Fuel Type: Diesel

Explaining October’s registration figures

In October, none of the big five European markets achieved a positive increase in registrations. With markets entering various states of lockdown to ease a second wave of coronavirus (COVID-19) infections in November, the picture for the rest of 2020 could become murkier still. Autovista Group Daily Brief editor Phil Curry guides you through the figures in the latest registrations round up.

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will find videos on a range of subjects including autonomous vehicles, new-car registrations, safety systems, and electrification.

Volvo recalls 120,000 cars globally after airbag defect

Volvo Cars is undertaking a global recall of its S60 and S80 models built between 2001 and 2003 due to an airbag defect, Autovista Group has learned.

‘The recall is global and in total around 120,000 cars will be recalled from markets with hot and humid conditions,’ the carmaker confirmed to Autovista Group’s Daily Brief. ‘All affected owners will be contacted directly by Volvo.’

The move looks to tackle an airbag defect which has already been linked to one fatality in the US. Documents published by the country’s National Highway Traffic Safety Administration (NHTSA), describe the potential for the driver side airbag inflator to rupture, causing fragments to be expelled on deployment.

This process has already begun, with the manufacturer reaching out to owners of the S60 and S80 models. According to NHTSA documents, Volvo plans to replace the faulty unit with modern propellant and inflator.

‘After being notified by Volvo in August 2019 of a field incident where it appeared that a specific type of airbag inflator ruptured upon deployment, ZF promptly informed the NHTSA and, together with Volvo, began investigating the incident,’ the airbag provider told the Daily Brief. ‘As a company committed to safety, ZF will continue to work closely with NHTSA and Volvo on this issue.’

Hot and humid conditions

The report lays out that when the faulty airbag’s propellant tablets are subjected to increased moisture levels and frequent high-inflator temperatures, the tablets can start to decay and form dust particles. Also, when exposed to increased temperatures, moisture leaves the tablet and when cooled down is absorbed and accumulated on its surface.

This localisation of moisture leads to ‘volumetric changes of the tablet’s surface,’ creating dust. This dust increases burn surface area and burn rate. This can result in higher combustion chamber pressure and the risk of inflator rupture.

‘In the event of a crash were the driver airbag is activated, fragments of the inflator inside the airbag may, in certain cases, project out and in worst case strike you, potentially resulting in serious injury or death,’ the US recall notice states.

The carmaker and the NHTSA have had meetings about the airbag fault since August 2019.

The agency confirmed that one person in the US died when a ZF/TRW FG2 twin driver airbag inflator containing the propellant 5AT-148N exploded. The government body said this was the only known fatality for this type of inflator globally.

Takata troubles

The development is reminiscent of the ongoing global recall due to an airbag issue by Takata. According to the NHTSA, it affected tens of millions of vehicles, from 19 different automakers. These airbags were recalled because they could explode when deployed, causing serious injury or even death.

UK sees registrations drop as it enters second lockdown

The UK has seen its weakest October registrations performance for nine years, as a ‘firebreak’ lockdown in Wales hindered sales of new vehicles and contributed to a 1.6% drop in the market.

The latest data, provided by the Society of Motor Manufacturers and Traders (SMMT), shows that 140,945 units were registered last month, making it the weakest October since 2011 and 10.1% lower than the average recorded over the last decade, according to the industry body.

The arrival of new models and ongoing financial incentives around battery-electric vehicles (BEVs) helped initially to sustain UK demand in the month, but the introduction of a lockdown in Wales on 23 October contributed to the nation recording 25.5% fewer registrations by the end of the month, which accounted for more than half of the overall UK decline.

Grafik: Neuwagen-Anmeldungen Oktober 2020 SMMT

Source: SMMT

Trouble ahead

Year-to-date, the market is down by 31%, according to the SMMT, with 620,921 fewer vehicles on the road. However, the UK is now in a month-long lockdown period that will see all but essential services closed – including car dealership showrooms. This means that only registrations made up until 5 November, when the lockdown started, will count in the November figures, and the SMMT’s expectation is in line with Autovista Group’s predictions that this month will see 100,000 fewer vehicles registered in the country as a result.

