Article Type: Insights

Brexit survey: have your say

There are only 70 days until the UK’s Brexit transition period with the European Union (EU) comes to an end. Currently, there is still no certainty on future trading relationships, or how the UK setting its own regulations will affect businesses and technology developments in the coming years.

Autovista Group wants your views on Brexit, from the impact a ‘no-deal’ would have on the automotive industry in both Europe and the UK, to your opinions on how the two parties have managed the process.

Click here to access our Brexit survey, and tell us how the negotiation uncertainty and the UK leaving the EU is impacting your business and industry.

BMW hybrid recall reignites PHEV fire concerns

BMW is carrying out a global recall of some of its plug-in hybrids (PHEVs) produced this year, due to battery fire concerns. The carmaker is also suspending delivery of affected vehicles as part of a ‘preventative measure.’

The recall notice will come as a blow to the manufacturer, which recently revealed promising third-quarter free cash flow figures. Thanks to a fast recovery in several markets, BMW saw higher sales growth compared to the same period last year, on top of optimised working capital and a reduction of fixed costs. The manufacturer’s free cash flow from the automotive segment in Q3 2020 amounted to over €3 billion, compared with €714 million in Q3 2019.

But more widely, the recall could have a knock-on effect on vehicles equipped with alternative powertrains. With faults being reported by the likes of BMW and Ford, consumer confidence could take a real hit, alongside the residual values (RVs) of these electric vehicles (EVs).

Worldwide recall

In a statement to Autovista Group’s Daily Brief, the German carmaker confirmed the details of the recall. ‘BMW Group has launched a worldwide safety recall and stopped delivery of a small number of plug-in hybrid vehicles as a preventative measure to check the high-voltage battery,’ it said.

‘Internal analysis has shown that in very rare cases, particles may have entered the battery during the production process. When the battery is fully charged this could lead to a short circuit within the battery cells, which may lead to a fire.

‘A total of 26,700 vehicles are affected worldwide, of which only around 9,000 vehicles are already with customers and have been recalled. BMW apologises for the inconvenience caused to customers, but of course, safety must come first,’ the carmaker concluded.

In the US, National Highway Traffic Safety Administration (NHTSA) documents reveal that BMW became aware of an incident involving a 2021 BMW X5 on 4 August 2020, where the vehicle experienced a ‘thermal event’, whereupon it began analysis. Then, between early August and mid-September, the manufacturer became aware of three additional incidents.

‘A review of supplier production and process change records indicated that for the incident vehicles, battery-cell production at the supplier occurred during a specific and limited time period,’ the document states. The NHTSA document identifies Samsung as a component manufacturer. Autovista Group’s Daily Brief did approach the battery maker for comment, but it did not respond prior to publication.

On 23 September, BMW decided to conduct a voluntary safety recall. According to the NHTSA report, there are some 4,509 recalled PHEVs in the US, including 2,441 X3 xDrive30e (2020-2021), 1,228 X5 xDrive 45e (2021), and 33 Mini Cooper Countryman All4 SE (2020-2021). BMW is currently working on a solution to the fault. Until a remedy is available, drivers will be instructed to not charge their vehicle, not to drive in manual or sport mode, and to not use the shift paddles.

Wider EV impact

BMW is not alone when it comes to EV difficulties. Both Audi and Jaguar recalled their battery-electric vehicles (BEVs) in June 2019. Audi experienced issues with the e-Tron’s battery cells, while Jaguar recalled the I-Pace because of a software fault that could have resulted in the failure of the electric braking system.

In August, Ford issued a recall notice for Kuga PHEVs it built up until 26 June, after four vehicles reportedly caught fire. The problem was traced back to the potential for water to cause an electrical short, which could then lead to overheated battery cells. It was estimated that over 20,000 models could be affected.

Recently, Ford Werke GmbH posted a video to YouTube, with managing director Hans Jörg Klein, apologising for issues with the model and asking for customer patience as troubleshooting could take months rather than weeks.

With manufacturers pushing to make an electrified COVID-19 comeback, the success of their electrified models is of paramount importance. Carmakers are considering PHEVs as an essential stepping stone for some consumers on the road to full BEVs. If big brands like BMW and Ford produce problematic PHEVs, consumer confidence in electrified vehicles could take a hit.

This could then have a knock-on effect on RVs, as consumers shy away from vehicles linked to recalls, potentially in favour of models with internal combustion engines. As pointed out in the Autovista Group and Twaice Power of Signalling whitepaper, information on battery condition can be invaluable to help combat the asymmetry of information, and could significantly increase RVs.

UK to adopt EU emissions regulations following Brexit transition period

The UK government has confirmed it will adopt European Union (EU) emissions targets for 2021 and beyond at the end of its Brexit transition period on 31 December 2020.

Following a consultation, the government said that the existing target of 95g/km CO2 emissions averaged across a vehicle fleet would remain, meaning carmakers may continue with their current strategies to ensure they meet the strict regulations. Many are looking to achieve this by selling a greater number of battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs). However, all must now be aware of their performance in two markets, rather than a single one.

Had the UK government decided to go its own way with regards emission targets, there were fears that the supply of BEVs and PHEVs in the country would become limited, as carmakers focused on supplying Europe to meet the needs of a bigger market.

The new UK rules will mirror those in the EU, including an £86 (€95) fine for each g/km above the carmakers’ respective targets multiplied by the number of vehicles registered in the year.

Changing figures

As the UK’s average fleet mass is heavier than that of the EU, the UK government has highlighted that the sum of individual manufacturer targets in the UK will be slightly higher than the sum of targets in the EU.

‘While this may therefore appear to be a slight relaxation of standards, by retaining the average EU mass value, it replicates the same level of effort required by manufacturers as under the current scheme in the EU,’ the government said. ‘This ensures that the regulation is as ambitious as existing arrangements.

‘If the UK average mass value was used to calculate manufacturer targets instead, it would make targets immediately more challenging.’

The UK average mass is updated every three years and will be used in calculations from the next due update onwards.

Future targets

The UK will also adopt EU targets set for 2025 and 2030 for a further reduction in vehicle CO2 emissions, meaning manufacturers will have to reduce output by 15% (based on 2021 levels) in 2025, with a 37.5% reduction in 2030.

European regulations (EU) 2017/1152 and (EU) 2017/1153 establish the correlation procedure to be used during the regulation’s conversion from New European Driving Cycle (NEDC)-derived targets and calculations to Worldwide Harmonised Light-Vehicle Test Procedure (WLTP)-derived targets and calculations.

While the corrections needed to ensure these regulations continue to function in the UK are minor, the EU dataset will be used as a basis for the correlation between NEDC and WLTP, providing further clarity for carmakers.

