above, cars with autonomous features will continue to be insured as individual vehicles by the holder of the vehicle. That system has proven to be highly effective. Suing an OEM, or one of the many suppliers, in an attempt to hold them liable for causing an accident is not what the holder of the vehicle or victim of the accident should be concerned with; insurers should pursue that route and they already do.

With Level 2+ features or further advanced driver-assistance systems, differentiation is possible between one OEM and another. These features will also impact the ability to remarket the vehicle – the most important building block for any leasing rate. Furthermore, it will be of interest for those looking at total cost of ownership optimisation for their fleet.

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.

Can graphene give a glimpse into the automotive future?

The automotive industry looks to have reached a critical evolutionary step. Emerging from a mechanical mindset, vehicles are undergoing a process of electrification and digitalisation. As this fresh era of design expands, new materials are also erupting onto the scene. Daily Brief journalist Tom Geggus examines the potential of one such material; graphene.

When considering the construction of vehicles throughout the 20th century, particular materials spring to mind. Ford’s Model T was shaped by steel, GM engineered aluminium into its engines and Renault made progress with plastic. But as vehicles become smarter, so do the materials which go into their production. One new source of innovation for carmakers looks to be graphene.

A science lesson

So what is this new wonder material? Graphene is a one-atom-thick layer of carbon, arranged into a hexagonal lattice. While scientists have known about its existence for years, they were unable to extract it from graphite, the same mineral used in pencils.

But that was until 2004, when two professors from the University of Manchester, Andre Geim and Kostya Novoselov, made a Nobel Prize-winning discovery, with little more than a roll of sticky tape. The two would often hold ‚Friday night experiments,‘ venturing into experimental science that was not necessarily linked to their day jobs.

Armed with their tape, the pair removed flakes from a lump of graphene. Realising some samples were thinner than others, Geim and Novoselov began separating fragments repeatedly. Eventually, they were left with carbon flakes only an atom thick.

This means the graphene can be stretched along its length and width, but at an atom thick it cannot be manipulated on its third dimension, making it two-dimensional (2D). To put this into perspective, it is one million times thinner than the diameter of a single human hair.

While the sticky tape method opened the door to the discovery of graphene, it is not workable on an industrial scale. Instead, alternative methods like chemical deposition are now being used to extract the material en masse.

Groundbreaking graphene

Now, Graphene@Manchester leads the business-based development of the material at the University. Based in the UK, this includes the National Graphene Institute (NGI) and the Graphene Engineering Innovation Centre (GEIC). NGI brings together the scientific elements while GEIC deals with prototypes for pilot productions.

Speaking with Autovista Group’s Daily Brief, James Baker, CEO of Graphene@Manchester explained why graphene is so groundbreaking.

Because it is 2D, the material has unique properties that set it apart from 3D ones. ‘So you often refer to what’s called the graphene superlatives, and you hear things like 200 times stronger steel,’ said Baker. ‘It’s more conductive than copper. It’s both electrically and thermally conductive, it’s stretchable, it’s flexible, it’s transparent.’

Re-shaping cars

Used as an additive, the material can improve multiple elements of vehicles. When combined with rubber, it could potentially give a tyre both durability and grip, Baker explained. This could mean no more trade-offs between longevity and traction. One company, SpaceBlue, even looks to recycle tyres after they have reached the end of their life, by converting them into hardwearing floor mats, which have been enhanced with tiny amounts of graphene.

The 2D material can also be used to form compounds with other elements of a car to make it lighter. GEIC partner Briggs Automotive Company built the Mono, ‚the first production car in the world to fully incorporate the use of graphene-enhanced carbon fibre in every body panel‘. The material improved the structural properties of the fibre to make the supercar’s panels stronger and lighter, while also significantly improving the car’s mechanical and thermal performance.

Ford ran trials to see how the material could be used in components like fuel rail covers, pump covers and front engine covers. The carmaker also looked to reduce noise inside of its vehicles by mixing graphene with foam constituents. Tests carried out by Ford and suppliers revealed an approximate 17% reduction in noise, a 20% improvement in mechanical properties, and a 30% enhancement in heat endurance properties, compared to a non-graphene foam.