‘When showrooms shut, demand drops, so there is a real danger that with England today entering a second lockdown, both dealers and manufacturers could face temporary closure,’ comments SMMT chief executive Mike Hawes. ‘What is not in doubt, however, is that the entire industry now faces an even tougher end to the year as businesses desperately try to manage resources, stock, production and cashflow in the penultimate month before the inevitable upheaval of Brexit. Keeping showrooms open – some of the most COVID-secure retail environments around – would help cushion the blow but, more than ever, we need a tariff-free deal with the EU to provide some much-needed respite for an industry that is resilient but massively challenged.”

UK new-car registrations, January 2018 to December 2020 (forecast from November 2020)

Pkw-Neuzulassungen in Großbritannien, Januar 2018 bis Dezember 2020 (Prognose ab November 2020)

Source: SMMT and Autovista Group

‘While the continuation of click & collect and delivery services is welcome, and should help prevent a return to the sales wipe-out experienced in the spring, it cannot offset the loss of custom from the closure of showrooms themselves, given the unique nature of the car purchase process,’ the SMMT said.

Brexit uncertainty also continues to complicate matters. Tariffs of 10% could be added to imports and exports in the event of no free-trade agreement between the UK and European Union. Carmakers are already highlighting their inability to absorb this tariff, meaning they could tag it onto the price of new cars imported into the country.

With dealerships closed in November, this only leaves one month for consumers and businesses to update their vehicles before factoring in any potential cost increase. This may mean that pent-up demand will aid the market in December. However, as this is traditionally a poor-trading month for the automotive industry, with consumer spending concentrated elsewhere, and with an extension to the UK government’s furlough scheme meaning many consumers are economically worse off during lockdowns, pent-up demand is unlikely to drive the market back to pre-lockdown levels.

UK forecast to fall 32%

To this end, Autovista Group is forecasting a 32% drop in registrations in the UK for 2020. The Autovista Group forecast, first published in June, was a downgrade from the 23% decline forecast in May and 20% forecast in April. In March, before the coronavirus (COVID-19) pandemic took hold, the expectation was that the UK market would only experience a 3% fall in 2020.

The UK’s market continues to be driven by alternatively-fuelled vehicle sales, as petrol and diesel models register declines. In October, petrol fell 21.3%, while diesel dropped by 38.4%.

However, BEVs saw a 195.2% increase in registrations, albeit on smaller figures, with 9,335 units hitting the road in October. Year-to-date, BEVs are up 168.7% as new models and improving infrastructure helped 75,946 vehicles roll out of showrooms. Following a decline due to the abolishing of government grants, plug-in hybrids (PHEVs) are also making a comeback. In October, 7,775 units were registered, representing growth of 148.7%, while year-to-date, PHEVs are up 91.5%.

Video: Carmakers pooling to reduce emissions

As carmakers look to reduce their average CO2 emissions, many are collaborating in pools to spread their figures across a wider fleet. Autovista Group Daily Brief editor Phil Curry explains the benefits…

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will find videos on a range of subjects including autonomous vehicles, new-car registrations, safety systems, and electrification.

New-car registrations recede across Europe in October

Autovista Group senior data journalist Neil King considers the slump in registrations in France, Italy and Spain in October.

Despite the existence of government-backed incentives in France, Italy and Spain, new-car registrations in October have dropped over the month, according to the respective automotive trade associations.

Following the lifting of coronavirus (COVID-19) related lockdowns earlier in the year, the countries’ automotive markets had shown signs of recovery. However, all three contracted for the third consecutive month in October, with the exception of the incentive-induced growth in Italy during September.

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

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

Source: CCFA, ANFIA, ANFAC

New-car registrations were 9.5% lower in France in October 2020 than in the same month of 2019 (there was one less working day in the month than in October 2019), according to the latest data released by the CCFA, the French automotive industry association. This is a greater downturn than the 3.0% year-on-year contraction in new-car registrations in the country in September. However, factoring in the lower number of working days (22 in October 2020 versus 23 in October 2019), the CCFA has calculated that the market declined by 5.4% based on an equal comparison.