Super credits

One of the biggest changes in the government’s consultation announcement is the lowering of the CO2 g/km threshold for carmakers to apply for ‘super credits’. The credits can be used against emissions targets, and work as an incentive for manufacturers to sell more zero- and low-emission electric vehicles (ZLEVs) as they will multiply within a fleet. For 2020, one super credit counts as two vehicles, with this dropping to 1.67 in 2021, and 1.33 in 2022.

In the EU, the amount that manufacturers may benefit from the use of super credits is capped at 7.5g/km cumulatively over 2020-2022.

As the new regulations will only take effect from 2021, the UK government has decided to reduce the cap for two years to 3.75g/km. This received a mixed response in the consultation, some arguing that the figure was too high as carmakers may have already used their EU-mandated 7.5g cap, others suggesting it was too low, unfairly affecting those looking to bring more ZLEVs to the market in 2021 and 2022.

‘It is evident via the nature of the responses that this issue is complicated,’ the government said. ‘An increase in the super credits can act as an incentive for car manufacturers to put more ZLEVs on to the market, which is in line with the government’s net-zero and decarbonisation commitments.

‘Equally, the government recognises super credits can artificially lower manufacturer targets, thus providing the opportunity for higher emission vehicles to be sold. There is the possibility that manufacturers will use their EU-allocated 7.5g CO2/km cap in 2020 alone, meaning the 3.75g CO2/km cap available across 2021 and 2022 will be in addition to the super credits offered in the EU regime. Whilst this is possible, due to the timelines for enforcing the regulation, it will not be known until October 2021.’

Launch report: Volkswagen ID.3

The Volkswagen (VW) ID.3 is the carmaker’s first dedicated battery-electric vehicle (BEV) and features a futuristic look to appeal to both a new and existing customer base. The interior is ultramodern, and the powertrain is beaten only by the Nissan Leaf.

The BEV market is expanding rapidly, thanks mostly to the emissions targets set by the European Union and a collapse in diesel sales. As Europe’s market leader, and a company heavily reliant on internal combustion engine (ICE) sales, VW has to succeed with its BEV plans, and has therefore conceived a new sub-brand to carry the weight of this expectation. The ID.3 is the first offering, and the carmaker has promoted the vehicle extensively prior to it going on sale.

As an important car, it has received a lot of attention from VW, and this shows in its development with a competitive range and fast charging times.

As a rapidly expanding market, the ID.3 needs to compete with established models such as the Nissan Leaf, as well as newer options from Asian carmakers, like the Kia e-Niro and Hyundai e-Ioniq.

Click here or on the image below to read Autovista Group’s benchmarking of the VW ID.3 in France, Germany, Spain and the UK.

We present new prices, forecast residual values and SWOT (strengths, weaknesses, opportunities and threats) analysis.

ID3 SWOT dashboard - click here

Video: Laying the foundations for autonomous cars

In part two of our insight into autonomous vehicles, Phil Curry talks with Autovista Group’s chief economist Christof Engelskirchen and Daily Brief journalist Tom Geggus about the practical applications for self-driving technology and the infrastructure needed to support it…

Watch the first video in the series here. To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including incentive schemes, safety systems, electrification and event reviews.

How has COVID-19 impacted fleets?

The automotive industry has been dominated by a specific number of topics in the last year. From coronavirus (COVID-19) to electromobility and the advance of new technologies. But how have these topics impacted one of the industry’s most important sectors? In a new series, Autovista Group’s Daily Brief journalist, Tom Geggus, speaks with industry insiders to discover how these themes are changing fleets. Up first, COVID-19.

As countries went into lockdown to prevent the spread of coronavirus, the toll on the automotive industry was enormous. Between February and April registrations went into free fall, manufacturing ground to a halt and supply chains froze. Currently, incentive schemes are providing short-term stimulation, but the long-term consequences of the pandemic could be much further reaching, for fleets in particular.

In the beginning

Peter Golding, managing director of fleet management company FleetCheck, explained that early on in the pandemic there was a binary divide between essential service operators and those companies which had to put business on hold.

‘If we look at the impact to essential, they had a significant challenge because there was an expectation that they could increase capacity,’ he said. Some vehicles were seeing an exceptional jump in usage, which meant implementing increased sanitisation practices and policies to protect staff. Some companies even found themselves taking on board furloughed staff to meet demand, which meant training inexperienced drivers how to operate a vehicle that was completely new to them, all in non-ideal conditions.

Meanwhile, companies that found themselves operating out of their employees’ homes were without the integral systems that only functioned in an office environment due to safety restrictions. So the businesses with fleet-management software tied to localised intranets were at a distinct disadvantage to those with a cloud-based system. Meanwhile, those companies needing to pause operations and lay up a fleet were faced with a different conundrum.

‘If we are dealing with the issues of laying up fleet, the uncertainty of the duration of COVID-19 and how long the shutdown was going to last,’ said Golding. ‘Having a vehicle stand down for a month is quite different than having a vehicle stood down for five months.’

As time passes

Formed in March this year, the Association of Fleet Professionals (AFP) serves over 1,000 members in the UK, providing best-practice advice, training and representation. As the number of COVID-19 cases continues to fluctuate, fleets may find themselves facing fresh challenges as more time passes.

‘I think the reality for fleet operators, is that they’re likely to see impacts well into 2021,’ said Paul Hollick, chairman of the AFP. This could include vehicle safety, as cars sit unused and uninspected for long periods of time, particularly if they are not company assets. Both the driver’s physical and mental health also become a cause for concern, whether they are having to risk commuting into the office or if they are becoming more confined to their home.

‘The other big thing, of course, is cost-saving and cost-reduction as everybody starts to tighten their belts,’ Hollick said. Trying to deliver savings at a time of economic fallout has meant reviewing and re-reviewing budgets to reduce the impact on bottom lines.

But as with operation types, not all vehicle types have suffered the same effects at the hands of the pandemic. ‘The van market has just gone crazy because of course, the delivery sector in a COVID-19 world requires a lot more vans on the road to be able to lift goods and services to people’s address rather than to deliver to depots.’

Lars Pappe, vice president of e-mobility design and development at Deutsche Post DHL, considered that even after COVID-19 some trends may persist, particularly in relation to online shopping. ‘So I think the average amount of parcels we ship in B2C-related business, I think it will remain on the high volume level in comparison to before the COVID-19 situation.’

Since parcel volumes are expected to remain on the current high level, for some logistics providers this might mean increasing the number of light commercial vehicles (LCVs) in their fleet, to cope with a greater number of deliveries. Meanwhile, other operators might decide to increase the size of the LCVs they operate, to deal with larger loads. But whether operators are able to acquire additional vehicles, or even refresh their fleet from the currently distressed supply chain is another question.

Uncertain times

‘Many companies have pushed to extend their contracts for various reasons,’ Sjoerd Brenters, head of international consultancy services at LeasePlan explained. ‘Clients might be more careful with leasing new vehicles and instead extend existing contracts given the uncertain times we live in,’ he said.

