Fuel Type: Plug-In Hybrid (PHEV)

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.

UK needs to commit more to BEV infrastructure to meet 2035 target

As the UK looks to ban the sale of petrol, diesel and some hybrid powertrains by 2035, a new survey has highlighted the key issues consumers identify as putting them off purchasing battery-electric vehicles (BEVs). This is leading to calls for incentives and targets from the government to ensure the switch can be made seamlessly.

The survey, conducted by Savanta Comres on behalf of the Society of Motor Manufacturers and Traders (SMMT) suggests almost half of UK motorists don’t feel ready to buy a BEV. This, the body says, means the government should commit to ‘significant long-term incentives for purchases and binding charges on charging infrastructure.’

Electric vehicles (EVs), including BEVs and plug-in hybrids (PHEVs), are rapidly growing in popularity, with demand more than doubling over the last year thanks to massive industry investment worth some £54 billion (€59.4 billion) in 2019 alone. Over the last 12 months, the number of PHEV and BEV models available to buy in the UK has leapt from 62 to 83, with more scheduled for launch in the coming months.

There is interest from consumers in EV technology, with drivers attracted to lower running costs (41%), while interest in improving the environment only accounts for 29% of responses. However, while these cars now accounting for one in six models on sale (17%), they make up just one in 13 purchases (8%).

Issues found

The survey found the biggest factors holding buyers back are higher purchase prices (52%), lack of local charging points (44%) and fear of being caught short on longer journeys (38%). Encouragingly, a third (37%) are optimistic about buying a BEV by 2025, 44% don’t think they will be ready by 2035, with 24% saying that they cannot ever see themselves owning one.

However, the SMMT believes that the main barriers, those of cost and charging infrastructure, can be overcome with the right strategy. It is calling for a long-term commitment to incentives, including the continuation of the Plug-In Grant, which sees £3,000 taken off the price of a BEV, and the reintroduction of the grant for PHEVs, a technology which acts as a bridge for those who want a low-emission vehicle but still want the reassurance of an internal combustion engine (ICE). This grant was cancelled in 2019.

‘This commitment, alongside VAT exemptions for all zero-emission capable cars, would reduce the upfront price of a family car by an average £5,500 for battery-electric cars and £4,750 for plug-in hybrids, and for an SUV by £9,750 and £8,000 respectively – vital given the high cost of producing this advanced new technology,’ the SMMT stated. ‘This would bring them more in line with petrol and diesel equivalents and potentially drive some 2.4 million sales over the next five years, with an estimated 28% market share by 2025 compared with 8% today.’

Increased charge

Extensive analysis by the SMMT, alongside Frost and Sullivan also shows that a full, zero emission-capable UK new car market will require 1.7 million public charge points by the end of the decade and 2.8 million by 2035. Given there are only some 19,314 on-street charge points available in the UK at present, the task is massive, needing 507 on-street chargers to be installed per day until 2035, at a cost of £16.7 billion.

‘Carmakers are leading the charge to zero-emission motoring, with massive investment in new models fuelling huge consumer interest but they can’t transform the market alone,’ commented SMMT chief executive Mike Hawes. ‘To give consumers the confidence to take the leap into these technologies, we need government and other sectors to step up and match manufacturers’ commitment by investing in the incentives and infrastructure needed to power our electric future.

‘Manufacturers are working hard to make zero and ultra-low emissions the norm and are committed to working with the government to accelerate the shift to net zero – but obstacles remain. Until these vehicles are as affordable to buy and as easy to own and operate as conventional cars, we risk the UK being in the slow lane, undermining industry investment and holding back progress.’

The UK government has already taken steps to support the emerging EV market. Purchase grants worth more than £1.7 billion have been paid out or budgets earmarked from 2011 to 2023, alongside £500 million committed to the Project Rapid motorway charging

Editor comment

Autovista Group Daily Brief editor Phil Curry recently spent two weeks testing an MG ZS EV to experience the differences of living with a BEV in the UK.

Switching from ICE to a BEV is a big step, and currently requires a lot of planning, not just from a financial aspect, but also logistically. Consumers will need to look at the range of a vehicle and work out how often they will need to charge it. This is easier for those who use their car purely for local journeys, but those covering long distances will need to factor in charging times and charge point availability.