The incentives introduced on 1 June for new battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) remain, but the additional bonus for trading in older cars for cleaner new and used cars was exhausted before the end of July. The scrappage scheme reached its 200,000-vehicle cap after just two months, although the Ministry of Ecological Transition did announce the replacement of the recovery scheme with a conversion bonus, which has been in effect since 3 August.

‘Orders were quite good at the start of October, but they deteriorated sharply at the end of the month,’ explained François Roudier, spokesperson for the CCFA. Roudier added that sales revenues are ‘healthier’ than is usual for the end of the year, with more sales to private buyers and less discounted prices meaning ‘margins have held up well.’

In the first 10 months of 2020, new-car registrations in France were 26.9% lower than in the same period in 2019. However, the CCFA reports that demand is 39.1% lower on the basis of a comparable number of working days.

Roudier warned that ‘we must remain cautious about the management of the last months of 2020.’ Between the unpredictable behaviour of consumers in the face of bonuses and penalties, and the ongoing effects of COVID-19, ‘we have a difficult end of the year,’ he concluded.

Pain in Spain

In Spain, 74,228 new cars were registered during October, 21.0% fewer than in October 2019 according to ANFAC, the Spanish vehicle manufacturers’ association. ‘The negative evolution of the pandemic, together with the uncertainty regarding the related social and economic consequences, is causing a generalised fall in sales, which could be even worse without the support plans approved for the sector,’ ANFAC commented.

The MOVES II and RENOVE schemes were introduced in July and the new-car market saw a 1.1% increase in the month. Since then, however, there have been respective monthly declines of 10.1% and 13.5% in August and September, and now 21.0% in October. It is therefore clear that weak underlying consumer demand is the problem in the country. Measures to deal with the second wave of COVID-19 infections, and the calculation of the registration tax based on WLTP emissions figures from January 2021 are further complicating the recovery.

Noemi Navas, communications director of ANFAC, explained that ‘the purchase assistance plans are good tools to achieve stimulation of the market and prevent the falls from being even worse. The crisis situation is going to extend into 2021 and if we do not want the sector and its employment to fall even more, it will be necessary to maintain the support. At ANFAC, we are very concerned about the effect that an increase in the registration tax would have, due to the switch to WLTP, in a market that cannot overcome the COVID-19 crisis.’

‘It is important to make the buyer understand that if they intend to change cars, they should not postpone the decision. From January, there is a risk of a rise in prices as a consequence of the entry into force of the WLTP regulation, which will mean that vehicles that were previously exempt from registration tax will have to pay as the parameters for measuring CO2 emissions change,’ added Tania Puche, communications director of the Spanish dealer association GANVAM.

Italy back in negative territory

In Italy, the year-on-year downturn in October reported by the industry association ANFIA was just 0.2%, although the result would have been positive (up by about 4%) had there not been one less working day. Nevertheless, this does mark a return for the country to negative territory following the 9.5% growth in new-car registrations in September due to the new government incentives that came into effect at the beginning of August as part of the Decreto Rilancio (Relaunch Decree). While the market still contracted in that month, demand improved but delivery times delayed many registrations until September.

‘In this phase, we are engaged in ministerial meetings for the presentation of the proposals of the Italian automotive industry in relation to the recovery plan, an opportunity not to be missed to support the sector in this difficult industrial transition. We are working on the four pillars necessary to guarantee its strategic repositioning and competitive advantage: interventions to support investment in research and innovation; the promotion of smart and shared-mobility projects; interventions on human capital and financial interventions to support businesses. We hope that these lines of action are considered a priority and may have sufficient space in the final plan,’ commented Paolo Scudieri, president of ANFIA.

The key to recovery of new-car markets revolves around countries agreeing budgets for 2021, and improving economic certainty and consumer confidence to boost spending. However, with a second wave of COVID-19 cases washing across Europe, and accompanying lockdowns, the industry certainly does face a difficult end to 2020.

Video: Emissions anxiety for carmakers

Autovista Group Daily Brief editor Phil Curry explains why some carmakers are concerned about rising CO2 levels, and how the industry has got to this point with a strict European target in place…

To get notifications for all the latest videos, 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 autonomous vehicles, new-car registrations, safety systems, and electrification.

Monthly Market Dashboard: RVs rise across Europe, but for how long?