Upon impact, COVID-19 caused OEM supply chains to come to a standstill as the delivery of vehicles became problematic. However, these issues could be rectified as manufacturing restarted. The longer-term changes look to involve order completion and getting the car to the customer. Considering the impact on used-car sales, for example, Brenters explained how the LeasePlan subsidiary CarNext.com was well-positioned to handle the pandemic. With vehicles being ordered online, delivered directly, and all with little to no human interaction, CarNext.com could easily deliver vehicles in a safe way.

There is even the potential for a short testing period, with the option to return the car after a trial period for a relatively low amount. If this were to be the case, the relationship between those who supply fleet vehicles and those who use them could become far more direct, without the need for human interaction.

However, how these vehicles might be used is another matter. While at the start of the pandemic, cars were parked up, the need for these vehicles was not drawn into doubt. ‘Employees and employers are starting to rethink the usage of the vehicle. This doesn’t mean less usage, it just means different usage.’ said Brenters. ‘A car may be used less for commuting to work, but used more for vacations, for example, especially with people wanting to avoid flying.’

Therefore, the need for higher-end vehicles in which a member of staff spends a lot of time travelling would not decrease, its use would just shift. This will surely also influence the size and type of car which employees choose going forward.

On top of the pile

Operating a benefit fleet for its employees, Microsoft leases roughly 9,200 cars across nearly 50 countries. Managing the company’s vehicles in 10 of these European countries including Germany, Austria and Switzerland is Michael Pohl, senior procurement engagement manager fleet at Microsoft.

In the early stages of the COVID-19 pandemic, Pohl’s team received advice that vehicle orders should go on hold, but this was not the path he chose. ‘I remember saying, if everything is piling up, I want to be on top of the pile. We agreed that we are not going to stop anything. We continue to order cars, as well as possible. Within the limitations of operations in spring of this year,’ he said.

‘The only thing we did was to give the employees more time, because it was not possible for them to do test drives, for example. They need more time to figure out what type of car they want to drive in the future,’ Pohl explained.

Looking back, it is not a decision Pohl regrets for a moment. As production lines became operational, Microsoft orders were fulfilled with a shorter lead time, compared to the companies who decided to go on hold.

Looking forward, Pohl explained that COVID-19 is not the death of the company car, it is in fact far from it. ‘Since COVID, people have realised that having a company car gives you an incredible freedom,’ he said. These vehicles open up the potential for commutes without public transport, holidays without aeroplanes, and freedom without compromise.’

Right strategy for tomorrow

The coronavirus crisis has taken so much. It has taken lives and it has taken livelihoods. But it did provide one thing; time. As automotive production paused, distribution dried up and sales stopped, Alain Duez and Wim Buzzi used their time in lockdown to found a new company; let it fleet.

Drawing on their combined 45 years’ worth of experience in the automotive industry, the pair built the company on the pillars of people, procurement and process. Driven by a desire to approach vehicle supply from a customer perspective, let it fleet aims to create customised support that addresses every element of fleet management. This covers a wide gambit from policy assessment, to contract management and recruitment support.

As Duez and Buzzi established their new venture amid the pandemic, others in the automotive and fleet industry also had time to reflect. ‘Coronavirus right now has meant that a lot of companies have time,’ explained Buzzi. ‘They had frozen their car orders or extended their contracts because nobody is driving. And it gave them time to look at things.’

COVID-19 has meant the restructuring of fleet strategies. At present, liquidity remains at the top of the agenda while leasing costs mount. New-car sales have plummeted while lead times increase and manufacturers wrestle with their supply chains. Looking down the road, the company car faces a new world with the likes of more home-based working and the tightening of purse strings.

‘So, the way we will use a car will be totally different in the next few months, maybe even in the next few years. There are a lot of things that will be changing around,’ Duez said. ‘So, I think that we need to anticipate as much as possible for clients, to put in place the right strategy for tomorrow,’ he added.

COVID-19 has acted as a sudden catalyst for change when it comes to fleets. How vehicles are sourced, managed and operated. But the immediacy of the pandemic’s impact has acted as a trojan horse for a change that looks to tectonic. The age of electromobility has arrived, and the automotive industry is plugging in.

Video: Incentives improve September registrations in Germany and Italy

Autovista Group Daily Brief editor Phil Curry guides you through the September registration figures of Germany, Italy, Spain, France and the UK, as the industry continues to see mixed results following the relaxation of coronavirus (COVID-19) lockdowns.

To get a notification for the second part of our ‘Keeping up with autonomous cars’ episode, subscribe to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including incentive schemes, safety systems, electrification and event reviews.

Podcast: Stalling sales and Brexit woes

In its latest podcast, the Autovista Group Daily Brief team discusses Europe’s fluctuating registrations, developments in EV battery manufacturing and more complications arising from Brexit…

https://soundcloud.com/autovistagroup/stalling-sales-and-brexit-woes

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Podcast: How design plays a part in car residuals

Zeitgeist, Bauhaus, cartoonesque Fiat 500, impish Mini… The quest to develop the perfect vehicle design, which captures the essence of a brand, sets the vehicle apart and lets it appear fresh and up to date for several years, is a major challenge for all design teams. There have been expensive mistakes and some overwhelming success stories.

Autovista Group’s Chief Economist Christof Engelskirchen talks with Sam Livingstone, director at Car Design Research, about the role of design in the success of a newly launched vehicle, how little things can add a lot of character and the impact design can have on residual values. Sam shares several precise insights that you really should not miss…

https://soundcloud.com/autovistagroup/the-quest-for-perfection-in-vehicle-design

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Infected: COVID-19 in the German LCV market

The market for light commercial vehicles (LCVs) is often somewhat neglected in the automotive industry. Volumes are smaller, it is less price-driven, has fewer distinguishable model ranges and is not as glamorous as the more disparate passenger-car market, writes Andreas Geilenbrügge, head of valuations and insights at Schwacke.

It is therefore worthwhile measuring its pulse separately. On the one hand, this market functions according to its own rules while on the other hand, used vans are almost exclusively for commercial use but have also suffered from the ongoing coronavirus (COVID-19) crisis.

Looking at the German registration figures for new LCVs, the picture appears comparable to that of passenger cars at first glance. LCV registrations were 22% lower year-on-year in the year-to-August 2020 and passenger cars were down 29%, so not that far apart. However, looking in more detail, it is noticeable that passenger cars were still successful at the beginning of the year, whereas LCVs were already lower in January and February 2020 compared to the previous year’s figures. And then the COVID-19 effect from March to May came on top with full force.