Having lived with a BEV for two weeks, while the technology was good, the MG ZS EV having a range of 160 miles was enough for everyday use but needed planning for longer trips. With no access to a charging point at home and no opportunity to plug in to a domestic socket, I relied on local infrastructure. However, in my local area, there is only one rapid charger, and five slower units, two of which are not currently operational.

On a longer journey, I relied on the current UK motorway charging network. However, having driven as far as I dare, I came across a service station with faulty charge points. The only option was to travel into a nearby town and use the only charge point available, a slow 7Kw unit, that took almost three hours to provide enough charge to get me most of the way home, missing my appointment.

Therefore, I can appreciate the SMMT’s calls for charge point targets. The UK’s infrastructure is only going to improve, but the number of charging points, especially on-street locations, needs to increase quickly if the government is to make it easy to switch in time for the 2035 target. With the country’s housing mix including a large number of flats, and homes without off-street parking, there will be a lot of reliance on a public network. As seen in the SMMT survey, consumers do not have confidence in what is available at present.

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

Used-car transactions grow across Europe in July

The latest data from the respective associations in the major continental European markets reveal that the volume of used-car transactions grew in July 2020 compared to the same month last year. Autovista Group senior data journalist Neil King considers this return to growth across Europe’s used-car markets as the sector tentatively recovers from the coronavirus (COVID-19) crisis.

Used-car sales increased by 13% year-on-year in both France and Germany in July, and were up 9% in Italy and 6% in Spain. Through to July, Germany is the only major European used-car market that has not suffered a double-digit decline, with a comparatively modest contraction of 8%.

Used-car data is not yet available for the UK for July but is expected to follow the growth trend, especially given the 11% surge in new-car registrations in the country’s first full month of trading since February. This is even without increased buying incentives, which have been introduced in France, Germany, Italy and Spain.

Used-car transactions, year-on-year percentage change, July and year-to-date 2020

Used-car transactions, year-on-year percentage change, July and year-to-date 2020

Sources: CCFA, KBA, ANFIA, GANVAM/IEA

Outperforming new-car registrations

Prior to the positive results last month, the volume of used-car transactions declined in the first half of 2020 compared to H1 2019 in all five major European markets. However, the downturns in the first half of 2020 were not as dramatic as the contractions in new-car registrations.

Used-car transactions and new-car registrations, year-on-year percentage change, H1 2020

Gebrauchtwagen-Transaktionen und Neuzulassungen, Veränderung gegenüber dem Vorjahr in Prozent, H1 2020

Sources: CCFA, KBA, ANFIA, ANFAC, GANVAM/IEA, SMMT

In the UK, the used-car market contracted by 28.7% in the first half of 2020, according to the latest figures released by the Society of Motor Manufacturers and Traders (SMMT) on 11 August. Following a comparatively modest decline of 8.3% in the first quarter of 2020 as the COVID-19 lockdown from March negated growth in January and February, there were only 1,039,303 changes of ownership in the second quarter, equating to a 48.9% slump in the second quarter. However, ‘the pace of decline eased as the quarter progressed, from a peak year-on-year loss of 74.2% in April to 17.5% in June, as private sellers and buyers got back on the move and transactions began to restart,’ the SMMT stated.

‘As devastating as these figures are, with full lockdown measures in place for the whole of April and May, they are not surprising. As the UK starts to get back on the move again and dealerships continue to re-open, we expect to see more activity return to the market, particularly as many people see cars as a safe and reliable way to travel during the pandemic. However, if we’re to re-energise sales and the fleet renewal needed to drive environmental gains, support will be needed for the broader economy in order to bolster business and consumer confidence,’ commented Mike Hawes, SMMT chief executive.

Continental transactions

There were similar contractions of the used-car market in Spain and Italy. Spain suffered the most, with 31.7% fewer changes of ownership in the first half of 2020 than a year earlier, but new-car registrations declined by more than 50%. There was a phased approach to relaxing the lockdown measures in Spain, which largely explains why both the new- and used-car markets were still weak, even in June. However, dealers can now fully reopen, and the introduction of the MOVES II incentive scheme for new battery-electric vehicles (BEVs) and plug-in electric hybrids (PHEVs) and the RENOVE scrappage scheme have stimulated the Spanish market since their introduction in early July.

