Monthly Market Update: Car residual values descend across Europe during October
04 November 2024
Residual values (RVs) presented as a percentage of new-car list price (%RV) kept falling in Europe during October. Autovista Group experts analyse the latest figures with Autovista24 editor Tom Geggus.
The average value retained by a three-year-old car at 60,000km continued to spiral downward in Europe during October. Values measured in major used-car markets fell compared to September and October 2023, with many record lows recorded for 2024.
In Switzerland, three-year-old cars retained 47% of their new car list price on average. Germany recorded %RVs of 49.9%, followed closely by Austria and Italy with 50% and 50.3% respectively. In France, three-year-old models retained 54.2% of their list price, while Spain reached 58.8%.
The only country not to hit a record %RV low in October was the UK, at 51.6%. However, this was still down month on month and year on year. The market’s lowest %RV point so far in 2024 was recorded in July at 50.1%.
However, these broadly falling values may not be an immediate cause for concern. In the last few years, COVID-19, supply chain disruptions and global conflicts limited the availability of new cars. This made used models more sought after. Demand increased as supply slowed, causing residual values to soar upwards.
However, many of the extraordinary factors which drove this behaviour have now come to an end. With markets no longer under such extreme pressure, %RVs are descending from an exceptional peak. So, wider declines over the last few years can be more accurately thought of as market normalisation.
HEVs lead value retention in Austria
After drops in August and September, Austria’s sales-volume index (SVI) fell again in October. The number of observed sales fell by 3% compared to the previous month. Compared to the same period one year ago, the SVI was almost stable with a 0.6% year-on-year increase.
‘The active-market volume index (AMVI) of two-to-four-year-old passenger cars slightly decreased by 0.6% month on month,’ commented Robert Madas, Eurotax regional head of valuations, Austria, Switzerland, and Poland. ‘The supply volume of passenger cars in this age bracket slumped by 8.9% year on year.
At 65.6 days, the average amount of time needed to sell a used car increased in October. Diesel vehicles continued to be the fastest-selling powertrain, averaging around 54.5 days. This was followed by petrol vehicles at 69.8 days and plug-in hybrids (PHEVs) at 71.2 days. Battery-electric vehicles (BEVs) and full hybrids (HEVs) took the longest amount of time to sell at 85 and 85.1 days respectively.
The average %RV of a three-year-old car in Austria hit 50% in October. This was down by 0.3 percentage points (pp) compared with September. However, this amounts to a larger drop of 3.4pp compared with 12 months ago, illustrating the increasing pressure on RVs.
HEVs retained the greatest amount of trade value at 55.5% followed by petrol cars (51.9%). Then came diesel models (50.2%) and PHEVs (47.9%). BEVs once again retained the lowest amount of value, at 42.6%.
‘By the end of 2024, %RVs are expected to drop by around 5.2% year on year,’ Madas added. ‘Due to weakening demand and unwavering supply, further pressure on values can be expected. In 2025 and 2026, %RVs are expected to decrease at a slower pace.’
Expensive used cars in France
‘France saw values stabilise across its used-car market in October,’ commented Ludovic Percier, Autovista Group residual value and market analyst for France. ‘Absolute RVs were inflated because of higher list prices, which impacted %RVs.’
Petrol, HEV and PHEV powertrains saw a slight decline in %RVs, while BEVs and diesel-powered cars saw larger drops. This situation is helping to boost transactions which have seen a positive trend.
As of December 2023, BEV purchase incentives became dependent on lifetime carbon emissions, removing the eligibility of some brands and models. Therefore, used BEV models are still too expensive, meaning prices are dropping month after month. Where demand did not meet supply, the market saw a strong drop in values and lower prices.
PHEVs saw a slight decrease again after only one month of stability. More brands are now offering this powertrain, but demand does not always keep pace with supply. Fleets are willing to buy these models, paying a premium price.
However, private customers struggle to balance the large costs with the small electric ranges. New PHEVs will be capable of 100km on electric power, benefitting RVs, but prices will have to be carefully calculated.
