Monthly Market Update: Used car RVs forecast to fall further by end of 2024
02 October 2024
Residual value (RV) outlooks remained negative across Europe’s major used-car markets as 2024 entered the fourth quarter. Autovista Group experts outline what they expect by the end of the year with Autovista24 editor Tom Geggus.
RVs are coming under constant pressure across Europe. Demand for used passenger cars is failing to keep up with supply, particularly in Austria, Germany, Italy and Switzerland. This market dynamic is driving down outlooks of RVs when presented as a percentage of new-car list price (%RV).
In August’s report, Autovista Group editors expected year-on-year value declines come December 2024. However, the extent of this fall is now more severe. Italy saw one of the largest adjustments, with the %RVs of three-year-old cars now expected to drop by 6.5%, instead of 5.8%.
The outlook in Spain now sits at a 2.3% decline, rather than a 1.8% drop. Austria and Switzerland saw only marginal adjustments in their RV expectations, while France and the UK held their forecasts. Germany is expected to see the greatest fall in %RVs, down by 8% at the end of the year. However, this was up compared to last month’s expected decline of 8.1%
Further drop forecast in Austria
‘Following a drop in August, the sales-volume index (SVI) in Austria fell further in September,’ commented Robert Madas, Eurotax regional head of valuations, Austria, Switzerland, and Poland. ‘The number of observed sales decreased by 4.7% month on month. But, compared to September 2023, the SVI was up 16.9% year-on-year.’
Meanwhile, the active-market volume index (AMVI) of two-to-four-year-old passenger cars slightly increased by 1.6% compared to August. Yet the supply volume of passenger cars in this age bracket slumped by 9.2% compared to the same point year.
At 62.4 days, the average amount of time needed to sell a used car fell slightly in September. Diesel vehicles continued to be the fastest-selling powertrain, averaging 55.3 days. This was followed by plug-in hybrids (PHEVs) at 63.1 days and petrol vehicles at 66.4 days. Battery-electric vehicles (BEVs) and full hybrids (HEVs) took the longest amount at 73.5 and 74.4 days respectively.
Percentage RVs sat at 50.3% on average in September. This meant values stayed stable month to month. However, they experienced a larger drop compared to September 2023, when three-year-old cars retained 53.6% of their new list price. This illustrates the increasing pressure on RVs.
HEVs retain the greatest amount of trade value at 55.7%, followed by petrol cars (52.5%). Then came diesel models (50.2%) and PHEVs (47.6%). BEVs once again retained the lowest amount of value, at 42.8%.
‘By December 2024, %RVs are expected to drop further, by around 4.9% year on year,’ Madas added. ‘Due to weak demand and unwavering supply, further pressure on values can be expected. In 2025 and 2026, %RVs are expected to decrease at a slower pace.’
Values fall in France
‘In France, RVs fell again during September in both absolute terms and percentage terms. Almost all powertrains suffered drops compared to July and August,’ said Ludovic Percier, Autovista Group residual value and market analyst for France.
BEVs recorded the greatest drop in values in the country. Absolute RVs were down 1% month on month to €19,294, while %RVs dropped to 54.6% from 54.8% in August. Declining values are helping used-car sales as there was a higher number of transactions in the month.
As of December 2023, electric-car purchase incentives became dependent on lifetime carbon emissions, removing the eligibility of some brands and models. Therefore, used models are still too expensive, leaving prices to drop month after month. Where demand does not meet supply, the market sees a strong RV drop and lower prices.
PHEVs saw %RVs drop by 0.9 percentage points (pp) to 52.5%, compensated for by list prices rising 1% month on month. This can be explained by already low values experiencing an ongoing decline in recent months. Other powertrains have seen values drop more slowly over longer periods. However, buyers are still slightly more likely to choose a PHEV, especially from brands such as Hyundai and Cupra.
With its fleet-based benefits, the technology is better suited to the new-car market, while demand for used models flags. Newer PHEVs also feature more advanced technology and improved ranges at lower list prices, directly impacting the used market.