Used-car demand fell 31.6% year-on-year in Italy in the first half of 2020, compared to a 46.1% contraction of the new-car market. However, many buyers of both new and used cars decided to hold off until government incentives came into effect at the beginning of August as part of the Decreto Rilancio (Relaunch Decree). This new scheme comes on top of the Ecobonus scheme, which incentivises cars producing less than 20g of CO2/km.

Electric and hybrid cars can now benefit from up to €10,000 in subsidies when scrapping an older vehicle. €3,500 is now provided for scrapping vehicles that are at least 10 years old when buying a new Euro 6 vehicle with CO2 emissions up to 110g/km, and a price of up to €40,000. Dealers will put forward €2,000 towards the incentive, while the state provides €1,500. Without trading in an older model, the funds drop to €1,750.

In France, the 17.4% decline in used-car sales in the first half of 2020 was a significantly better performance than the 38.6% fall in new-car registrations. Whereas the incentives introduced on 1 June for new BEVs and PHEVs remain, 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, but the Ministry of Ecological Transition announced it would be replacing the recovery scheme with a conversion bonus, applicable from 3 August.

Germany has weathered the COVID-19 storm better than the other major European markets, with only 11.4% fewer changes of ownership in the first half of 2020 compared to the same period last year. New-car registrations have also suffered less than in the other major markets, but were still down 34.5% in the first half, and have therefore been outperformed by used-car demand here too.

Residual-value resilience

As used-car markets have proven more resilient than new-car markets, the impact on residual values (RVs) has been rather marginal in European markets so far this year. Nevertheless, a ‘three-speed’ development of residual values (RVs) is emerging. The UK and France are benefitting from pent-up demand and some markets have had a rapid reaction to the impact of COVID-19, but most are ‘late starters’ with limited value movements thus far.

Autovista Group - Restwert-Intelligence Coronavirus-Tracker

Source: Autovista Group – Residual Value Intelligence Coronavirus Tracker

As COVID-19 lockdowns are left behind, thoughts turn to economic recovery. However, as the latest update to the Autovista Group whitepaper ‘How will COVID-19 shape used car markets’ explains, in the last month, the situation has taken a gloomier turn. Download your copy here.

Podcast: Running the numbers on incentives, registrations and residual values

The Autovista Group Daily Brief Team discusses the biggest automotive news stories of the last fortnight. In this episode, Tom Geggus talks incentive schemes, Neil King reviews registration figures and returning special guest Christof Engelskirchen wraps up residual values.

https://soundcloud.com/autovistagroup/running-the-numbers-on-incentives-registrations-and-residual-values

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

Carmakers’ financial performance highlights COVID-19 crisis – Part 2

Daily Brief editor Phil Curry looks at carmakers’ 2020 quarterly and first-half financial performance, exploring how the coronavirus (COVID-19) pandemic has affected the automotive industry. In this second part, Curry explores the impact of COVID-19 on the financial performance of BMW, Daimler and Toyota.

The BMW Group delivered 962,575 BMW, Mini and Rolls-Royce premium-brand vehicles to customers worldwide in the first six months of 2020, down 23% compared to the first half of 2019. Group revenues fell 10.3% to €43.2 billion. Earnings before interest and tax (EBIT) for the six-month period amounted to €709 million, down 74.6%. 

As BMW expected, the negative impact of the COVID-19 pandemic was felt more sharply in the period from April to June. The carmaker reported a loss of €666 million in Q2, its first quarterly loss since 2009.

‘Our swift responsiveness and consistent management strategy enabled us to limit the impact of the corona pandemic on the BMW Group during the first half of the year,’ said Oliver Zipse, BMW chairman. ‘We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0% and 3% for the automotive segment in 2020. We are monitoring the situation very closely and managing production capacities in line with market developments and regional fluctuations in customer demand.’

Daimler – a challenging quarter

Daimler has issued a number of profit warnings in recent years, as it has struggled with EV development budgets, falling sales and the implementation of the Worldwide Harmonised Light-vehicle Test Procedure (WLTP). The COVID-19 pandemic has therefore added another layer to an already complicated situation.