Demand for diesel
HEV values were almost stable in October as was the case in previous months. This powertrain currently offers the best compromise between an internal-combustion engine (ICE) and BEV technology.
‘This means filling up quickly at fuel stations and no need to plug the car in. Furthermore, some small HEV models are becoming more affordable over time,’ Percier added.
Demand for used petrol cars is stable even with a small drop in the previous month. The fuel type seems to have resisted wider market fluctuations quite well so far.
Demand for diesel was still strong on the used-car market but prices were too high. There were fewer models on offer with lower new-sales volumes. This powertrain has been supported by fleets, but recent years have seen more companies choose electrified models.
Values fall in Germany
‘After a slight improvement in September, the SVI showed a month-on-month decrease of 0.6% in October. Compared with October 2023, the SVI dropped more severely by 8.3%,’ Madas said.
At the same time, the AMVI of two-to-four-year-old passenger cars fell by 1.8% compared to September. However, this meant that the supply volume of passenger cars in this age bracket dropped by 20.3% compared to the previous year.
The average number of days needed to sell a used car remained stable at 57.7 days in October. PHEVs and diesel-powered models sold the fastest at 53 days and 54.1 days respectively. Then came petrol cars after 59.2 days and HEVs after 61.2 days. BEVs took the longest amount of time to sell at 66.3 days.
Due to weaker demand, the average RV of a three-year-old car declined slightly in October. Models held on to 49.9% of their value new-car list price, down from 50.1% in September. This equated to a considerable decline from 56.2% in October 2023, underscoring how much pressure RVs are currently under.
HEVs led the way with a %RV of 53.3%. Then came petrol cars at 51.7%, diesel models at 50.4%, then PHEVs at 45.5%. Meanwhile, three-year-old BEVs retained the lowest level of value at 38.3%.
‘As demand weakens and supply persists, RVs can be expected to come under even more pressure,’ Madas explained. ‘%RVs are expected to fall even further this year, dropping by nearly 8% when compared with December 2023. In 2025 and 2026, %RVs are only expected to experience a marginal decrease.’
List prices increase in Italy
‘Entering the final quarter of 2024, the Italian used-car market could see some last-minute surprises,’ said Marco Pasquetti, head of valuations, Autovista Group Italy. ‘However, it is unlikely that there will be any significant changes to overall trends.’
In October, %RVs fell compared to 12 months ago. Last month, %RVs of three-year-old cars at 60,000km hit 50.3% on average, compared with 54% in October 2023.
The reason for this drop is that list prices increased by 7.7% year on year to €38,419. This is a pace the current used-car market cannot keep up with. Meanwhile, absolute values remained relatively stable, up 0.5% compared with 12 months ago, reaching €19,334.
Considering powertrain performances, liquid-petroleum gas (LPG) was the only technology to see year-on-year %RV growth. Value retention rates increased to 48.8% from 46.5% 12 months ago. Meanwhile, BEVs saw %RVs fall to 32.2% from 36.8% at the same point last year. PHEVs retained 46.7% of their new-car list price, down from 53%.
‘LPG vehicles were the fastest sellers on average, spending only 55 days in stock. Meanwhile, electric cars struggle, taking an average of 80.9 days,’ Pasquetti highlighted.
Looking across all powertrains, the fastest-selling used model in October was the Peugeot 3008. It averaged just 42.2 days in stock while the national average sat at 69.9. Close behind were the Volvo XC40 and Dacia Sandero, at 43.1 and 44.7 days respectively.
Stock absorption in Spain
September brought some positivity back to the Spanish new-car market, reversing a negative trend experienced last summer. Registrations grew by 6.3% year on year, with the private channel helping to sustain growth. Electric vehicles captured 14.3% of the market, after several months of not reaching a double-digit share.
‘The rental channel was unstoppable, with deliveries up by over 30%, despite the end of the summer season,’ commented Ana Azofra, Autovista Group head of valuations and insights, Spain. ‘This pace has oxygenated the sector this year. It has sustained new-vehicle sales while consequently rejuvenating the used-car market, which has survived on older vehicles for years.’