Infografik Auto

Even outside of the car, the material could help make a difference to motorists. Responsible for the UK’s motorways and major roads, Highways England is working with GEIC to explore the additon of graphene to bitumen in road surfaces. The aim is to make roads not only hard-wearing but flexible when it comes to extreme weather. If surfaces are able to expand and contract to adapt to hot and cold conditions, the likelihood of potholes would decrease, alongside the potential for damage to vehicles.

EVs and graphene                

But how does graphene play into current automotive trends? As the industry experiences an electrified undercurrent, pulling vehicle development towards e-mobility, a material which decreases weight could be essential.

Baker explained that ‘light-weighting’ is a key challenge with electric cars as they get progressively heavier. This process can help shed weight from all over the car, including the interior, with plastics and fabrics being made thinner and lighter. The less an electric vehicle (EV) weighs, the less work the motors will have to do and the more efficient the car will become. Graphene can also be added to battery elements, such as the casing, to make it lighter and tougher, as well as more thermally conductive.

Ultracapacitor specialist Skeleton Technologies, also recently partnered with the Karlsruhe Institute of Technology, to complete the development of a graphene ‘SuperBattery.’ With a 15-second charge time, the unit would also be capable of charging cycles counted in hundreds of thousands. The company claims this makes it ‘a perfect solution for the three main issues affecting electric vehicles: slow charging times, battery degradation, and range anxiety.’

Forward-thinking

Discussing the potentially disruptive areas graphene might one day impact, Baker considered whether a vehicle’s structure could itself store energy. This could mean a car’s door or floor panels taking the place of a battery pack. However, he acknowledged the challenge with an idea like this would be dealing with a potential collision, and what would happen if a panel became damaged.

Going forward, Baker believes the wonder material is more likely to be crucial to the development of a new type of supercapacitor. This could allow vehicles to be equipped with a relatively smaller battery for range, which is then supplemented with a supercapacitor used for acceleration. For taxis and buses, which do a lot of stop-start driving, this split would be ideal as they would receive better range and performance from a supercapacitor that can recharge through braking.

Getting any graphene product into the market place requires jumping two major hurdles, Baker said. First, there is the development of the product itself, then secondly obtaining all the necessary certificates and coming into line with regulations. For a safety-critical product, this could mean roughly two to five years to get the required performance, and then a similar time scale to get the product certified. Meanwhile, simpler, non-safety related items could reach the market in 12 to 18 months.

However, with targeted investment, Baker believes certain areas of development could undergo acceleration. With countries looking to lower their carbon outputs, any technology capable of assisting the reduction of emissions would be well received. As environmental necessity continues to drive change, graphene could start shaping more of the automotive industry before too long. If used to its full potential, the 2D material could make its predecessors, like steel, aluminium and plastic, seem outdated, old-fashioned and one-dimensional.

Images courtesy of the University of Manchester.

Podcast: Breaking down registrations, fuel types and supply chains

The Autovista Group Daily Brief team discusses the biggest automotive news stories of the last fortnight. In this episode, Neil King examines Europe’s registration figures, Phil Curry focuses on fuel types, and Tom Geggus studies battery supply chains.

https://soundcloud.com/autovistagroup/breaking-down-registrtaions-fuel-types-and-supply-chains

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify and Google Podcasts.

Three-speed RVs: UK and France benefit from pent-up demand post-lockdown

Following the emergence of Europe’s automotive sector from coronavirus (COVID-19) lockdowns, a ‘three-speed’ development of residual values (RVs) has prevailed across the region. Senior data journalist Neil King explores the region’s variations.

The UK and France have enjoyed a rally, driven by pent-up demand in the initial post-lockdown period. Autovista Group’s COVID-19 tracker, which tracks 12 European markets, shows that the index of RVs, compared to early February, has risen since mid-May and peaked at 104.8 (a 4.8% rise) in the UK and 102.4 (a 2.4% rise) in France in the week to 6 September. The start month was February, with a value of 100.