Even the immense new-car success in Germany due to extended incentives is scarce in the vans segment. Without the Ford Transit and Transit Custom hybrids, the overall balance of (partly) electric vehicles would even be slightly negative. In addition, although the surplus of tactical registrations in Q3 2019 put a heavy burden on the new-car trade during the shutdown, it is now helping to satisfy unmet demand for new cars, due to production downtime and supply shortages, with young used cars. There was not such a large surplus of young used vans, as there was no need to register produced vehicles quickly, which would have otherwise contributed to CO2 emissions penalties in 2020.

In terms of new registrations, LCVs have therefore been much less affected by the crisis than passenger cars.

Used LCVs in demand

The change-of-ownership data paint an even better picture, with year-to-August growth of almost 4% for LCVs up to six years old and 2.5% growth for all ages. This is even with the lack of supply from trade registrations due to the crisis pulling volumes down this year. Looking at the brands, most large-volume players are in the black (figure 1). The unusually positive outlier Mitsubishi is probably explained by a combination of portfolio peculiarity (almost exclusively pickups) and a shortage of new cars due to production interruptions in Thailand.

Figure 1: Changes of ownership, LCVs by brand, maximum age six years, YTD August 2019 vs YTD 2020

Eigentümerwechsel, LCVs nach Marke, Höchstalter sechs Jahre, YTD August 2019 vs. YTD 2020

Stock management is the key

As can be seen from the development of stock levels on used-vehicle portals, there was an initial accumulation of LCVs during the shutdown, and then, as expected, a significant surge in the outflow of used vehicles (figure 2). In the meantime, stocks have returned to their pre-crisis level in terms of volume (figure 3). Still, the persistently high average level of stock days indicates that although ‘fresh goods’ are entering and exiting quickly, those that remain stay longer and longer.

Figure 2: Stock development of LCVs on portals, 2.5 to 4.5 years of age, volume and average stock days

Bestandsentwicklung von LCVs auf Portalen, 2,5 bis 4,5 Jahre alt, Volumen und durchschnittliche Bestandstage

Figure 3: Stock development of LCVs on portals, less than and above 60 stock days

Bestandsentwicklung von LCVs auf Portalen, weniger als und über 60 Lagertage

With a view to the approaching year-end business, the risk of a price war is building because of the long-standing vehicles. In addition, the approximately 25,000 fewer new sales to end customers in the year-to-date have torn a large sales hole in the books of commercial vehicle dealers, despite the 6,000 more sales of used vehicles. So, in December, every used van that is somehow paid for and rolls off the lot, will count even more than usual.

Insight: Keeping up with autonomous cars

In the first part of our latest insight episode, Phil Curry talks with Autovista Group’s chief economist Christof Engelskirchen and Daily Brief journalist Tom Geggus about the rapidly advancing pace of autonomous technology, and the reality of self-driving cars…

To get a notification for the second part of our ‘Keeping up with autonomous cars’ episode, You can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including incentive schemes, safety systems, electrification and event reviews.

New-car registrations fluctuate across Europe in September

Automotive associations in France and Spain have reported declines in their September registrations, while Italy has recorded its first increase of 2020, largely thanks to government-backed incentives finally boosting registration figures. Autovista Group Daily Brief editor Phil Curry assesses the results.

Following the lifting of coronavirus (COVID-19) related lockdowns, the automotive industry in some of Europe’s biggest markets has shown signs of recovery. However, as the year goes on, pent-up demand and incentive schemes are making way for a drop in consumer spending due to economic woes, while a second wave could also impact sales.

New-car registrations, France, Italy and Spain, year-on-year percentage change, September and year-to-date 2020

Pkw-Neuzulassungen, Frankreich, Italien und Spanien, Veränderung gegenüber dem Vorjahr in Prozent, September und seit Jahresbeginn 2020

Source: CCFA, ANFAC, ANFIA

New-car registrations in France fell 3% during September, according to the latest data released by the country’s automotive authority, the CCFA. Taking into account the number of working days in September 2020 compared to the same month last year (22 days compared to 21), this decline increases to 7.4%

Despite positive increases in June and July, thanks to a comprehensive incentive scheme, the removal of financial bonuses, following the cap in the budget being reached, have seen sales drop in the last two months.

Although a 3% decline is an improvement over August results, the market is still 28.9% down year-to-date. Over nine months, registrations stood at 1,166,699 units. The CCFA is forecasting the market as declining by 25-30% over the whole of 2020, amounting to the lowest number of registrations in 15 years.

Spain too logged a decline in registrations, with the market down 13.5% in September, according to the latest data from ANFAC. This is a decrease from August, despite the introduction of an incentive scheme in the country. Just 81,746 units were registered in the month.

Spain was one of the worst-hit markets in Europe, and the country’s government has recently introduced a number of local lockdowns, including the city of Madrid, as COVID-19 cases start to increase again.

While this move may not have impacted heavily on September figures, it highlights the changing situation in Europe, and how the automotive industry may struggle for the rest of the year. The Spanish market is down 38.3% year-to-date, according to the latest figures, with 595,435 registrations.

‘The drop in registrations worsened again in September compared to August,’ explained Noemi Navas, communications director of ANFAC. ‘Sales continue to fall in all channels, and this has a serious impact on employment, industry (because one in four cars manufactured in Spain stays in the country) and society as a whole. Without forgetting, due to its impact, that the renovation of the parc is slowed down and with it, the necessary reduction of CO2 emissions that we have to undertake. The RENOVE Plan [Spain’s incentive scheme] still has sufficient funds to boost sales for the last quarter, and we hope that the evolution of the virus will not slow down the market even more.’

Positive aspects

Italy offered an exception to the trend currently being seen in Europe, posting an increase in registrations of 9.5% in September, according to Italian industry association ANFIA. This is likely due to the country’s incentive scheme, which began in August. While sales in that month declined, delivery times would likely have pushed registrations back into September, boosting figures.

The country was the first to go into lockdown, doing so in March of this year. Since these measures were lifted, the Italian automotive market has shown a slow but steady increase in registrations, leading to the increase over the same month last year. This is in contrast to other markets, which have shown rapid increases followed by further declines.

‘The incentives introduced have contributed to this result,’ said Paolo Scudieri, chairman of ANFIA. ‘Funding for the 91-110g/km CO2 vehicle band was quickly exhausted, while those available for the 61-90g/km CO2 bracket will soon be depleted.’

Year-to-date figures show the Italian market is still down 34.2%, with 966,017 passenger cars registered.

Incentive burnout

The results show a mixed impact of incentive results. In France, the scheme was well received and depleted quickly, leaving the market at the mercy of a drop in consumer spending.

