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Impact of Covid-19 on Europe’s used car industry revealed in new white paper

New analysis shows how the used car industry in Europe is responding to different stages of Covid-19 including the potential impact it will have on the daily rental and leasing sectors.

Andy Shields, Indicata business unit director

The free-to-download white paper has been published by Indicata and looks at the short-, medium-, and long-term effects of Covid-19 on the European used car industry, particularly rental and leasing companies.

The research was based on analysis of nine million used vehicle advertisements across Europe each day, giving a comprehensive view of demand and retail market pricing by country. Looking at the number of vehicle adverts removed from the internet, the data indicates Northern Europe saw a sales fall of 21.5% between 11 and 18 March, while southern Europe, including Italy, fell by 44% during the same period.

Looking at the main markets, the data determines that Italy’s dramatic fall in sales is clear, Spain’s volumes are beginning to ease, and the French market has started to fall.

It also compares the UK and Germany, and finds the former is showing a small market fall, while there is a more visible downward step change in German sales volumes.

The data also explores the variances between medium-sized countries and finds some impact in the Netherlands and Sweden, while Poland and Turkey are yet to be hit due to having lower infection rates.

Europe’s smaller countries are particularly showing a marked difference between markets. Austria closed its border with Italy on 11 March and the impact has been instant. Denmark and Belgium have implemented strong sanctions and the effects are showing. Portugal declared a state of emergency on 19 March and we can expect car sales to fall quickly.

As such, the data shows the correlation between infection rates and the fall in used car sales. Countries with low infection rates, such as Poland and Turkey, have been least affected. As the virus progresses, the country-by-country market trends will help remarketers to identify the most effective sales channels.

Andy Shields, Indicata’s global business unit director and author of the white paper, said: “The relationship between the increase in the number of people with Covid-19 and the measures each individual government introduces to fight the pandemic is already having a detrimental impact on European rental and leasing companies.

“Countries will have different challenges at different times and it’s all about equipping companies with the right data to help assist them in making fast decisions, which is where our pricing insights comes into its own. We look forward to bringing you regular country data soon,” he added.

The white paper also looks at how the last recession played out for both the new and used car markets across Europe and how those same trends may repeat in a world dominated by Covid-19. In addition, the paper explores how China is getting control of infection rates, and how this may provide learnings for Europe.

The research also explores the impact on rental companies and leasing firms.

It warns that rental companies will need to re-assess current contracts with OEMs, and in many cases contracts will be defaulted on, leaving OEMs with a stock of unregistered and, in some cases, registered ready for delivery new vehicles the rental industry does not want.

It also says EU rental company remarketing operations should be flexible over which countries they remarket vehicles in.

For the leasing industry, the challenge will be to manage the current volatility in the market whilst respecting the fact that there may be no short-term recovery in residual values. In 2008/9 many leasing companies extended vehicle contracts. Bearing in mind the risk used vehicle prices will be depressed for an extended period, an immediate run on vehicles may not be ideal. Even so, vehicles will still need to be remarketed over the downturn and leasing firms will need to be able to identify the changing fortunes of country markets or segments and act accordingly.

Go to www.indicata.com/corona to download the 18-page white paper in full.

For more of the latest industry news, click here.

Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. Natalie edits all the Fleet World websites and newsletters, and loves to hear about any latest industry news.