The German carmaker reported that revenue slipped ‘significantly’ by 29% to €30.2 billion in Q2 2020. It reported a loss before interest and tax of -€1.7 billion, with a net loss of €1.9 billion.

‘Due to the unprecedented COVID-19 pandemic, we had to endure a challenging quarter,’ said Ola Källenius, chairman of Daimler. ‘But our net industrial liquidity is a testament to effective cost control and cash management, which we must continue to enforce. We are now seeing the first signs of a sales recovery – especially at Mercedes-Benz passenger cars, where we are experiencing strong demand for our top end models and our electrified vehicles. Going forward, we are firmly determined to continue to improve the cost base of our company. At the same time, we are committed to our key strategic objectives: to lead in electrification and digitalisation.’

Daimler countered the drop in demand by quickly suspending production in March, April and May, as well as introducing short-time working. To safeguard the company’s financial strength, expenditure and investments were focused on the most critical future projects. The company currently expects to return to profit by the end of the year.

Toyota turns a profit

Unlike Nissan, and other Japanese carmakers, Toyota reported a profit, albeit significantly reduced, in its 2021 financial year Q1 results, covering the period from 1 April to 30 June. The carmaker’s operating profits plunged by 98% compared to the same period last year, coming in at ¥13.9 billion (€110 million).

Net income tumbled 74% to ¥158.8 billion, as total retail vehicle sales, including those from Daihatsu and Hino, fell by 32%.

Toyota attributed its profit to a number of key elements that played out in the three months. First, the effects of foreign exchange rates decreased operating income by ¥75 billion. Secondly, cost-reduction efforts increased operating income by ¥10 billion. Lastly, the effects of marketing activities decreased operating income by ¥810 billion yen, largely due to the fall in sales volume caused by the spread of COVID-19.

The carmaker has not revised its forecasts for the year, which were made in May 2020, as it operates an April to March financial year. Therefore, it was able to take the COVID-19 effect into account when planning its year ahead. The company expects operating income will fall 79% to ¥500 billion in 2020/2021 while net income will slide 64% to ¥730 billion.

‘While we expect an increase in consolidated vehicle sales, we have left those forecasts unchanged given, for example, the possibility that the business environment will change significantly depending on such factors as the future spread of COVID-19 and the state of its containment,’ the company said.

Cautious optimism

Throughout the recent spate of financial results, one thing is clear. No company is currently able to accurately forecast its full-year results. Some have tried, with caveats added in case things change drastically, while others have simply said they are not in a position to produce forecasts in what is a volatile market.

However, there is cautious optimism, and as countries around the world start to get a grip on how to handle the COVID-19 pandemic, it is hoped that the extreme measures taken in March and April will not be repeated. What could cause further issues for the automotive industry is the economic impact, which has pushed some countries into recession and is increasing unemployment. These two factors that do not bode well for the purchase of new vehicles.

Read part one of Curry’s financial results round-up here. 

Carmakers’ financial performance highlights crisis behind COVID-19

Daily Brief editor Phil Curry looks at carmakers’ 2020 quarterly and first-half financial performance, and how the coronavirus (COVID-19) pandemic has affected the automotive industry. In this first part of two, Curry considers VW Group, Nissan, Renault and Ford.

Europe’s economy is in a state of flux in the wake of COVID-19 lockdowns, with Italy leading the way in extreme measures put in place to prevent the spread of the virus.

Some carmakers have weathered the storm better than others, and many remain optimistic that the impact is merely a ‘blip’ in their financial results, with improvements already developing.

VW – one of the most challenging periods

In its H1 2020 results, Volkswagen Group (VW) reported an operating loss of €803 million (before special items). This expanded to an overall loss in the first half of 2020 to almost €1.5 billion when special items are included. Vehicle sales were down 30% compared to the first half of 2019, while production fell 32.5%. Group sales revenue decreased by 23.2% to €96.1 billion.