New-car registrations, France, Italy and Spain, year-on-year percentage change, January to September 2020

Pkw-Neuzulassungen, Frankreich, Italien und Spanien, Veränderung gegenüber dem Vorjahr in Prozent, Januar bis September 2020

Source: CCFA, ANFIA, ANFAC

However, in Spain, the RENOVE scheme seems to have passed many buyers by, with funding still available, but a minimal impact on sales. The market saw a 1.1% increase in July, the first month of the MOVES II and RENOVE scheme introduction, but since then has posted declines of 10.1% (August) and now 13.5%. With funding still available, it is clear that consumer demand is the problem in the country. With the implementation of local measures to deal with a second-wave of COVID-19 infections, a further complication to recovery is being added.

‘In September there was a market slowdown,’ said Raúl Morales, communications director of Faconauto. ‘The evolution is not good, but we are still at a registration volume that is better than expected thanks largely to the effect of the RENOVE.

‘Undoubtedly, the worsening of the health situation and a new decline in confidence is already weighing on consumers, who view not only the present but also the future with suspicion. This slowdown was the fear we had, and that leaves us facing a last quarter of the year marked by uncertainty.’

Values of older used cars rise above pre-crisis levels across Europe

The golden age of the used car continues in many markets, with residual values at, or even above, pre-coronavirus (COVID-19) crisis levels. This is partly driven by higher demand and prices for older used cars, the so-called ‘budget cars.’ Senior data journalist Neil King explores the reasons behind the positive pricing developments.

In the 12 markets featured in Autovista Group’s COVID-19 tracker, residual values (RVs) of cars aged 91 months or more are already above pre-crisis levels except in just three countries – Portugal, Finland and Italy. The broader ‘three-speed’ development of RVs, which has prevailed across the region following the emergence of Europe’s automotive sector from lockdowns, is less pronounced, but the UK still stands out from the crowd. The index of RVs for this used-car age group has risen since mid-May, peaking at 108.4 (an 8.4% rise) in the UK in the week to 27 September. The start month was February, with a value of 100.

Residual-value index of cars aged 91 months or more, February to September 2020

Restwertindex von Autos mit einem Alter von 91 Monaten oder mehr, Februar bis September 2020

Source: Autovista Group, Residual Value Intelligence, COVID-19 tracker

Similarly, the RVs of used cars aged 54-90 months are higher than before the COVID-19 pandemic took hold except in Portugal, Finland and Italy. The most robust performance is again in the UK, where the index peaked at 107.4 (a 7.4% rise) in the week to 27 September.

‘New and used stock is the biggest issue in the UK. This is driving up used prices and we don’t see the bubble bursting quite yet. It is September, and even convertible demand is still high, with values increasing,’ commented Anthony Machin, head of content and product at Glass’s.

Residual-value index of cars aged 54-90 months, February to September 2020

Restwertindex von Autos im Alter von 54-90 Monaten, Februar bis September 2020

Source: Autovista Group, Residual Value Intelligence, COVID-19 tracker

Cheaper, safer private transport

A key factor behind the increased popularity of older used cars is consumer aversion to public transport, which Autovista Group highlighted as one of the side effects of COVID-19 back in April. In many countries, governments are still advising against using public transport. Furthermore, car-rental companies are suffering too and the mobility trend towards car-sharing has also been dampened.

Johan Trus, head of data and valuations for the Nordics at Autovista Group, commented that in Finland and Sweden, where lockdowns were not observed and dealerships remained open, ‘both markets have been in recovery since April, and have experienced high demand for used cars as people were asked to avoid public transport when commuting.’

‘In Poland, we observe and also receive feedback from dealerships that asking prices are rising due to very good demand. At the moment I guess it is the consequence of public transport being replaced with private cars. Cheap fuel further supports this solution,’ said Marcin Kardas, head of the Autovista Group editorial team in Poland.

Ana Azofra, valuation and insights manager at Autovista Group, reiterated the point. ‘In Spain, part of the population, which used public transport until now – especially in the big cities – is moving or returning to car ownership as a more hygienic and safer form of mobility.’

A second factor is purely economic as consumers tighten their financial belts and look for a lower financial risk.

‘As in past economic crises, COVID-19 has diverted demand towards cheaper, smaller, older cars, favouring their performance in the market,’ said Azofra.

With the full economic impact of COVID-19 yet to be unleashed in Europe, this trend is expected to continue and may amplify, albeit nuanced by market.

Stock shortages

Finally, scrappage schemes and new-car supply challenges have further supported RVs of older used cars as stock levels reduce.

‘The halt in sales activity and production of new cars has also reduced dealer stock of older cars, as this usually comes from trade-ins. This is boosting stock turnover and taking the pressure off prices. The new RENOVE fleet-renewal plan in Spain incentivises the scrappage of older cars – always an easier disposal option than selling – which is further reducing supply,’ Azofra explained.

As a second wave of COVID-19 threatens Europe – cases are rising and tighter restrictions have been introduced in France, Spain and the UK for example – this may further boost the demand for older used cars.

This may be good for the used-car business but not necessarily for the environment, especially as manufacturers and countries seek to boost demand for clean new cars to lower emissions levels.

You can find more information about how different markets are shaping up, and the various economic scenarios across the region, in the latest update of the Autovista Group whitepaper – ‘How will COVID-19 shape used-car markets?’ – which can be viewed here.

TCO Dashboard: B-segment BEVs only competitive because of incentives

In the second of a new series that considers total cost of ownership (TCO), Autovista Group has created a dashboard comparing the retail prices (including taxes) and TCO of leading B-segment battery-electric vehicles (BEVs) in France, Germany, Spain and the UK. Senior data journalist Neil King explores the findings.

Autovista Group’s TCO analysis reveals that B-segment BEVs are only competitive compared to petrol models because of government incentives. However, hybrids still offer a lower TCO in all markets, except Germany, and list prices of small BEVs therefore need to be lower for them to gain momentum – especially if incentives are lowered (as has been announced in France) or even withdrawn entirely.

Under normal circumstances, the price positioning of B-segment BEVs (Opel/Vauxhall e-Corsa, Peugeot e-208 and Renault Zoe), at around €32,000 (£30,000 in the UK), means they struggle to be competitive from a cost perspective.

Government subsidies in France, Germany, Spain and, to a lesser extent, the UK, help to close the pricing gap. Nevertheless, the BEVs are at least 24% more expensive than our reference hybrid model, the Toyota Yaris, and 7% costlier than the 1.2-litre Peugeot 208 in France. In Germany, the price premium over the Yaris for the cheapest B-segment BEV, the Opel e-Corsa, is reduced to just 5% and the model is 11% cheaper than the petrol Peugeot 208.

B-segment BEVs can therefore only compete on price against petrol and hybrid rivals if attractive list price positioning is combined with healthy government support.

‘OEMs need to leverage the government incentives but make an effort to bring list prices down over the next 12-18 months,’ commented Christof Engelskirchen, chief economist at Autovista Group.