The UK is enjoying the release of pent-up demand, both from the lockdown and the uncertainty running up to the country’s departure from the European Union on 31 January. It also faces a starker vehicle-supply challenge than any other market, which is filtering through to higher RVs as used-car demand outstrips supply. ‘Stock of both new and used cars is the biggest issue in the UK. This is driving up used prices and we do not see the bubble bursting quite yet. It’s September and even convertible demand is still high, with values increasing,’ commented Anthony Machin, head of content and product at Glass’s.

French Revolution

France benefitted from pent-up demand and a new incentive scheme that came into effect on 1 June. The €8 billion package includes a €7,000 grant for private buyers of new battery-electric vehicles (BEVs) costing less than €45,000 (€5,000 for fleet buyers), while buyers of new plug-in hybrids (PHEVs) can claim a €2,000 subsidy.

Additionally, France doubled its premiums for those looking to trade in older vehicles for a cleaner model, with a €3,000 grant for vehicles with internal combustion engines (ICE) and €5,000 for BEVs and PHEVs. Crucially, the enhanced trade-in bonus also applies to used cars and hence the notable rise in RVs. However, the scheme reached its 200,000-vehicle cap before the end of July and the Ministry of Ecological Transition announced the replacement of the recovery scheme with a conversion bonus, applicable from 3 August.

‘In France, OEM plants restarted late and slowly, creating a lack of new-car stock in July and even more in August. Moreover, as people have defected from the new-car market to the used-car market, increasing demand, the low stock of used cars explains the ongoing increase in residual values. This is especially true in the A- and B-segments, where the conversion bonus is working really well, but this is not the case for all fuel types and segments,’ commented Yoann Taitz, operations director of Autovista Group in France.

Used-car transactions surged; 595,942 used cars changed ownership in France in June, 29.1% more than in June 2019, according to data published by the French carmakers’ association CCFA. This was followed by year-on-year growth of 13.3% in July and 16.8% in August. Nevertheless, there were still 9.2% fewer used-car transactions in the first eight months of 2020 than in the same period in 2019.

Autovista Group anticipates a slowdown in the RV development in France and our latest RV outlook calls for prices of used cars to be 0.3% lower in France at the end of 2020 than when the COVID-19 crisis erupted in Europe, in March. In the forthcoming September update of Autovista Group’s whitepaper, How will COVID-19 shape used car markets?, we will reveal which market is forecast to be the most resilient among the 18 European countries covered. 

Autovista Group, Residual Value Intelligence, COVID-19 tracker

Source: Autovista Group, Residual Value Intelligence, COVID-19 tracker

Rapid-reaction markets

Sweden, Finland and Portugal all had rapid negative reactions to COVID-19. Dramatic lockdown measures were not introduced in Sweden and Finland, but RVs fell from early February to mid-May in both markets.

However, RVs have climbed in Sweden since mid-June and recorded 100.7 on the index in the week to 6 September, i.e. 0.7% higher than in early February. ‘The used-car market has recovered fine as stocks are decreasing and sales volumes and values are rising,’ said Johan Trus, chief editor of Autovista Group in Sweden. ‘People were not allowed to travel to other countries, so the summer vacation has been spent in the country, and then people needed a car to travel. In addition, car exports have picked up.’

In Finland, the index of RVs fell from early February to only 97 in mid-June and has remained at the lowest level in Europe since. ‘Finland is still running on low numbers, and we don’t see the same quick recovery as in Sweden. The import of young used Swedish cars has picked up again too, in combination with lower used-car values than normal, already before the crisis started,’ Trus commented.

Portugal also endured falling RVs since the tracker index started in February but a more pronounced downturn commenced at the end of March. As in Finland, the price index is only showing a modest increase and has not recovered to pre-coronavirus levels.

‘Used-car sales continue to recover quicker than new-car sales. In July, used-car sales grew 25% year-on-year whereas new-car sales fell 16.9%, although this was a significant improvement on June, when the drop was 56.2%. There was just a small 0.1% decline in new-car sales in August but the drop was 8.6% including light commercial vehicles,’ said Joao Areal, editorial manager of Autovista Group in Portugal.

