The European used car industry saw further growth in October but the current bull market of short supply and rising prices could be coming to an end.

Andy Shields, Indicata business unit director

Used car sales rose 12.4% year-on-year in October, due to data from Indicata’s Market Watch insights report; down on September’s 18.4% increase.

Rises were as high as 31.1% in countries such as Portugal, Turkey, France, Italy and Germany, balanced by countries such as Sweden, Austria, Poland and the Netherland,  which all experienced a year-on-year fall in used car sales.

Dealer stock turn for diesels and petrols, which stood at 7.4x and 6.7x, eased back marginally from September but both fuels remain in short supply. That compares with EVs and hybrids, which delivered a 4.5x and 5.3x stock turn during the month, with supply freer and prices less stable.

Five-year-old cars proved particularly popular, but the sub-12-month old market sales continued to struggle due to poor stock levels (illustrated by a 23% year-on-year increase in stock turn).

And with European used car dealers having increased stock levels just as the second started – the result of further part exchanges and ex-lease vehicles coming into the market and after many months where supply has been restricted – there are concerns for pricing going forwards. A total of 11 out of 13 countries increased dealer stock levels from 1 October to 1 November  (4.2% up vs prior month). Key movers were Spain, France and the UK, increasing stock levels by 9.0%, 7.9% and 7.4%.

Indicata added that with EU27, EFTA3 and UK new car sales down by a total of 38.7% in Q3, OEMs are demonstrating little interest in supporting tactical pre-reg and 0km sales campaigns so sub-12-month old car stock levels are not likely to improve any time soon.

Global business unit director Andy Shields said the challenge is for dealers to manage their growing used car stock levels just as demand may start softening.

“With the risk that Lockdown 2.0 impacts consumer demand in many countries, some dealers may have overstocked for November. December is traditionally when demand softens so those dealers are going to have balance their used vehicle books very carefully in the few weeks to the end of the year.

“We are already seeing some adjustment of prices to keep sales ticking over and as we move into 2021 and delayed lease returns start coming on to the market, dealers and remarketers should now re-visit their pricing strategies.

“With specific models showing real signs of oversupply, each vehicle now needs individual pricing based not just on trade or retail benchmarks, but also reviewing to saleability in the market,” he added.