Competitive TCO ‘on paper’

Pricing data is provided in the local currency for the same five models in each market, including retail list prices (including taxes), incentives, discounts, and a final adjusted retail price. The TCO is calculated as the sum of total acquisition costs and total utilisation costs. Acquisition costs cover depreciation, financing and acquisition taxes. Total utilisation costs consist of servicing, fuel, wear, tyres, insurance, and utilisation taxes.

The TCO of B-segment BEVs is competitive with petrol-powered cars in both the 36 months/45,000 km and 36 months/60,000 km scenarios (36 months/30,000 miles and 36 months/45,000 miles in the UK). Nevertheless, these TCO results are only ‘on paper’, as buyers can often negotiate discounts on petrol competitors such as the Peugeot 208. For this reason, TCO calculations are also provided with discounts of 10% and 20% applied to the 1.2-litre, 130-hp petrol Peugeot 208 in this analysis.

Moreover, small BEVs only have a competitive TCO compared to the Yaris in Germany, even without factoring in potential discounts for the hybrid Toyota.

TCO Dashboard B-Segment September 2020

Changing incentives

France introduced new incentives on 1 June, with the bonus for BEVs (and plug-in hybrids (PHEVs) with CO2 emissions less than 20g/km) costing less than €45,000 now at €5,000 for fleet users, compared to €3,000 previously, as shown in the TCO dashboard. For private buyers, the BEV/PHEV subsidy is €7,000, instead of €6,000 previously. For both private and fleet buyers, the subsidy is still €3,000 if the BEV or PHEV (<20g/km) car is priced between €45,000 and €60,000 (including taxes). For PHEV models costing less than €50,000, and with CO2 emissions between 20g and 50g/km, there is now also a €2,000 bonus.

Similarly, from 1 July, Germany increased its incentives for BEVs costing up to €40,000. The one-off payment rose from €6,000 to €9,000 and for models costing between €40,000 and €65,000, the incentive is now €7,500. PHEVs still benefit from the scheme and are now eligible for a €6,750 subsidy.

The incentives are provided in equal halves by the German Government and the carmaker. From 1 July, the governmental element doubled to €6,000 for BEVs and hydrogen fuel-cell electric vehicles (FCEVs) costing less than €40,000. When paired with the manufacturer bonus of €3,000, customers are therefore able to save €9,000 on zero-emission cars. Meanwhile, BEVs and FCEVs costing above €40,000 but below €65,000, are eligible for €5,000 in government subsidies, alongside a €2,500 OEM bonus. PHEVs costing €40,000 or less will be eligible for an increased federal contribution of €4,500 and the manufacturer bonus of €2,250. Where they cost €40,000 to €65,000, they will receive a €3,750 government subsidy and a €1,875 OEM bonus. These incentives will be available until December 2021.

Given the incentives offered in the other major European markets, it was clear from our TCO analysis of C-segment models, conducted in June, that Spain also required incentives to make BEVs competitive.

The MOVES II incentive scheme for new BEVs and PHEVs, and the RENOVE scrappage scheme, were introduced in early July and boosted new-car registrations in the month.

Under the MOVES II scheme, large companies purchasing new BEVs and PHEVs costing less than €45,000 are entitled to a total subsidy of €3,800 (€2,800 from the government and €1,000 from the manufacturer). For small companies, the subsidy is €4,200 and for private buyers it is €5,000. Customers can also receive an additional bonus of €500 if they trade in a car to be scrapped that is over seven years of age.

Cars with other fuel types are not eligible for the MOVES II new-car incentive but can still benefit from the RENOVE scrappage scheme. When scrapping a car over ten years of age, buyers of hybrids, mild-hybrids and CNG or LPG cars costing less than €35,000 receive a bonus up to €2,000 – half provided by the government and half by the manufacturer. For cars with internal combustion engines (ICE) costing less than €35,000 and with CO2 emissions lower than 120g per kilometre, the maximum bonus is €1,600.

Both the MOVES II and RENOVE schemes have been applied retroactively to 1 January 2020, and so both new and young used cars are eligible for the subsidies in order to avoid potential stock problems.

Lower list prices for long-term competitiveness

The upshot is that existing and enhanced incentives across Europe provide a short-term boost as the automotive industry contends with the fallout from the coronavirus (COVID-19) pandemic. However, they may be lowered or, ultimately, fully withdrawn.

As a case in point, the French government has announced a reduction in the €7,000 incentives for private buyers of BEVs and PHEVs to €6,000 in 2021 and €5,000 in 2022. There has not been an announcement concerning changes to the incentives for fleet buyers. Nevertheless, Yoann Taitz, operations director at Autovista Group in France commented ‘we could think that it should be €2,000 lower for fleet buyers too but this is just my assumption.’

A reduction in the list prices of BEVs is therefore still the only long-term solution to make electromobility viable from a TCO perspective.

Click here or on the screenshot above to view the pricing and TCO dashboard for the B-segment models under review in France, Germany, Spain and the UK. Click here for the TCO dashboard for C-segment models.

Podcast: Back to basics with Brexit, emissions and electric vehicles

The Autovista Group Daily Brief team takes a look at some of the challenges the automotive industry is facing, besides the ongoing complications caused by the coronavirus (COVID-19) pandemic. In this episode, emissions regulations, Brexit and the increased need for electric vehicles are up for discussion.

https://soundcloud.com/autovistagroup/non-covid-challenges-impacting-the-automotive-industry

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Schwacke Insights September 2020 – monatliche Kennzahlen im Überblick

Die Erholungs-Tendenz der aktuellen Bewertungen setzte sich im August – abgesehen von elektrifizierten Antrieben – weiter fort. In den Prognosen spiegeln sich dagegen noch Auswirkungen der
Vorkrisen-Entwicklung und erste Anteile der Krisenmonate März und April wieder. Die dreijährigen Gebrauchten bekommen dabei weiter attraktiven Rücklauf aus 2017, während den jungen Gebrauchten langsam der 2019er Nachschub aus Handels- und Eigenzulassungen ausgeht und 2020 dahingehend ja tief im Minus steht.