‘In the next months, we will understand if the demand for used cars continues to grow or if this was due to pent-up demand built during the lockdown. The car market represented more than half of consumer credit in July but of this amount, 85% was for used cars. Although we can see a recovery in the car market, we are still far from pre-COVID-19 values,’ added Areal.

Late starters

The rest of Europe’s tracked markets remain ‘late starters’, where several effects are balancing each other out.

The first reason for the ongoing stability in many markets is that they have essentially remained ‘on hold.’ In Italy for example, ‘the market has been waiting for a better understanding of the full impact of the economic crisis, especially considering that many experts are convinced that we could face a second wave and a new lockdown in autumn,’ explained Marco Pasquetti, forecast and data specialist of Autovista Group in Italy.

RVs fell again in Italy from late June to late July. This is partly because of the incentives to support the country’s automotive industry, which came into effect on 1 August. ‘There is also the Ecobonus incentive scheme, but the amount allocated is insufficient in our opinion (so far). We think that we’ll see an impact on values starting from September,’ Pasquetti added.

The significant disruption to new-car supply and registrations is also impacting RVs in ‘late-starter’ markets.

In Germany for example, used-car transactions were just 6% lower in the first eight months of the year than in the same period in 2019, according to the KBA. They have even performed better than last year for two consecutive months. New-car registrations have been far more affected, however, and are still 29% lower in the year-to-date than in 2019.

‘The lack of new-car supply still boosts young used-car sales but dealers seem to be unnecessarily discounting them even more than before the crisis – probably in favour of a quicker turnaround of stock. After a proper autumn, we expect stronger price competition at dealers in the last two months of the year as they compensate for the loss in new-car sales with higher used-car turnover,’  commented Andreas Geilenbrügge, head of valuations and insights at Schwacke.

The situation is a bit more optimistic than before in Spain, but the country faces the same challenge. ‘The automotive sector is resisting the crisis better than expected, helped by the measures to boost the sector that the government put in place. The production stoppages have also reduced pressure on used-car stock and the average number of stock days is much longer now. However, there are fewer new used cars coming into the dealers and I think the MOVES and RENOVE plans and/or the high discounts for new cars and young used cars will end up affecting transaction prices in the coming months,’ said Ana Azofra, valuation and insights manager at Autovista Group in Spain.

Switzerland saw the same dramatic decline in new-car sales volumes as elsewhere. ‘So, nearly new cars, aged 0-6 months, served to fill the gap left by missing new cars and increased their values temporarily. However, used cars aged 0-6 months, as well as those aged seven to 17 months, are losing ground again as new-car sales slowly regain some of the terrain lost during the lockdown,’ commented Hans-Peter Annen, head of editorial for Autovista Group in Switzerland.

‘Now manufacturers have resumed production and all the individual new-car incentives are back, this will most likely increase the used-car stock volume and the pressure on RVs,’ Annen added.

Meanwhile, there has been continued positive development of RVs in Poland.

‘I can observe continuous good demand for young used vehicles. They are a lower financial risk for buyers in the volatile market situation. Besides, list prices are growing very fast. That’s probably due to expected penalties for CO2 targets and the introduction of WLTP and the new Euro 6d norm, with more complicated engines (mild-hybrids),’ commented Marcin Kardas, head of the Autovista Group editorial team in Poland.

‘On the one hand, the financial contracts between companies and fleet suppliers are extended, which will cause a lack of the youngest used cars on the market. But a lot of people still work from home so don’t need a car and the economy remains unstable. In this environment, it is really hard to predict the direction of RVs. Growing list prices will decrease them but strong demand for used cars will positively influence them. To recognise the real post-COVID effect, we should wait a bit longer but I don’t expect significant changes in the coming months,’ concluded Kardas.

Kia commits to mobility services

Kia Motors Corporation (Kia) is expanding its partnerships with mobility companies to ‘meet the needs of a diverse range of customers worldwide.’ The move will mean increasing its fleet sizes, providing customised transport offerings and launching new rental capabilities. In July, Kia also announced the formation of Purple M, a startup focused on electric-vehicle (EV) mobility services.

