Whitepaper: Coronavirus will cause drop in RVs with impact into 2022

29 April 2020

29 April 2020

Autovista Group has recently published an updated version of this whitepaper, with the latest information on the impact of COVID-19 on dealers. To see the latest information, click here.

Strict measures to control the spread of coronavirus across Europe have brought economic activity to a standstill in many sectors. The automotive sector is no different, with dealerships closed in many countries, vehicle production halted and new sales stalled. New analysis by Autovista Group reveals the impact of restrictions on the used-car sector.

There will be a drop in vehicle residual values (RVs) over the remainder of 2020 across the Big 5 European markets. Underlying market conditions vary, which is why in the UK the expected lack of supply, combined with some remaining pent-up demand, almost overcompensates for the grim economic outlook. RVs are not expected to drop as much as in continental Europe, the paper highlights, with France and Italy expecting the impact to occur in 2021.

‘During the 2008/2009 financial crisis, we saw falls in RVs that were substantially higher than what our most probable scenarios currently forecast,’ according to Christof Engelskirchen, chief economist at Autovista Group. ‘At the time, declines of 12% on average across segments built up over 12-18 months into the crisis.’

Several things are different this time. Eurozone governments have taken much stronger policy action to protect against collapsing demand, the current economic shock is not paired with a lack of financing opportunity. In addition, after the peak of the crisis, the automotive industry should see some pent-up demand. As the economic data rolls in, there will be more understanding of whether private consumers will regard the shock as temporary, or expected a prolonged crisis and hold off buying cars – new and used.

More detail on the early impact of the coronavirus and the outlook for market recovery is available in Autovista Group’s new whitepaper: How will COVID-19 shape used car markets? Scenarios for post-coronavirus economic recovery.

Autovista Group has recently published an updated version of this whitepaper, with the latest information on the impact of COVID-19 on dealers. To see the latest information, click here.