Während die Jungen vom Neuwagenlieferverzug profitieren, kommen den hier gezeigten Älteren die enger geschnürten Gürtel mancher Jung-Käufer sowie ex-ÖPNV-Umsteiger zugute.
Die stark rückläufigen Standzeiten bestätigen das hoffnungsvolle Bild. Bei den Schnelldrehern schaffen es sogar zwei Modelle mit ansehnlichen Stückzahlen deutlich unter die 30 Tage-Grenze!Insights September 2020 Preview

Schwacke Newcomer September 2020 – Neue Modelle im Forecast

Nicht elektrisch aber doch neu – Scharf geschnitten

Im September haben wir wieder Restwertprognosen für interessante Fahrzeugneuerscheinungen in unsere Datenbank aufgenommen:

  • BMW 4er Coupé
  • VW Arteon Shooting Brake
  • Hyundai i20

BMW 4er Coupé – Niere und Herzblut

Die wichtigste Frage, die sich wohl viele Fans und potenzielle Käufer stellten, war: „Kommt die Niere?“ Gemeint ist das auffällige Frontmerkmal aus dem Concept 4 Fahrzeug von der letzten IAA 2019. Ein echter Hingucker, wenn auch im Concept Car deutlich weiter kopflastig nach vorne geneigt. Die sehr große Niere, die auch und vor allem an die Elektro-Konzepte iNEXT und i4 erinnert, trägt sehr viel zum eigenständigen Gesicht des „The 4“ bei. War dem Vorgänger noch die Verwandtschaft mit dem 3er anzusehen, ist mit dieser Generation die Differenzierung deutlich besser gelungen. Die Silhouette reiht sich nun auch besser in die des 6ers und 8ers ein. Die in Teilen der Welt entfallenden, aber hier nun einmal notwendigen Frontnummernschilder, stellen in Europa zwar eine gewisse optische Beeinträchtigung dar, dürften aber Fans des neuen Designs kaum wirklich stören. Innen ist der 4er auch wieder ganz der Alte bzw. 3er. Das Interieur und Infotainment birgt keine Überraschungen – manch einer wird sagen: Gottseidank. Platz ist auf der Rückbank ausreichend, nur die Kopffreiheit ist coupétypisch knapp bemessen. Aber wann sitzt da mal jemand? Den sportlichen Auftritt lassen sich die Münchner aber stattlich entgelten. Im zugegebenermaßen etwas hinkenden Vergleich mit der Limousine kostet der flache Bruder fast 5.000€ mehr. Bringt allerdings serienmäßig immer gleich Sportsitze, 2 zusätzlich klimatisierte Innenraumzonen und Parksensoren mit. Das zweitürige Coupé macht nun also den Anfang. Allerdings waren zahlenmäßig die beiden anderen Karosserievarianten Cabrio und Gran Coupé immer die wichtigeren. Der erste Auftritt macht dennoch schon jetzt Lust auf mehr!

VW Arteon Shooting Brake – Nadelstreifen-Variant(e)

Die Bezeichnung Shooting Brake verbinden die meisten eher mit den Stuttgarter Autoerfindern mit dem Stern oder allenfalls britischen Sonderkarosserien legendärer Modellreihen. Bei VW ziert das Label die sportliche Kombivariante des „viertürigen Coupés“ im Format eines Passat. Der Arteon sollte mit hochwertigen Details in der Premiummittelklasse wildern und den klanglosen Abschied des Phaeton ein wenig vergessen machen. Für den Erfolg speziell in Deutschland fehlte aber dem geneigten Dienstwagenberechtigten sein Steckenpferd – ein Kombi. Und da kommt der Shooting Brake ins Spiel, der die Erweiterung eines Coupés um ein Gepäckabteil in eine schönere Form bringt. Das Konzept ist stimmig und schaut gut aus. Der Innenraum hat sich auch deutlich verbessert gegenüber dem früher stark an den Passat erinnernden Layout. Allerdings hat sich auch die Premiumwelt weiterentwickelt und bietet z.B. mit dem mächtig aufgefrischten Audi A4, dem neuen BMW 3er oder dem Volvo V60 die stylisheren Cockpits. Dazu kommt nächstes Jahr die neue C-Klasse, sodass die gehobene Gesellschaft sich wieder etwas weiter vom Volks-Wagen wegbewegt. Ein starkes Argument für Käufer ist aber sicherlich der geringe Kombi-Aufschlag von aktuell weniger als 900€ gegenüber dem Arteon ohne Box. Das wird dem erstgeborenen Bruder Kunden abspenstig machen und macht ihn wiederum für Flotten sehr interessant.

Hyundai i20 –Eine rationale Entscheidung

Den Kleinwagen aus dem Hause Hyundai kann man in vielerlei Hinsicht eines nennen: solide. Er sorgt seit seiner Entstehung für verlässlichen Absatz und überrascht auch in der dritten Generation nicht mit verspielten Details, sondern zeigt eine moderate Weiterentwicklung. Ungeübten Beobachtern könnte sogar entgehen, dass es sich um ein ganz neues Modell handelt, aber im Detail merkt man dann doch, dass die Hyundai-Entwickler mit der Zeit gehen. Besonders das ausdrucksstärkere Heck mit Leuchten in einer Art „Z“-Optik und im Innenraum das auf die Mittelkonsole gewanderte Digitaldisplay weisen den Neuen aus. Vergleicht man ihn allerdings mit dem gerade vorgestellten neuen Tucson, erscheint der i20 optisch eher etwas aus der Zeit gefallen. Von der Motorenpalette her hat sich ebenfalls auf den ersten Blick nicht viel verändert, aber beim genaueren Hinsehen bemerkt man den Einzug der 48V-Hybridtechnik, also verbrauchsärmerer Mild-Hybride. Diesen Schritt lässt sich Hyundai allerdings auch ordentlich bezahlen. In manchen Versionen neu nominell mehr als 2.000€ zusätzlich in der Preisliste – zugegebenermaßen ausstattungsunbereinigt – wird für zukünftige Kunden, die sich zwischen einem gebrauchten Vorgänger und dem aktuellen Modell entscheiden müssen, sich vermutlich nicht in gleichem Maße im Restwert wiederfinden. Mit vertrauenswürdigen und gebrauchtwagenkäuferfreundlichen fünf Jahren Garantie schließt sich aber der Kreis und wir landen inhaltlich wieder am Anfang seiner Beschreibung: Solide beschreibt den i20 alles in allem recht gut.

Newcomer-september-2020

European automotive market facing slow u-shaped recovery from COVID-19

As the coronavirus (COVID-19) situation across Europe remains fluid, and infection rates start to rise again, many of the continent’s key automotive markets are still expecting a slow, u-shaped recovery, despite recent rebounds in economic activity. The potential for a v-shaped recovery is diminishing with a second wave coming in.

With cases starting to rise across the continent, it is likely that the automotive market will again be affected in some way – either through new lockdowns, restrictions in manufacturing or an impact on consumer confidence when it comes to large purchases. The new-car market saw sales rise following the lifting of lockdowns, as pent-up demand drove customers to dealerships. However, this demand has now waned. Incentive schemes are still helping to keep some markets afloat.

In June 2020, economic trade value was only 10% below levels seen in February, highlighting the beginning of economic recovery – a process that took eight months to begin in the financial crisis of 2008-2009. Shipping activity in the US, Asia and Europe had also normalised to previous levels in August.

In addition, an economic sentiment indicator, published by the EU commission has grown in the Eurozone, to 87.7 in August from 82.4 in July. However, in the UK it has slid to 75.1 from 75.5 in the same period.