Hybrid stability
HEV values were almost stable in France last month, as was the case in August, confirming the trend. The powertrain is currently the best compromise between full internal-combustion engine (ICE) and BEV vehicles, with no need to plug the car in. Furthermore, some small HEV models are becoming more affordable as time goes on.
After staying consistent for so long, demand for used petrol cars dropped in the month. Absolute RVs slumped by 1.5%. This aligns with the global fall of ICE powertrains. However, this decline was less worrying than the one experienced by BEVs in August.
Demand for used diesel models continues, although fewer are now on offer in the new-car market. Registrations were once supported by fleets, but these buyers are now transferring to electrified powertrains, including BEVs, PHEVs and HEVs.
‘This illustrates the overall descent of the French used-car market, confirmed by the SVI which fell once again. It dropped by 15.2% between August and September,’ Percier commented. ‘Consumers are clearly waiting for prices to drop further.’
RVs forecast to fall in Germany
After a decrease in August, the SVI in Germany showed a slight improvement during September. ‘Transactions were up by 0.2% month on month and remained stable compared with September 2023,’ Madas pointed out.
At the same time, the AMVI of two-to-four-year-old passenger cars increased slightly by 1.8% compared to August. However, this meant the supply volume of passenger cars in this age bracket dropped by 20% year on year.
The average amount of time needed to sell a used car increased slightly to 57.3 days in September. Diesel-powered models and PHEVs sold the fastest, at 52.1 and around 52.6 days respectively. Then came petrol cars after 58.2 days, and HEVs after 59.8 days. BEVs took the longest time to sell at 71.1 days.
Despite weaker demand, the average RV of a 36-month-old car remained stable. In %RV terms, models held on to 50.1% of their value, holding steady on August’s figures. However, the year-on-year decline was considerable as cars retained 56.5% of their value in September 2023. This confirms that RVs are under continual pressure in Germany.
HEVs led the way with a %RV of 53.8%. Then came petrol cars at 51.9%, diesel models at 50.5%, then PHEVs at 45.8%. Meanwhile, 36-month-old BEVs retained the lowest level of value at 38.7%.
‘As demand drops and supply persists, RVs can be expected to come under even more pressure in Germany,’ Madas said. ‘This year, %RVs are expected to fall further, dropping by 8% when compared with December 2023. In 2025 and 2026, %RVs are expected to experience a marginal decrease.’
Outlook adjusted in Italy
‘Approaching the latter part of 2024, it is becoming increasingly clear that Italy’s used-car market is declining considerably compared to 2023,’ commented Marco Pasquetti, head of valuations, Autovista Group Italy.
The descent is even more severe than originally anticipated. This is why the RV outlook has been adjusted, with a 6.5% year-on-year decline now expected by the end of the year.
The used-car market had been expected to gradually decline back to a state of stability. This hinged on the calming of crises as production and delivery problems were resolved. These issues had brought RVs up to unthinkable levels. However, the deflation of values back to a point of stability has been far faster than expected.
The only powertrain still experiencing year-on-year RV growth in September was compressed-natural gas. At the end of last year, it was still being impacted by big increases in fuel costs. All other drive technologies have seen %RVs fall.
Both BEVs and PHEVs have seen values continue to fall sharply. All-electric models recorded %RVs of 32.7% in September, down from 36.8% a year earlier. Meanwhile, PHEVs reached 47.1% from 53.1% 12 months ago.
‘Used-car transactions were up across the Italian used-car market last month compared with September 2023. However, demand is still failing to meet up with the levels of supply,’ Pasquetti explained.
Sales of used EVs climb in Spain
Bucking a familiar trend, Spain’s electric vehicle (EV) market grew by 20% year on year in September, according to data from ANFAC. This led BEVs and PHEVs to make up 14.2% of all passenger-car deliveries in the month. This was just enough to push the year-to-date total back into growth, up 0.6% compared to the first nine months of 2023.