From the outset of 2020, Kia has been revealing how it wants to change the way these platforms operate. In January, the carmaker announced ‘Plan S,’ its long-term strategy to shift focus away from internal combustion engine (ICE) vehicles towards EVs and other customised mobility solutions. This strategy includes establishing hubs in cities with strict environmental regulations, as well as developing services based on electric and autonomous vehicles in the long term.

‘Kia is striving to provide customised products and differentiated mobility services based on its long history in automotive manufacturing,’ Kia’s President and CEO Ho Sung Song said. ‘Kia will further enhance its collaboration with global partners to offer regionally customised mobility services as it implements its ‘Plan S’ strategy.’

Regional strategies

During a visit to the carmaker’s Sohari plant in South Korea, Song revealed the company’s plans to develop different regional approaches to its mobility partnerships. So, in South Korea, the carmaker will build on its ‘Kia Flex’ vehicle subscription programme by expanding the fleet to 200 vehicles. The line-up will include the new Carnival, which is nearing its launch date in the country, as well as a new EV model to be added in the future.

Meanwhile, in Europe, Kia will collaborate with its partners to provide customised offerings. In 2018, Kia worked with Spanish energy company, Repsol, to establish a car-sharing service called ‘WiBLE’. Currently operating with a fleet of 500 Niro plug-in electric hybrids (PHEVs), it allows customers to rent and return vehicles at designated locations on a ‘free-floating’ system. Kia plans to provide a multi-modal service in the future, which will offer multiple means of travel, like public transport and car-sharing.

Later this year, the manufacturer also intends to launch a dealer mobility service in Italy and Russia. This will enable dealers to rent out vehicles for any period, from a single day up to a full year. Kia hopes to gradually go global with the offering in future.

In the US, the company plans to accelerate the electrification of its fleet and enhance cooperation with its mobility partners. The carmaker provided 200 Niro EVs to Lyft last year and this year it supplied 44 Niro HEVs to MoceanLab, Hyundai Motor Group’s mobility service company.

In emerging markets, the South Korean manufacturer has partnered with companies like Ola, India’s largest ride-hailing company, Revv, an Indian car-sharing company, and Grab, Southeast Asia’s largest ride-hailing company. Through these partnerships, Kia hopes to better understand the needs of its customers in the development of future vehicles.

Purple M

Investing further in mobility solutions, Kia has also partnered up with CODE42.ai, a technology firm focused on the transition to autonomous Transportation-as-a-Service (TaaS). Together, they have launched a joint venture called Purple M.

This new company aims to establish a flexible e-mobility platform, as well as develop a sustainable EV ecosystem. While consumer interest in EVs is on the rise, mobility services are still driven primarily by ICE vehicles. Kia reasons that this leaves room for an e-mobility ‘first mover’.

‘With the newly established Purple M, Kia will be reborn as a leader for the era of e-mobility,’ said Song. ‘CODE42.ai is a leading Korean company in the field of future innovation technology, and is the best partner for successfully promoting a differentiated e-mobility service business.’

Purple M will use CODE42.ai’s Urban Mobility Operating System (UMOS), a cloud-based platform that integrates autonomous vehicles and air transportation services. This includes e-hailing, fleet management, demand-responsive shuttles and smart logistics.

‘Our goal is to accelerate the era of electric vehicles through Purple M,’ said Chang Song of CODE42.ai. ‘The integrated mobility and logistics platform UMOS will be central to building an e-mobility ecosystem encompassing everything from infrastructure to services.’

The two companies will use the new platform to establish further collaborative partnerships with specialist providers, hoping to develop a flexible e-mobility infrastructure. In particular, Purple M aims to help revitalise South Korea’s domestic mobility industry. It hopes to achieve this by cooperating with mobility market players while presenting new standards in what Kia calls ‘the post-coronavirus (COVID-19) era’.

COVID-19 complications

Currently, manufacturers are having to focus on EV production to keep in step with emissions regulations. But as the COVID-19 economic downturn means fewer people will have the money to buy expensive vehicles, traditional means of car ownership might be questioned by consumers.

