“In the middle of a storm” is how the automotive market is described today. For both new cars and used cars, electric or not, prices are constantly rising. The average increase is 20%. And the impact of the war in Ukraine is yet to be felt… Even though electric cars are a good alternative in the second-hand market, inventories are proving to be very low and most models are very expensive.
Since the pandemic, several factors have strongly affected the automotive market, not to mention the repercussions of the coronavirus crisis. As of autumn 2020, unprecedented demand has led to overshooting the production capacities of car manufacturers. Today, this production simply cannot keep up. All sorts of components are missing, especially microchips, which in turn slows down the supply of other components. The pandemic has also caused logistical problems and raised the price of transport. And then there is the explosion in energy and raw material prices: it is mainly steel and aluminum that are affected, but also raw materials… for electric car batteries, among others.
Since the pandemic, several factors have strongly affected the automotive market, not to mention the repercussions of the coronavirus crisis. As of autumn 2020, unprecedented demand has led to overshooting the production capacities of car manufacturers. Today, this production simply cannot keep up. All sorts of components are missing, especially microchips, which in turn slows down the supply of other components. The pandemic has also caused logistical problems and raised the price of transport. And then there is the explosion in energy and raw material prices: it is mainly steel and aluminum that are affected, but also raw materials… for electric car batteries, among others. The icing on the cake, the war in Ukraine forced some suppliers to suspend their deliveries (of cabling but also of raw materials). “Last summer, the situation was already very tense. It’s only gotten worse since then,” says Joost Huys, managing director of NV Dex. With 18 branches, this West Flanders company mainly sold recent second-hand cars (about 18 months old, 25,000 kilometers per watch). In its last balance sheet (from the beginning of March 2020 to the end of February 2021), it reached a turnover of 65 million euros and a profit of 3.2 million euros. “Currently, delivery times of 8 to 18 months for a new car are common, complains Joost Huys. Prices continued to rise, which also pulled those of opportunity. Profit: the most expensive. Which is not good news for In fact, we are also seeing a shift towards cars with higher price points that until now were sold at average prices. During the pandemic, the two SUVs Hyundai Tucson and Ford Kuga cost between 25,000 and 26,000 euros. Today, you have who pay no less than 30,000 or even 32,000 euros. , dealers hardly give discounts on the list price, which is a novelty.” This represents an increase of 20%. The same phenomenon also affects the second-hand market. Last summer, Joost Huys again observed an increase of 10%, a number that denotes an acceleration of the increase. “The price of cheaper models has gone up even more. A year ago, an 18-month-old Opel Astra was sold for 12,000 euros. Today, it costs from 17,000 to 18,000 euros. The price of a Ford Focus has increased by almost 25 euros. %, as that of a Fiat Tipo or a Renault Mégane. The same goes for the prices of the new models of these brands because they are those for which delivery times are longer. This is precisely in the medium segment, which normally represents the largest volume, that the price increase is the strongest”. How is this increase explained? The new and used markets are communicating vessels. When customers have to wait a long time for a new car, they look for second-hand alternatives. The problem is that there too, the supply is deteriorating. On the one hand, because rental contracts are extended in the company car market, which generally constitutes an important source of supply for the second-hand market. On the other hand, because, as a rule, staff traveled fewer kilometers during the pandemic. Demand is particularly strong for relatively new SUVs, preferably with gasoline engines. Car rental companies were a second significant source of supply, especially for small cars. “Today, the offer is very rare”, analyzes Ivo Willems, co-CEO of Cardoen. The Renault Clio and Fiat 500, these are typically the models that rental companies offer for vacations. These cars are rented near airports. in the summer season, they hit the used market. But with the covid, they weren’t used by tourists and they didn’t land on the used market either. .” Joost Huys and his company Dex have already adapted their offer. “Our inventory is starting to go up. But the number of cars offered on the used market in general has obviously not increased. Therefore, we have expanded our offer. Until last year, we mostly sold cars that averaged a year and a half and 25,000 kilometers on the clock. Today, they are four to five years old, and 80,000 to 90,000 kilometers.” How long will the rise last? “It’s a bit of my fear, admits Joost Huys. We’re still doing good business, but how far will the consumer go? , they pay 200 to 300 euros to pay off a loan for a car. This amount is now largely destined for the energy bill, which has increased a lot.” At Cardoen, Ivo Willems has not yet noticed a drop in sales. “But I fear the worst if it happens that the energy bill increases by 300 euros a month. Perhaps the repercussions are still to come, once consumers have received their regularization bill. today 20,000 euros on average for a car. Last November , that amount was still 18,500 euros.” Cardoen already sees a direct impact of the war in Ukraine. “Cars sold by private individuals have seen their prices increase in the last two years, in parallel with the increase in prices on the used market. The residual value fluctuated between 2,000 and 8,000 euros. They were then sold in Eastern Europe. in Poland, Romania… Because of the war, this market is completely at a standstill. As a result, the price that “you can get for your own car Vehicles evaluated three months ago are no longer the same value. These older cars are back to the price level of two years ago.” Are there still good deals on the second-hand market? “Buy a used Euro 6 diesel instead of a petrol one, advises Filip Rylant of the Traxio industry federation These engines are economical and clean and will still be authorized for a long time in low emission zones. the wave valley. Their steadily declining market share is also proof of this. However, it is still possible to find interesting used diesel.” Joost Huys also recommends diesel cars. “Diesel is still a good product that has been wrongly demonized. That’s why it’s a little cheaper than the gasoline version. That doesn’t stop consumers from asking questions. For those who drive a lot of kilometers, diesel remains a good option. The range of electric cars is still an issue when traveling long distances.” Since the beginning of the year, diesel is back in the beast’s hair. While last year a diesel still had a lower price than a gasoline one, the trend today is balanced. What is the chance of an individual finding a hybrid or electric car on the second-hand market? Electric car share is growing but remains minimal The market share of hybrid and electric cars reached just over 5% in the first two months of 2022 (100% electric, just 1.3%). However, in terms of new vehicles, the market share of this segment already exceeds 40%. “As hybrid and electric cars are relatively recent, their presence in the used market is still limited, underlines Filip Rylant of Traxio. very expensive, even second hand. In addition, the first models have the disadvantage of having a very limited range. This will likely improve in the future. More and more electric vehicles are being registered today. However, there is a downside: these registrations currently refer to cars whose price is well in the upper range. But from experience, we know that electric cars maintain a very high residual value, because the batteries remain efficient. And it is especially the models with good autonomy that retain their value.” Ivo Willems de Cardoen is also doing his math. “More than 90% of electric cars are in the range of 40,000 to 50,000 euros. Few private individuals spend that much on a used car. For example, a Tesla S is taken out of lease after three to four years. Very exceptionally we find Tesla 3s but this model is not cheap either. We still don’t sell a second-hand Audi e-Tron. On the other hand, there are sometimes Renault Zoe, which, however, have the disadvantage of having a limited radius of action, especially when it comes to older models. It’s hard to sell the smaller models.”