BMW is carrying out a global recall of some of its plug-in hybrids (PHEVs) produced this year, due to battery fire concerns. The carmaker is also suspending delivery of affected vehicles as part of a ‘preventative measure.’

In the first of a new monthly initiative, Autovista Group has created a dashboard showcasing the latest data on residual values, average selling days, the fastest-selling used cars and the residual value outlook in France, Germany, Italy, Spain and the UK. Senior data journalist Neil King discusses the findings.

Autovista Group’s new monthly market dashboard (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 October. Even 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 48%, equating to a 1.9% improvement on September and a healthy 14.9% change compared to October 2019.

Monatsupdate Oktober 2020

As reported in our coverage of the ‘three-speed’ development of RVs across Europe, the UK is enjoying the release of pent-up demand, both from the coronavirus (COVID-19) lockdown and the uncertainty running up to the country’s departure from the European Union on 31 January. The country also faces a starker vehicle-supply challenge than any other market, which is filtering through to higher RVs as used-car demand outstrips supply.

Quicker rehoming

In addition to the growth in RVs in most markets during October, three-year-old cars are also selling quicker than a year ago in all the major European markets, except Spain. Three-year-old cars are selling the quickest in the UK, moving on after an average of just 33 days. However, the greatest reduction in the average number of days for 36-month-old cars to sell, compared to October 2019, was in France. These vehicles now have to wait on average only 37 days to find a new buyer in France, sitting idle for a significant 23% fewer days than in October 2019.

The fastest-selling model in France in October 2020 was the Peugeot 208, which took just 17 days to find a new home. After the Peugeot 208 in France, the fastest-selling models across the major European markets were in the UK. The Range Rover Evoque and the Mercedes-Benz GLC also took less than 20 days to be rehomed in October.

The future’s not so bright

The new MMD also features the latest Autovista Group RV outlook for the major European markets. The current trend for rising RVs is unfortunately not forecast to continue in 2021. Autovista Group predicts that at year-end 2021, compared to year-end 2020, RVs of cars in the 36 month/60,000km scenario will be lower in France, Italy, and the UK and merely stable in Spain. The weakest outlook is for Italy, where RVs are currently forecast to be 3.9% lower by the end of 2021 than at the beginning of the year. RVs are only expected to be higher in Germany, albeit with year-on-year growth of only 0.4% forecast for both 2021 and 2022.

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

UK to adopt EU emissions regulations following Brexit transition period

The UK government has confirmed it will adopt European Union (EU) emissions targets for 2021 and beyond at the end of its Brexit transition period on 31 December 2020.

Following a consultation, the government said that the existing target of 95g/km CO2 emissions averaged across a vehicle fleet would remain, meaning carmakers may continue with their current strategies to ensure they meet the strict regulations. Many are looking to achieve this by selling a greater number of battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs). However, all must now be aware of their performance in two markets, rather than a single one.

Had the UK government decided to go its own way with regards emission targets, there were fears that the supply of BEVs and PHEVs in the country would become limited, as carmakers focused on supplying Europe to meet the needs of a bigger market.

The new UK rules will mirror those in the EU, including an £86 (€95) fine for each g/km above the carmakers’ respective targets multiplied by the number of vehicles registered in the year.

Changing figures

As the UK’s average fleet mass is heavier than that of the EU, the UK government has highlighted that the sum of individual manufacturer targets in the UK will be slightly higher than the sum of targets in the EU.

‘While this may therefore appear to be a slight relaxation of standards, by retaining the average EU mass value, it replicates the same level of effort required by manufacturers as under the current scheme in the EU,’ the government said. ‘This ensures that the regulation is as ambitious as existing arrangements.

‘If the UK average mass value was used to calculate manufacturer targets instead, it would make targets immediately more challenging.’

The UK average mass is updated every three years and will be used in calculations from the next due update onwards.

Future targets

The UK will also adopt EU targets set for 2025 and 2030 for a further reduction in vehicle CO2 emissions, meaning manufacturers will have to reduce output by 15% (based on 2021 levels) in 2025, with a 37.5% reduction in 2030.