‘Younger vehicle sales are seeing a comeback in the professional channel too, revitalising a fundamental part of the industry. This helps bring quality and transparency to the used-car market,’ she highlighted
However, this positive trend in used vehicle sales has not translated into an increase in transaction prices. The current absolute trade price of a three-year-old used car at 60,000km is €19,058. This equates to a drop of 1.9% from September and 3% from October 2023.
All powertrains saw a negative trend last month, but BEVs and PHEVs fared slightly worse. Nevertheless, Spain is still relatively stable, with BEVs and PHEVs suffering less than in other major European used-car markets.
The stock that accumulated throughout 2023 and the early months of 2024 is slowly being absorbed, month after month. Discounts and downward adjustments are encouraging sales in a very price-sensitive market. In any case, prices are expected to continue to stabilise in the coming months.
This month’s fastest-seller table has not been dominated by hybrids,’ Azofra said. ‘In October, the Mini Countryman spent the smallest amount of time in stock. It was followed by the Volkswagen T-Roc and the Peugeot 508, highlighting a fleet-based trend.’
Stock falling in Switzerland
Used-car supply had effectively returned to the pre-COVID-19 level in Switzerland. However, incoming stock appears to be falling once again. Rising living costs in 2023 came down slightly this year, but new-car registrations continue to be weak, unable to bounce back.
The AMVI for two-to-four-year-old passenger cars decreased by 0.7% from September to October 2024. Compared to October 2023, this indicator dropped by 7.2%. This illustrates how the supply of younger used models has not recovered. In contrast to last month’s increase, the SVI fell by 3.8% in October. Compared year-on-year, it was down 11.7%.
‘Influenced by constant supply and declining demand, RVs of three-year-old cars at 60,000km decreased again,’ outlined Hans-Peter Annen, head of valuations and insights, at Eurotax Switzerland.
‘In %RV terms, overall values fell slightly to 47% in October from 47.3% in September. However, the year-on-year drop was more severe, as the %RV level sat at 50.1% in October 2023,’ he pointed out.
HEVs retained the most value in October with a %RV of 51.2%. Then came petrol cars (48.2%), diesel models (45.8%) and PHEVs with 44.5%. BEVs were once again the worst-performing powertrain, retaining only 41.6% of their original list price.
October saw two-to-four-year-old passenger cars sell more slowly than in September. Time in stock climbed by 0.6 days to 83.8 days on average. Petrol cars sold fastest at 77.8 days, followed by HEVs at 82.4 days and diesel cars at 82.9 days. PHEVs took 85.8 days, and BEVs, with the biggest increase, needed 111.3 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. By the end of 2024, used-car values are expected to drop by 5.2% due to relatively stable supply and lower demand.
Balanced supply and demand in UK
October’s sales-volume index revealed a small decline in retail sales in the UK, but only by 0.8% compared with September. So, the market remains reasonably consistent, which will give dealers confidence to continue with stock acquisition.
The AMVI shows increased levels of inventory on forecourts. However, recent feedback from auction channels suggests that dealer buying activity has been buoyant. This has been a consistent trend in the last couple of months.
‘With balanced supply and demand in the UK’s wholesale market, there has been no significant movement in values,’ said Jayson Whittington, Glass’s chief editor, cars and leisure vehicles.
RVs presented as a percentage of new-car list prices fell by only 0.7pp to 51.6% in October. Compared to October 2023, the average RV of a three-year-old car dropped 7.8pp.
The average %RVs of diesel models at three years of age reached 52% in October, slightly above the market average. This is 1.9pp lower than petrol cars and 2.2pp below than HEVs. However, it is 2.1pp higher than PHEVs and 16.3pp higher than BEVs.
‘Diesel-powered cars fell out of favour with new-car buyers in 2017. This was driven in no small part by a shift in sentiment from parts of the media. As a result, OEMs cut production drastically and in September, diesel cars made up only 6.4% of new-car registrations in the UK,’ Whittington commented.
This is a far cry from the 47.7% share diesel-powered cars enjoyed in 2016. Unsurprisingly, the volume of used diesel models entering wholesale channels has fallen significantly since then. This has helped underpin diesel RVs, as they have remained popular with used car buyers.