Frank Witter, member of the group board of management responsible for finance and IT, said: ‘The first half of 2020 was one of the most challenging in the history of our company due to the COVID-19 pandemic. The health of our employees, customers and business partners is still the top priority. With our 100-points plan to ensure maximum health protection, we have, for example, created the best possible prerequisites for a safe working environment. At the same time, we introduced comprehensive measures aimed at reducing costs and securing liquidity early on, which enabled us to limit the impact of the pandemic on our business to a certain degree.

‘Thanks to the great team effort, we have gradually been able to ramp up operations within the Group and up until now, have steadily managed to navigate through this unprecedented crisis. Due to the positive trend exhibited in our business over the past few weeks and the introduction of numerous attractive models, we look cautiously optimistic to the second half of the year.’

Nissan – major losses

For the April to June period, consolidated net revenue at Nissan was ¥1.1742 trillion. The operating loss was ¥153.9 billion, equivalent to an operating margin of -13.1%. The net loss was ¥285.6 billion.

In its first quarter, Nissan’s global automotive sales fell by almost half amid the pandemic. To limit the spread of COVID-19, the company suspended production at manufacturing sites around the world. Nissan’s plants have since resumed operations but face reduced utilisation of their capacity due to lower demand. The company’s performance continues to be impacted by the challenging business climate, it said in a release.

Nissan raised concerns about its financial performance in April, saying that its full-year consolidated earnings ‘may differ by more than 30% from the previous financial forecast’ that was made in February. It is expecting an operating loss of ¥470 billion (€3.7 billion) for the year to March 2021.

Renault – impacted by Nissan

French carmaker Renault Group announced a €7.4 billion net loss in the first half of 2020, with the carmaker highlighting the negative impact of alliance partner Nissan’s results.

The contribution of associated companies came to -€4.8 billion, compared with -€35 million in the first half of 2019. ‘This decline came mostly from Nissan’s contribution, down €4.796 billion including -€4.3 billion of impairments and restructuring costs,’ the carmaker said.

Global sales dropped by 34.9%. However, the company stated it had a ‘high-level order book’ at 30 June, and sales of its Zoe electric model were up by 50%, highlighting the appeal of the technology. It is also likely that the generous incentive scheme in France helped the carmaker to increase sales in the period from 1 June.

No reliable guidance

However, Renault is unsure of how it will perform in the rest of 2020. ‘Given the uncertainties around the health situation, both in Europe and in emerging markets, Groupe Renault estimates that it is not in a position to give a reliable guidance for the full year,’ it stated.

Luca de Meo, CEO of Renault, declared: ‘Although the situation is unprecedented, it is not final. Together with all of the Group’s management teams and employees, we are fully dedicated to correcting the situation through a strict discipline that will go beyond reducing our fixed costs. Preparing for the future also means building our development strategy, and we are actively working on this. I have every confidence in the Group’s ability to recover.’

Ford quarter supported by Argo AI

Ford benefited from an investment made in its autonomous subsidiary Argo AI by VW Group, as part of a collaboration deal on driverless and electric-vehicle technology. Without the investment, Ford reported a loss for the second quarter of -$1.9 billion. Including the investment, the firm reported a second-quarter profit of $1.1 billion, up by $1 billion on the similar period in 2019.

Its H1 results reflect the wider picture of the coronavirus impact with six-month losses. For the first half of 2020, the company reported a loss of $900 million – a negative impact of $2.2 billion compared with the same period in 2019. Global sales fell 37% compared to the first six months of 2019.

Ford directed much of its capabilities and resolve in the second quarter to understanding and helping to meet the coronavirus-related needs of customers, dealers, suppliers, healthcare professionals and first responders, and patients and communities. Initiatives like enhanced and new online services, and deferred financing payments on new vehicles in the US, benefitted customers and Ford as commerce stalled, then began to recover. However, with the US yet to emerge from its first wave of coronavirus infections, let alone face a second wave, Ford’s global business may yet be facing deeper challenges in the second half of 2020.

In a follow-up article to be published tomorrow (14 August), Daily Brief editor Phil Curry explores the impact of COVID-19 on the financial performance of BMW, Daimler and Toyota.

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

As coronavirus (COVID-19) lockdowns are left behind, thoughts turn to economic recovery. However, as the latest update to the Autovista Group whitepaper ‘How will COVID-19 shape used car markets’ explains, in the last month, the situation has taken a gloomier turn.