European regulations (EU) 2017/1152 and (EU) 2017/1153 establish the correlation procedure to be used during the regulation’s conversion from New European Driving Cycle (NEDC)-derived targets and calculations to Worldwide Harmonised Light-Vehicle Test Procedure (WLTP)-derived targets and calculations.

While the corrections needed to ensure these regulations continue to function in the UK are minor, the EU dataset will be used as a basis for the correlation between NEDC and WLTP, providing further clarity for carmakers.

Super credits

One of the biggest changes in the government’s consultation announcement is the lowering of the CO2 g/km threshold for carmakers to apply for ‘super credits’. The credits can be used against emissions targets, and work as an incentive for manufacturers to sell more zero- and low-emission electric vehicles (ZLEVs) as they will multiply within a fleet. For 2020, one super credit counts as two vehicles, with this dropping to 1.67 in 2021, and 1.33 in 2022.

In the EU, the amount that manufacturers may benefit from the use of super credits is capped at 7.5g/km cumulatively over 2020-2022.

As the new regulations will only take effect from 2021, the UK government has decided to reduce the cap for two years to 3.75g/km. This received a mixed response in the consultation, some arguing that the figure was too high as carmakers may have already used their EU-mandated 7.5g cap, others suggesting it was too low, unfairly affecting those looking to bring more ZLEVs to the market in 2021 and 2022.

‘It is evident via the nature of the responses that this issue is complicated,’ the government said. ‘An increase in the super credits can act as an incentive for car manufacturers to put more ZLEVs on to the market, which is in line with the government’s net-zero and decarbonisation commitments.

‘Equally, the government recognises super credits can artificially lower manufacturer targets, thus providing the opportunity for higher emission vehicles to be sold. There is the possibility that manufacturers will use their EU-allocated 7.5g CO2/km cap in 2020 alone, meaning the 3.75g CO2/km cap available across 2021 and 2022 will be in addition to the super credits offered in the EU regime. Whilst this is possible, due to the timelines for enforcing the regulation, it will not be known until October 2021.’

How has COVID-19 impacted fleets?

The automotive industry has been dominated by a specific number of topics in the last year. From coronavirus (COVID-19) to electromobility and the advance of new technologies. But how have these topics impacted one of the industry’s most important sectors? In a new series, Autovista Group’s Daily Brief journalist, Tom Geggus, speaks with industry insiders to discover how these themes are changing fleets. Up first, COVID-19.

As countries went into lockdown to prevent the spread of coronavirus, the toll on the automotive industry was enormous. Between February and April registrations went into free fall, manufacturing ground to a halt and supply chains froze. Currently, incentive schemes are providing short-term stimulation, but the long-term consequences of the pandemic could be much further reaching, for fleets in particular.

In the beginning

Peter Golding, managing director of fleet management company FleetCheck, explained that early on in the pandemic there was a binary divide between essential service operators and those companies which had to put business on hold.

‘If we look at the impact to essential, they had a significant challenge because there was an expectation that they could increase capacity,’ he said. Some vehicles were seeing an exceptional jump in usage, which meant implementing increased sanitisation practices and policies to protect staff. Some companies even found themselves taking on board furloughed staff to meet demand, which meant training inexperienced drivers how to operate a vehicle that was completely new to them, all in non-ideal conditions.

Meanwhile, companies that found themselves operating out of their employees’ homes were without the integral systems that only functioned in an office environment due to safety restrictions. So the businesses with fleet-management software tied to localised intranets were at a distinct disadvantage to those with a cloud-based system. Meanwhile, those companies needing to pause operations and lay up a fleet were faced with a different conundrum.

‘If we are dealing with the issues of laying up fleet, the uncertainty of the duration of COVID-19 and how long the shutdown was going to last,’ said Golding. ‘Having a vehicle stand down for a month is quite different than having a vehicle stood down for five months.’

As time passes

Formed in March this year, the Association of Fleet Professionals (AFP) serves over 1,000 members in the UK, providing best-practice advice, training and representation. As the number of COVID-19 cases continues to fluctuate, fleets may find themselves facing fresh challenges as more time passes.

