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

11 August 2020

11 August 2020

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.