Since the production of the previous report, the view of the crisis and its economic impact has darkened. Forecasts have been declining since the pandemic struck Europe, but they seem to not have fully bottomed out, yet.

In our July update of this whitepaper, 10 out of 18 markets assigned the highest risk to scenario three, ‘medium risk: slow u-shaped recovery.’ In this August update, 12 out of 18 markets have moved into this scenario.

Residual value impact

The whitepaper also highlights the impact on residual values (RVs) depending on the most probable scenario and country-specific circumstances.

The majority of countries assign a higher probability to the medium risk scenario 3, which describes a drop in RVs that is more substantial and drags on longer than scenario 2 countries. Towards the end of 2022, used cars will – on average – still trade around 3% lower than in March 2020. But there are substantial country differences in this scenario cluster.

Looking at the data presented, it becomes apparent that Southern Europe may be impacted worst, and will also suffer the longest. The Nordic region has received the most extensive adjustments in this whitepaper update. In Sweden and Finland, there are no government incentives directly supporting the automotive industry.

Three-speed RVs

Autovista Group has developed a COVID-19 tracker, which follows recent RV developments in 12 European markets. The indexed tracker starts in February, with a value of 100. In the UK and France, the tracker shows that the index of RVs has risen since mid-May and peaked at 103.7 (a 3.7% rise) in the UK and 101.8 (a 1.8% rise) in France in the week to 2 August.

Autovista Group anticipates a slowdown in the RV development in France and our latest residual-value 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. Nevertheless, this is the most resilient expectation for all the European markets, according to the whitepaper.

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

A golden age for used-car markets?

As the automotive industry starts its recovery following the coronavirus (COVID-19) lockdowns, there is a notion of unexpected recovery visible in some markets. Is this pointing towards a golden age for used-car markets? Christof Engelskirchen, Autovista Group’s chief economist, talks with Anne Lange, head of data science, and Markus Halonen, head of research, statistics & data analysis at Autovista Group, about signs of recovery and the root causes for different market reactions in the used-car market at this time.

Christof: Are we in a phase of the market, where the trends that we see can already be safely interpreted or is it is more affected by external events? I am referring to the massive incentive scheme in France, also for used-car buying, which has pushed RVs up. I am also referring to the weak-British-pound- and supply-shortage-induced lack of new and used cars on the market that meets pent-up demand and lifts prices?

Anne: There are certainly some anomalies affecting current used-car price trends. For example, the French incentive scheme, that subsidises used-car buying and drives RVs up and the UK’s shortage of supply of new and used cars, that also drives RVs up.

There is one emerging trend that may last longer: people may exhibit a financial cautiousness and rather turn to a used-car than a new-car. The lack of available new cars further compounds this. In addition, those that used to rely on public transport may opt for some budget alternatives, thus driving up demand for older used-cars.

Markus: The reason for the decreasing active stock (number of active adverts) is simply that dealers are selling more cars than they are buying in. For example, in Finland and Sweden, the used-car selling volume has been at a high level lately. In June this year, used-car retail sales volumes were higher than in June 2019. High sales but lower than normal inflow of used cars keeps the stock falling. We have some anomalies, like the French used-car incentive scheme, pushing RVs up. Still, even in those countries where schemes are different or non-existent, there are commonalities: used-car sales volume is at a good level, stock is decreasing and prices are increasing. On top of what Anne said, a reason for the currently good demand for used cars is that people are spending less money on vacation and spent less during the lockdown. Patterns of consumption have changed, at least temporarily. Used-car markets are seeing the benefits.

Christof: People ask you many questions around our methodology for publishing used-car price development. How sensitive is our methodology to outliers? How do we control for irregular market conditions? What is the lag in our published values, i.e. how quickly are we capturing trends that may emerge?

Markus: Our methodology is based on market observation data that we source from various portals all across Europe on a daily basis. We control for outliers, data errors and non-actively managed cars. This works reliably.

I am not sure what the background is on the question of controlling irregular market conditions. Irregular market conditions like the COVID-19 pandemic affect used-car prices and that is what we are capturing with our data models. For measurement accuracy, we have implemented rolling values, where past days’ trends are captured as well as the current day’s realities. We put more weight on recent values in the statistical models. There is only a very small lag in how fast we see emerging trends, much smaller than for any economic modelling.