‘I think the reality for fleet operators, is that they’re likely to see impacts well into 2021,’ said Paul Hollick, chairman of the AFP. This could include vehicle safety, as cars sit unused and uninspected for long periods of time, particularly if they are not company assets. Both the driver’s physical and mental health also become a cause for concern, whether they are having to risk commuting into the office or if they are becoming more confined to their home.

‘The other big thing, of course, is cost-saving and cost-reduction as everybody starts to tighten their belts,’ Hollick said. Trying to deliver savings at a time of economic fallout has meant reviewing and re-reviewing budgets to reduce the impact on bottom lines.

But as with operation types, not all vehicle types have suffered the same effects at the hands of the pandemic. ‘The van market has just gone crazy because of course, the delivery sector in a COVID-19 world requires a lot more vans on the road to be able to lift goods and services to people’s address rather than to deliver to depots.’

Lars Pappe, vice president of e-mobility design and development at Deutsche Post DHL, considered that even after COVID-19 some trends may persist, particularly in relation to online shopping. ‘So I think the average amount of parcels we ship in B2C-related business, I think it will remain on the high volume level in comparison to before the COVID-19 situation.’

Since parcel volumes are expected to remain on the current high level, for some logistics providers this might mean increasing the number of light commercial vehicles (LCVs) in their fleet, to cope with a greater number of deliveries. Meanwhile, other operators might decide to increase the size of the LCVs they operate, to deal with larger loads. But whether operators are able to acquire additional vehicles, or even refresh their fleet from the currently distressed supply chain is another question.

Uncertain times

‘Many companies have pushed to extend their contracts for various reasons,’ Sjoerd Brenters, head of international consultancy services at LeasePlan explained. ‘Clients might be more careful with leasing new vehicles and instead extend existing contracts given the uncertain times we live in,’ he said.

Upon impact, COVID-19 caused OEM supply chains to come to a standstill as the delivery of vehicles became problematic. However, these issues could be rectified as manufacturing restarted. The longer-term changes look to involve order completion and getting the car to the customer. Considering the impact on used-car sales, for example, Brenters explained how the LeasePlan subsidiary CarNext.com was well-positioned to handle the pandemic. With vehicles being ordered online, delivered directly, and all with little to no human interaction, CarNext.com could easily deliver vehicles in a safe way.

There is even the potential for a short testing period, with the option to return the car after a trial period for a relatively low amount. If this were to be the case, the relationship between those who supply fleet vehicles and those who use them could become far more direct, without the need for human interaction.

However, how these vehicles might be used is another matter. While at the start of the pandemic, cars were parked up, the need for these vehicles was not drawn into doubt. ‘Employees and employers are starting to rethink the usage of the vehicle. This doesn’t mean less usage, it just means different usage.’ said Brenters. ‘A car may be used less for commuting to work, but used more for vacations, for example, especially with people wanting to avoid flying.’

Therefore, the need for higher-end vehicles in which a member of staff spends a lot of time travelling would not decrease, its use would just shift. This will surely also influence the size and type of car which employees choose going forward.

On top of the pile

Operating a benefit fleet for its employees, Microsoft leases roughly 9,200 cars across nearly 50 countries. Managing the company’s vehicles in 10 of these European countries including Germany, Austria and Switzerland is Michael Pohl, senior procurement engagement manager fleet at Microsoft.

In the early stages of the COVID-19 pandemic, Pohl’s team received advice that vehicle orders should go on hold, but this was not the path he chose. ‘I remember saying, if everything is piling up, I want to be on top of the pile. We agreed that we are not going to stop anything. We continue to order cars, as well as possible. Within the limitations of operations in spring of this year,’ he said.

‘The only thing we did was to give the employees more time, because it was not possible for them to do test drives, for example. They need more time to figure out what type of car they want to drive in the future,’ Pohl explained.

Looking back, it is not a decision Pohl regrets for a moment. As production lines became operational, Microsoft orders were fulfilled with a shorter lead time, compared to the companies who decided to go on hold.

Looking forward, Pohl explained that COVID-19 is not the death of the company car, it is in fact far from it. ‘Since COVID, people have realised that having a company car gives you an incredible freedom,’ he said. These vehicles open up the potential for commutes without public transport, holidays without aeroplanes, and freedom without compromise.’

