In November, residual values (RVs) of used cars in Europe continued to decline, reflecting changing market conditions. This downturn was observed across many key European markets, including Germany, France, Italy, and Spain.

Key factors driving the decline in RVs

• Increased supply of newer models: Car manufacturers have ramped up production and deliveries, resulting in an influx of newer models that reduce the value of older vehicles.
• Economic factors: Inflation and rising interest rates have impacted consumer purchasing power, lowering demand in the used car market.
• Technological changes: The growing popularity of electric vehicles (EVs) and hybrid vehicles has diminished the appeal of traditional internal combustion engine cars, affecting their residual values.
  

General trends

• Austria: The number of used car transactions decreased by 4.5% compared to October and 1% compared to last November. The supply of two-to-four-year-old cars also dropped by 1.6% month-over-month. The average time to sell decreased to 67 days. Hybrid electric vehicles (HEVs) were the fastest-selling (averaging 55 days), while battery electric vehicles (BEVs) were the slowest (about 99 days). The average residual value of 36-month-old cars was 53.9%, down from 54.8% last November. HEVs retained the highest value (57.1%), while BEVs had the lowest (47.9%).
• France: Used car RVs remained stable. Diesel, petrol, and HEV models showed slight increases, while BEVs and plug-in hybrids (PHEVs) continued to decline. Higher new car prices raised absolute RVs, but percentage values decreased. The average selling time for petrol cars remained stable at 64.5 days, while diesel cars sold faster at 52.1 days. HEV demand increased, whereas PHEVs faced challenges due to declining interest in the used car market, with an average selling time of 78.2 days, though this was 5.6 days better than last month. BEV values continued to decline, and selling times lengthened, particularly due to competition and falling prices of new models, reaching 97.1 days.
• Germany: The used car market faced challenges from weak demand and increasing supply. A slight decline in October intensified in November. Compared to October, sales volume dropped by 4%, and by 14.7% compared to last November. The average selling time increased to 60.1 days. BEV and PHEV models experienced the largest value declines, while HEVs maintained stable values. Used car prices in Germany are expected to drop further due to economic factors such as oversupply and weak demand, which is significant for buyers, sellers, and investors planning their market strategies.
• Italy: Used car transactions fell by 10.9% compared to last November. Average selling times increased, particularly for PHEVs and BEVs. Residual values decreased, especially in the BEV segment.
• Spain: The used car market remained stable but showed a slight decrease in transaction numbers. Average selling times slightly lengthened, and residual values declined, especially for PHEVs and BEVs.
• Switzerland: Used car transactions decreased by 0.2% compared to last November. The average selling time dropped to 80.4 days. Residual values decreased, particularly in the BEV segment.
• UK: Used car transactions increased by 18.7% compared to last November. The average selling time dropped to 62.5 days. However, residual values declined, especially in the BEV segment.
  

Forecasts

Residual values are expected to continue declining in 2024 due to weakening demand and increasing supply. In Austria, a 3.4% annual decrease is forecasted, while in France, an almost 8% drop is expected by the end of the year. BEV and PHEV models are likely to experience the largest value declines due to market saturation and falling prices of new models

Conclusions

The used car market in Europe faces challenges from weakening demand, increasing supply, and changing consumer preferences. BEV and PHEV segments, in particular, are under the most pressure, while HEVs and traditional internal combustion engine vehicles are maintaining more stable values. Market participants will need to adapt to changing conditions and closely monitor market trends to effectively manage residual values and inventory.