This, arguably, is exactly what services like Purple M have been designed for – a chance to challenge the status quo of ownership. Why own an expensive EV when you can rent one as and when you need it?

On the other hand, there may be some reluctance to make use of these offerings straight away. As consumers seek to avoid public transport and contact with other people, shared-mobility services may suffer the same fate. Providers like Purple M will need to routinely disinfect shared vehicles in order to reassure customers.

What is more, as offices remain closed to prevent further spread, fewer people will need a vehicle to commute. More broadly, if lockdowns continue to be intermittently enforced, travel will take a nosedive across the board. Until a vaccine is created, there will continue to be less person-to-person interaction and, consequently, far fewer journeys.

So, in the short term, the mobility services offered by the likes of Kia might be facing an uphill battle. But in the long term, consumers may recognise the potential of breaking free from traditional forms of car ownership and only pay for a car when they have an immediate need for one.

How has COVID-19 impacted residual values in Europe?

It has been almost seven months since the first official coronavirus (COVID-19) case was reported in Europe. Since then, governments across the continent have put procedures in place that had never been seen before. Whole countries locked down, travel bans were implemented and entire industries stopped as countries raced to reduce their rates of infection.

The automotive industry was particularly hard hit by the outbreak and resulting lockdowns. Vehicle production stopped, and dealerships closed, bringing a halt to sales. Since these lockdowns have eased, it is starting to become clearer how markets are reacting.

Yet questions remain. Will incentive schemes across Europe present additional residual value (RV) risk? How severe an economic decline should we expect towards the end of 2021? Are there still hopes of a V-shaped recovery?

To provide further insight into how the automotive market is reacting in the wake of COVID-19 lockdowns, and the impact the economic turmoil is having, or could have, on RVs, Autovista Group is holding a webinar: COVID-19 residual value impact – where are we now?

The 45-minute session is taking place on 16 September at 11.00 CEST (10.00 BST) and will see a number of Autovista Group’s experts, representing markets across Europe, come together to discuss the current state of the automotive market and the effect on RVs. Topics to be discussed include:

  • Europe’s three main scenarios for used-car market reactions
  • The latest outlook for residual-value performance across Europe
  • What is happening in your country and what it means for RVs
  • How markets are responding in the recovery phase
  • What you need to know for successful RV scenario planning and risk management

‘With the COVID-19 threat still present around the world, it is essential for businesses to have up-to-date information to help them understand the current situation and navigate through whatever the future holds,’ commented Phil Curry, Autovista Group Daily Brief editor and chair of the webinar. ‘When economic problems strike, the automotive industry is often particularly affected, yet there is more of an opportunity for used-car sales during these times, so having the latest information on RVs and the outlook for markets across Europe is essential, especially in these unprecedented times.’

To register for the free Autovista Group Webinar: COVID-19 residual value impact – where are we now? click here and fill in your details.

In-car touchscreens as distracting as a mobile phone?

In-car infotainment systems appear to be expanding endlessly across cockpits, becoming more technologically advanced as they go. Examples range from the Honda e’s dashboard-wide multimedia suite to Tesla’s titanic touchscreen-driven approach. While this is great news for gadget lovers, it does raise issues around driver concentration.

Andy Cutler, car editor of forecast values at Glass’s, the UK arm of Autovista Group, recognises the increasingly distracting nature of touchscreen technology. He argues that drivers now need to navigate a number of on-screen menus to adjust features like climate control, even though this can be far more distracting than simply locating a physical button. Any time the driver spends looking away from the road is dangerous, and touchscreens have the potential to elongate this hazardous period.

Reaction times

This position was supported by the findings of a study published by the UK’s Transport Research Laboratory back in March. It found that the latest in-vehicle infotainment systems can impair driving reaction times more than alcohol and cannabis use. Reaction times slow by 12% at the drink-drive limit, which then decreases to 21% with cannabis. While using a touchscreen display with Android Auto or Apple CarPlay however, reaction times were more than 50% slower.

During the study, many participants realised the system was distracting them and tried to compensate by slowing down, for example. However, their performance was still adversely affected, with drivers unable to maintain a constant distance with the vehicle in front, reacting more slowly to sudden occurrences and deviating from their lane.