Right strategy for tomorrow

The coronavirus crisis has taken so much. It has taken lives and it has taken livelihoods. But it did provide one thing; time. As automotive production paused, distribution dried up and sales stopped, Alain Duez and Wim Buzzi used their time in lockdown to found a new company; let it fleet.

Drawing on their combined 45 years’ worth of experience in the automotive industry, the pair built the company on the pillars of people, procurement and process. Driven by a desire to approach vehicle supply from a customer perspective, let it fleet aims to create customised support that addresses every element of fleet management. This covers a wide gambit from policy assessment, to contract management and recruitment support.

As Duez and Buzzi established their new venture amid the pandemic, others in the automotive and fleet industry also had time to reflect. ‘Coronavirus right now has meant that a lot of companies have time,’ explained Buzzi. ‘They had frozen their car orders or extended their contracts because nobody is driving. And it gave them time to look at things.’

COVID-19 has meant the restructuring of fleet strategies. At present, liquidity remains at the top of the agenda while leasing costs mount. New-car sales have plummeted while lead times increase and manufacturers wrestle with their supply chains. Looking down the road, the company car faces a new world with the likes of more home-based working and the tightening of purse strings.

‘So, the way we will use a car will be totally different in the next few months, maybe even in the next few years. There are a lot of things that will be changing around,’ Duez said. ‘So, I think that we need to anticipate as much as possible for clients, to put in place the right strategy for tomorrow,’ he added.

COVID-19 has acted as a sudden catalyst for change when it comes to fleets. How vehicles are sourced, managed and operated. But the immediacy of the pandemic’s impact has acted as a trojan horse for a change that looks to tectonic. The age of electromobility has arrived, and the automotive industry is plugging in.

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…

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…

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.

Japanese carmakers look for UK government compensation on no-deal Brexit

With just over 12 weeks until the UK’s transition period with the European Union (EU) ends, and no trade deal yet agreed, carmakers with British-based plants are starting to worry about the possibility of tariffs on their imported and exported parts and vehicles. In particular, Japanese manufacturers Toyota and Nissan are demanding that the UK government cover any additional tariffs should a free-trade agreement with the EU fail to materialise, according to Nikkei.

Without a deal, a 10% tariff would be added to any parts imported and exported to and from the UK. With thousands of parts crossing the border as carmakers rely on ‘just in time’ deliveries, plus a high number of vehicles exported from British plants to European markets, the imposition of tariffs would dramatically impact the profits of those building automotive-related products in the country.

According to the UK Society of Motor Manufacturers and Traders (SMMT), around 1.3 million passenger cars were built in the UK during 2019, 1.05 million of which were exported, with 55% of these going to the EU. In addition, 88.6% of the 2.3 million passenger cars sold in the UK during 2019 were imported, with 78.1% of these coming from the EU.

In 2018, the SMMT claimed that import tariffs would push up the cost of UK-built cars sold in the EU by an average £2,700 (€3,000) and that of light commercial vehicles by £2,000, impacting demand, profitability and jobs. UK buyers of EU cars or vans would also face additional costs – an average of £1,500 per car, £1,700 per van – if manufacturers or dealers were unable to absorb the costs.

Less competitive

Nikkei reports that Nissan and Toyota’s profit margins are expected to be in a ‘narrow range of several percent.’ Therefore, it would be impossible for the manufacturers to absorb the cost of tariffs, and would likely have to increase prices of vehicles as a result. Should this happen, the carmakers would become less competitive in the EU market, making it difficult to continue doing business in the UK. Nikkei also reports that Nissan and Toyota executives acknowledge they are demanding that the UK cover an increase in tariffs.

Volkswagen has warned that it would be unable to absorb any tariffs placed on vehicle imports. The carmaker has no manufacturing presence in the UK. As the country’s second-largest brand by market share (according to SMMT figures), it is possible the company will look to stockpile vehicles in the country before the end of the transition period.

No guarantees

The Japanese carmakers may be unable to avoid tariffs, even if a trade deal is struck, as the EU is refusing to mark Japanese and Turkish-built car parts as ‘British-made’. This will alter the balance of components in a vehicle towards the ‘non-UK’ threshold that would impose tariffs on exports from the country to the EU, even if a free-trade agreement is reached.