The full interview can be read here. In it, Lange and Halonen discuss the trends emerging for old and young used-cars across Europe, and whether dealer activity has picked up following COVID-19 lockdowns. Their answers are backed up by data showing the emerging patterns of used-car prices and stock levels in the market.

Autovista Group Insights: Improving safety in vehicles

With the safety systems for both vehicle occupants and pedestrians improving, Autovista Group’s Daily Brief team looks at the technology being introduced to help towards Europe’s vision of zero road fatalities by 2050. This includes developments in autonomous technology alongside advanced vehicle systems, and improved crash structures…

You can view more video content from the Daily Brief team on our dedicated YouTube channel. Click here and subscribe to be notified of new content when it becomes available.

German new-car registrations fell 5.4% in July and Spain

German new-car registrations dropped by 5.4% in July, compared with the same month in 2019. A total of 314,938 new cars were registered, according to the latest figures from the automotive authority Kraftfahrt-Bundesamt (KBA).

This is the greatest performance of the German market since the coronavirus (COVID-19) pandemic put sales on lockdown. The government announced a COVID-19 economic recovery package at the start of June. It looks to boost the sales of low- and zero-emission cars while investing in green transport infrastructure. Conversely, petrol- and diesel-powered vehicles did not feature in the package. Incentives were extended since 1 July, supporting registrations.

The country endured declines of 32.2% in June, 49.5% in May and 61.1% in April. However, Germany now lags behind France, Spain and the UK, which saw 3.9%, 1.1%, and 11.3% year-on-year rises respectively in July. Overall, the number of private registrations in Germany rose last month by 7.1% to a share of 41%.

How brands fared

There was a mixed performance among German brands. Double-digit growth was recorded for the likes of Mini at 35.7%, followed by BMW with 17.4%, and Mercedes at 10.7%. Porsche saw single-digit growth of 2.4%. For other brands, however, there were significant decreases in new-car registrations compared with the same month last year. Smart was down 51.6%, Opel dropped by 45.2%, Ford by 22.5%, Audi by 20.8% and VW by 3.3%. At 19%, the VW brand accounted for the largest brand share of new registrations.

Among the imported brands, increases were recorded among Subaru, up 63.9%, Jeep, up 42.2%, and Mitsubishi, up 33.4%. In contrast, declines were recorded for Tesla at 66.6%, Land Rover 39.9%, Jaguar 38.9%, Alfa Romeo 33.6% and Dacia 32.1%. With a new-car registration share of 7% (up 8.3%), Skoda was once again the largest import brand in the monthly balance.

How types fared

Year-on-year registration increases were recorded for motorhomes (94.7%), small cars (9.5%), SUVs (3.1%) and the luxury class (2.7%). The remaining segments recorded declines. Compact MPVs dropped by 49.5%, full-size MPVs were down 39.8%. The segment with the highest share was SUVs with 21.8%, closely followed by the compact class with 21.1%.

Registrations of petrol-powered vehicles fell by 20.3%, with a share of 49% at 154,352 new vehicles. Some 89,543 cars were equipped with diesel-powered engines. After a decline of 18.6%, their market share was 28.4%.

Compared with July 2019, alternative drivetrains showed growth, in some cases in the three-digit range. The number of electric vehicles (EVs) grew by 181.7% to 16,798 new vehicles, bringing their new-car registration share to 5.3%. A total of 52,488 hybrids generated growth of 143.5%, equalling a share of 16.7%. This included 19,119 plug-in hybrids (PHEV), up 484.7% with a share of 6.1%. With 933 new cars and a registration increase of 13.8%, natural gas-powered vehicles achieved a share of 0.3%. By contrast, 784 liquid gas-powered passenger cars recorded a decline of 4.2% with a share of 0.2%. Average CO2 emissions fell by 8.7% to 144.5 g/km.

Business expectations rise

These latest figures support a rise in business expectations by German automotive companies, as revealed by the Ifo Institute’s latest survey. Outlooks improved considerably for the second consecutive month in July, with carmakers also expecting exports to grow. Demand expectations also strengthened somewhat compared to the previous month, alongside production outlook.