‘Sales of used EVs have grown significantly, especially PHEVs’ said Ana Azofra, Autovista Group head of valuations and insights, Spain. ‘The powertrain managed to gain ground in the country’s used-car market and its vehicle fleet.’
Across all technologies, sales of used cars have remained broadly stable, with more optimism for both the new and used markets.
RVs dropped significantly in September. The benchmark group of three-year-old cars at 60,000km saw absolute trade RVs hit €19,444. This was down by 2% month on month and by 5.4% year on year, equating to a fall of €1,100 euros.
‘Stock is accumulating and turnover days are increasing as a result, affecting practically all powertrains. HEVs have been the only technology to maintain stability.
‘The average transaction value of used EVs has continued to increase,’ Azofra explained. ‘This was thanks to the supply mix improving with models offering longer ranges and better performances. PHEVs have seen increasing demand on the Spanish used-car market, with turnover figures improving.’
RV fall forecast in Switzerland
After used-car supply returned to a pre-COVID-19 level in Switzerland, volumes fell once again. Since 2023, the cost of living has risen, and new-car registrations have not bounced back.
The AMVI for two-to-four-year-old passenger cars increased by 1.4% from August to September 2024. Compared to September 2023, this indicator dropped by 7.6%. This illustrates how the supply of younger used models has not recovered.
‘In contrast with the holiday month of August, the SVI increased by 13.5%,’ said Hans-Peter Annen, head of valuations and insights, at Eurotax Switzerland. ‘However, it was still down 12.4% year-on-year.’
Influenced by constant supply and declining demand, RVs of 36-month-old cars at 60,000km decreased again. Overall %RVs slightly decreased to 47.3% in September from 47.4% in August. However, the year-on-year drop was more severe, as the %RV level sat at 50.3% in September 2023.
HEVs retained the most value in September with a %RV of 51%. Then came petrol cars (48.6%), diesel models (46.1%) and PHEVs with 44.2%. BEVs were once again the worst-performing powertrain, retaining only 41.8% of their original list price.
September saw two-to-four-year-old passenger cars sell more slowly than in August. Time in stock climbed by 5.7 days to 83.4 days on average. HEVs sold the fastest at 77 days, closely followed by diesel cars at 77.5 days. Petrol cars took 80.6 days, PHEVs 90.1 days, and BEVs needed 102.8 days on average.
‘Set against a wider declining trend, values of three-year-old cars are forecast to keep falling from a relatively high point. Last year saw %RVs fall 5% year on year,’ Annen added. ‘By the end of 2024, used-car values are expected to drop by 4.7% due to relatively stable supply and conservative demand.’
UK feels plate effect
The average RV of a three-year-old car in the UK sat at 52.3% of the original cost-new price in September. That was up 1.9pp from August, indicating rising values and a very strong market. However, the plate-change effect is the actual reason for this positive RV development.
‘It is crucial to remember that in September, a car registered three years ago displays a 71 plate, while a three-year-old registered in August shows a 21 plate,’ said Jayson Whittington, Glass’s chief editor, cars and leisure vehicles. ‘The uplift in September was the result of the different values between these two plates.’
However, the RV development this year was 0.5pp stronger than last year, which saw an uplift of only 1.4 points. A like-for-like comparison with the previous year’s average RV shows a fall of 9.8pp. Looking at absolute trade RVs, the difference is stark, having fallen by £1,684 (€2,024) in 12 months.
Retail activity has been steady over September, with no noticeable drop-off which would normally lead to a stable wholesale market. However, auction channels have experienced stronger than usual conversion rates, as a result of fewer used cars entering the market.
Three-year-old ex-fleet cars are reportedly entering auction channels in smaller numbers. This is unsurprising as three years ago the new car market suffered a significant fall in volume. This was due to the COVID-19 pandemic and parts supply disruption which affected production capabilities. ‘It will be interesting to see if September’s plate change moves the needle on wholesale used car supply,’ Whittington concluded.