Manufacturers with plants based in the UK will need to prove that exported goods are actually British-made, with a specified threshold of British parts, expected to be around 50%. Under the terms of any anticipated deal with the EU, components from countries in the bloc will count as British, a move known as ‘cumulation’.

This move could see Toyota and Nissan look to pull some production back to Japan, as has already occurred with the Nissan X-Trail. The fact that the UK has negotiated a free-trade agreement with Japan would make this process easier, as vehicles can then be imported to the country tariff-free.

UK Prime Minister Boris Johnson has said that going into next year ‘without a deal’ is acceptable if the UK and the EU cannot agree on one by the time of an EU summit on 15 October.

‘We remain committed to working with the automotive industry to try to ensure an outcome that reflects business interests across the UK,’ a government spokesperson told Nikkei. ‘A negotiated outcome remains our clear preference. We have put forward our proposals and are working hard to reach a deal with the EU. Our aim is a zero tariff, zero quota-free trade agreement, as avoiding tariffs is beneficial to both sides.’

Coming Soon: The Autovista Group survey on Brexit exploring your views on its impact on trade and business. Sign up to the Autovista Group Daily Brief for notifications.

German new-car registrations rise by 8.4% in September

New-car registrations increased in Germany by 8.4% last month, compared to September 2019. A total of 265,227 passenger vehicles were registered according to the latest figures published by the automotive authority Kraftfahrt-Bundesamt (KBA).

This marks the first month of growth for Germany this year. So far, the country has recorded double-declines almost every month in 2020, reaching of its biggest decline of minus 60% in April as the coronavirus (COVID-19) pandemic froze the automotive market.

New-car registrations, Germany, year-on-year percentage change, January to September 2020

Pkw-Neuzulassungen, Deutschland, Veränderung gegenüber dem Vorjahr in Prozent, Januar bis September 2020

Source: KBA

Powered by electric incentives

In some cases, alternative drivetrains underwent three-digit increases compared to the same month last year, no doubt buoyed by incentives. 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.

A total of 21,188 battery-electric vehicles (BEVs) were registered, up 260.3% compared to September 2019, capturing a market share of 8%. With 20.4% of the market, 54,036 hybrids were registered, up 185.2%, including 20,127 plug-ins (PHEVs), with a share of 7.6%, up 463.5%. LPG experienced an increase of 176.1% with 809 vehicles and a 0.3% market share. A total of 606 natural-gas vehicles was registered, up 17.9% with a share of 0.2%. 

Meanwhile, not benefitting from any incentives, cars powered with internal combustion engines (ICE) saw double-digit drops. Petrol fell by 17.6%, with 120,645 new cars registered and 45.5% of the market. A total of 67,901 new cars were powered by diesel, decreasing 6.4%, and a 25.6% market share. The average CO2 emissions fell by 13.4% in September at 134.3g/km.

With a share of 21.2%, most of the new vehicles were allocated to the SUV segment, up 9.7%. After an increase of 5.7 %, the compact class achieved a share of 21%. Small cars held a share of 16.8%, up 28.9%. However, not all segments faired so well. Mini vans fell by 46.8% to a 1.3% market share, sports cars to 1.0%, down 12.1%, and minis down 2.8% to 6.0%.

Brand performance

Audi recorded a double-digit increase in new registrations at 42.2%. Other German brands like Mini (4.7%), BMW and Mercedes (1.9% each) and VW (1.6%), showed single-digit increases. Meanwhile, Smart suffered one of the worst declines in registrations at -41.2%, followed by Opel (-27.6%), Porsche (-19.7%) and Ford (-0.8%). The VW brand claimed the largest share of new registrations at 15.2%.

As for imported brands, Tesla (82.7%), Seat (71.1%), Subaru (70.4%), Alfa Romeo (59.5%) and Renault (58.4%) all experienced increases of more than 50%. In contrast, DS (-41.5%), Ssangyong (-29.0%) and Mazda (-24.7%) all saw double-digit declines. Recording a 29.6% increase in registrations, Skoda claimed 6.8% of the market share.

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.

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?