However, the institute’s business situation indicator remained negative in July. ‘Headcount developments remain worrying,’ said Klaus Wohlrabe, head of surveys at Ifo. Outlook on personnel planning rose weakly but remained worse than during the 2009 financial crisis.

Incentives generate growth in July new-car registrations in France and Spain

The automotive trade associations in France and Spain report that new-car registrations grew by 3.9% and 1.1% year-on-year respectively in July. Both markets are being stimulated by government-backed incentives, although the scrappage scheme for older cars has already been exhausted in France. Autovista Group senior data journalist Neil King discusses the latest developments.

As Europe continues its emergence from coronavirus (COVID-19) lockdowns, Autovista Group expected that new-car registration figures would continue to improve in July. Thanks to incentive schemes offered by their respective governments to help the automotive market in the wake of the disruption, both France and Spain even recorded positive growth compared to the same month last year.

New-car registrations were 3.9% higher in France in July 2020 than in July 2019, according to the latest data released by the CCFA, the French automotive industry association. This is an improvement on the 1.2% year-on-year growth in new-car registrations in the country in June and the tally of 178,982 registrations is even more impressive as there was one less working day in July 2020 than in July 2019 (22 versus 23). Based on a comparable number of working days, the CCFA reports that the market expanded by 8.6% in the month.

Whereas the incentives introduced on 1 June for new battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) remain, 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, but the Ministry of Ecological Transition announced it would be replacing the recovery scheme with a conversion bonus. Applicable from 3 August, it will closely resemble one that had been in place several years before coronavirus (COVID-19) struck Europe.

In Spain, 117,929 new cars were registered in July, 1.1% more than in July 2019, according to ANFAC, the Spanish vehicle manufacturers’ association. ‘This boost to sales is having very positive consequences for the recovery of employment throughout the value chain. Dealers already have 90% of their workforce working, around 150,000 employees, and in factories, recovery rates exceed 85%. The Spanish market is especially important for Spanish factories because one in four vehicles manufactured in the country is sold within our borders,’ ANFAC commented.

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

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

Source: CCFA, ANFAC

Late reopening, MOVES II and RENOVE schemes boost Spain

There was a phased approach to relaxing the lockdown measures in Spain, which largely explains why the new-car market was still weak, even in June. However, dealers can now fully reopen, and the introduction of the MOVES II incentive scheme for new BEVs and PHEVs and the RENOVE scrappage scheme have further stimulated the Spanish market since their introduction in early July.

Under the MOVES II scheme, buyers of new BEVs and PHEVs costing less than €45,000 are entitled to a total subsidy of €5,000 (€4,000 from the government and €1,000 from the manufacturer). Buyers 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.

‘The positive registrations of passenger cars in the month of July reflect the significant boost given to the market by the RENOVE 2020 plan, a boost that allows economic activity and employment to be recovered and advances the decarbonisation of the parc by compulsory scrapping,’ commented Noemi Navas, director of communications for ANFAC.

Maintaining mobilisation

The end of the scrappage scheme in France, in conjunction with dissipating pent-up demand, means new-car registrations are unlikely to maintain their positive growth in the coming months. Spain invariably faces the same challenges.

Raúl Morales, communications director of Faconauto, said: ‘From now on, the challenge is to maintain this mobilisation of the market to strengthen the recovery. And the good news is that the RENOVE has room to be more decisive since approximately 20% of registrations have utilised it since it has been operational.’

‘Although with these figures we are seeing a V-shaped recovery, we must be very cautious, and the key will be in September, which is when the impact of the coronavirus crisis will be seen in business. The key to recovery, in a black year also for tourism, will be to get the pact to approve the budgets and to articulate as soon as possible the arrival of the aid approved by Europe,’ cautioned Tania Puche, director of communications of the Spanish trade association Ganvam.

As it stands, Ana Azofra, valuations and insights manager at Autovista Group in Spain, said that the forecast for Spain is still for a 40-45% decline for new cars in 2020 and 20-25% for used cars. How the new plans develop and European funds are allocated will largely dictate the outlook going forward.