Drivers who took their eyes off the road for as long as 16 seconds while driving and using touch controls resulted in reaction times that were worse than texting while driving (35% slower reaction time). Some also underestimated the amount of time they spent looking away from the road by as much as five seconds when engaged with these infotainment systems.

Tesla touchscreen trouble

A German court case has highlighted the turning tide against this technology. A ruling was passed down that Tesla’s touchscreen controls should be treated as a distracting electronic device. The judgement was made as part of a case concerning a collision where the driver had been trying to adjust the windscreen-wiper settings.

The defendant found himself facing a fine and a ban, under the same rules used to prosecute those found using a mobile phone behind the wheel.

In March this year, the Higher Regional Court in Karlsruhe, known as the Oberlandesgericht (OLG) in German, heard a case that stemmed from a collision almost a year previously, a legal blog revealed. A Tesla Model 3 driver had been out in the rain when the car’s automated wipers activated.

Their speed can be automatically adjusted by the car to compensate for the amount of rainfall. However, manually changing the intervals is done via the central touchscreen in the middle of the cockpit, rather than on a button or dial.

In this case, the Tesla driver had to navigate software menus to choose from one of five settings after touching an icon on the screen. The court said that due to the ‘resulting loss of vision from the traffic’, the driver left his lane and ended up in an embankment, colliding with a sign and several trees.

The ruling

Following the incident, the driver was initially handed a €200 fine and a one-month ban from driving by a local court. This penalty came into line with the rules surrounding the use of a mobile phone while driving, namely, ‘Improper Use of an Electronic Device in Accordance with Section 23 (1a) of the Road Traffic Regulations.’ But the driver argued that the wiper controls were a safety-related feature which he needed to access, and so appealed to the OLG.

However, the higher court denied the appeal, agreeing with the initial ruling. It found that ‘the touchscreen (permanently installed in the vehicle of the Tesla brand) is an electronic device in the sense of § 23 Para, it does not matter what purpose the driver pursues with the operation.’

‘The setting of the functions required to operate the motor vehicle via the touchscreen (here: setting the wiping interval of the windshield wiper) is therefore only permitted if the view is only briefly adjusted to the screen for road, traffic, visibility and weather conditions and at the same time a corresponding turn away from the traffic is connected.’

So according to this ruling, a fixed touchscreen is an electronic device, even if it is only being used to adjust the wiper speed. The Daily Brief did reached out to Tesla for comment about this verdict, but the company has yet to respond.

Alternative cockpit systems

So manufacturers might need to take stock of touchscreen alternatives. This could mean multifunction dials on the steering wheel or a voice-activated command system, capable of carrying out tasks quickly and effectively.

For example, Polestar’s Precept concept boasts a 15-inch screen with Google Assistant providing advanced speech technology. However, vital information is displayed on a separate nine-inch horizontal display that utilises eye-tracking technology, allowing on-screen adjustments based on where the driver is looking.

Launch Report: Mercedes-Benz GLA

The GLA is a well-established name for Mercedes-Benz, and the second-generation model (H247) has a more defined SUV shape than its predecessor. The new car is taller, slightly broader, and has a longer wheelbase, providing a more SUV-like entry and seating position as well as very good headroom and improved interior space.

The model has not grown in length overall but is still the longest of its premium competitors and is more easily differentiated from the A-Class. Its design is also strong enough to differentiate it from the GLB.

The new GLA has adopted the technologies introduced in the latest A-Class and, as a result, is the newest and most up-to-date crossover in the segment. Compared to its direct competitors, the GLA’s fuel consumption is rather low, with similar figures to less powerful engines offered on competitor models, and a petrol plug-in hybrid (PHEV) drivetrain has been added. However, the petrol and diesel engines are currently only offered with automatic transmission and so entry prices are comparatively high.

Click here or on the image below to read Autovista Group’s benchmarking of the Mercedes-Benz GLA in France, Germany, Italy, Spain and the UK.

We present new prices, forecast residual values and SWOT (strengths, weaknesses, opportunities and threats) analysis.

Launch Report Mercedes-Benz GLA