Risk potential

Some of this economic rebound could be short-lived, as current consumer behaviour is driven by pent-up demand, and there is a risk that joblessness increases in coming months as furlough schemes come to an end. This will suppress spending. The pace of recovery should slow down.

Autovista Group’s European research and analysis on the economic impact of the pandemic on Europe’s used-car markets and residual values (RVs) was discussed in a recent web seminar.

Six of the company’s top experts came together in an online discussion chaired by Autovista Group Daily Brief editor Phil Curry, discussing how markets are reacting to the COVID-19 downturn and the scenarios that some countries may find themselves in. You can watch the entire seminar broadcast below.

In a poll held during the pan-European conference, 45% of attendees felt the automotive market would see a slow, u-shaped recovery. This showed a drop in confidence compared to an identical poll held during July, where 55% felt this path would be the most likely scenario. The most significant increase in likelihood scenarios came in the ‘deep recession, slow recovery’ category, where 34% felt this path would be the most likely outcome of the COVID-19 impact on the automotive market, compared to just 14% in July. This increase could be down to the threat of a second wave of infections, with many countries across the continent starting to see cases rise, a situation that might lead to further lockdowns or restrictions.

Robert Madas, valuations and insights manager Austria & Switzerland, Eurotax, noted that in Austria, new car sales had suffered, 33% down year-to-date. At the same time, the used-car market is also off-track, with an 8.2% decline in the first seven months of the year. However, government electric vehicle (EV) purchase incentives have stimulated demand for plug-in hybrids (PHEVs) and battery-electric vehicles (BEVs). Switzerland is seeing a similar pattern, although used-car sales have only declined by 3.5% in the same seven-month period.

Purchasing power uncertainty

‘Asking prices in the used-car market have decreased after the lockdown, but we have now seen a recovery to pre-coronavirus levels,’ Madas commented. ‘However, in both markets, there is uncertainty regarding purchasing power and general economic outlook. Higher discounts and government incentives for new EVs will affect used-car values in Austria.’

Zsolt Horvath, operations manager at Eurotax Hungary, highlighted that the Central European region saw less-severe lockdown conditions than Western Europe, leading to less impact on RVs in the area. However, he added that car-rental companies had suffered due to cancellations, and supply of used-cars had also been impacted due to border restrictions. With a potential second wave incoming, the likelihood of a slow u-shaped recovery in the region has increased from 35% to 45%.

Yoann Taitz, operations and valuations director at Autovista France, pointed to the country’s strong market recovery since June in both the new and used-car markets, mainly due to the country’s COVID-19 recovery plan. Used-cars saw sales growth of 29.2% in June as pent-up demand helped the market, with a 12.1% increase in July and 15.6% in August, leaving the sector down just 9.6% year-to-date.

The government incentive scheme has led to a positive RV impact, since it supported also the purchase of used cars. However, some risks remain, especially with EV sales, as growth will be driven by the new-car market, and coupled with an increase in grants for their purchase, any supply stronger than demand would negatively impact EV RVs.

In Italy, Marco Pasquetti, forecast & data specialist at Autovista Italy, pointed to the country’s gloomier economic outlook, with GDP likely to be down 11.2%, as a significant impact on the automotive market, with a 65% probability of a medium-risk, slow u-shaped recovery. The market will likely see pent-up demand continue to drive sales, however, due to longer lockdowns and a drop in public transport use, estimated at around 35%-40% compared to pre-COVID-19 usage.

Johan Trus, head of data and valuations Nordics at Autovista, discussed the situation in Finland and Sweden, where no lockdown was observed, and dealerships remained open. Both markets have been in recovery since April, with a high demand for used-cars when people were asked to avoid public transport when commuting.

With various parameters for different scenarios taken into account, including a potential second wave of infections, continuing fluctuations in GDP, supply issues and country-specific factors, the landscape for scenarios in all countries is continuously changing. Autovista Group experts continue to monitor developments and will update their expectations accordingly.

You can find the information presented in the Autovista Group web seminar here. There are further details in the whitepaper: How will COVID-19 shape used-car markets?

Podcast: Up in the air – software updates and the future of vehicles

Special guest Szabolcs Jánky, head of product management for aiSim at AImotive, talks with Autovista Group Daily Brief journalist Tom Geggus. The topic up for discussion: how over-the-air-software updates are changing the future of vehicles…

https://soundcloud.com/autovistagroup/up-in-the-air

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify and Google Podcasts.

Facing autonomous disillusionment

A growing number of stakeholders has begun to address the legal, ethical and technological challenges around autonomous vehicles. The limited-use cases for autonomously driving vehicles may prove to be even more challenging. Autovista Group’s chief economist, Christof Engelskirchen, covers the top five issues with autonomous technology – from a use case perspective – and what ‘level’ of autonomy we should expect in our next vehicle.

The electric car, the connected car, the autonomous car… all great ideas take time. Like the battery-electric vehicle (BEV) that was conceived in the 1880s. Some 140 years later and it is far from being a breakthrough success. On that basis, the self-driving car still has around 132 years to go, if you consider 2012 as the starting point of the autonomous revolution. In that year, it became legal for Google’s autonomous car to drive on the roads of Nevada under one condition: a human driver had to be on board.

Since then, a lot has happened with respect to technology and legislation. A completely new universe of high-tech companies, traditional car manufacturers, suppliers and startups has emerged around autonomous driving technology (Figure 1).

Figure 1: Participating and exhibiting companies at Automotive Lidar 2020, 22-24 September

Participating and exhibiting companies at Automotive Lidar 2020, 22-24 September

This impressive line-up of companies has made strong progress in driving technological development and standards forward. However they have not yet been able to overcome the autonomous disillusionment we are facing collectively as an industry, namely that autonomous cars have a limited-use case for the near future. So what are the top five issues from a use case perspective?

  • The full Level 5 autonomous vehicle – in other words, a vehicle that does not have a steering wheel and never requires an intervention from a driver – is science fiction. There will always be circumstances where intervention from the driver will be required. Fog, rain, snow, lack of connectivity, other non-autonomous traffic, emergencies and peculiar traffic situations beyond the norm (such as passing the Arc de Triomphe in Paris) represent obstacles that have pushed Level 5 off the technology roadmap.
  • If driver intervention is still required, the cost for autonomous-driving technology comes on top of everything else. A combination of LiDARs, cameras, radar systems anddriver-monitoring technology will be required. At present, this means a medium-to-high five-digit figure of additional expenses will be added to the bill. In addition, the commercial vehicle fleet, including buses, trucks and taxis, will need to continue to pay a driver.
  • The business case for the autonomous car in a commercial setup only works if you can take the driver out of the equation. That requires Level 4 autonomous technology, where no driver intervention is required in specific areas; e.g. driving a certain route on the highway or on a campus would be possible, even in cities with very specific routes. Legally, and from a certification perspective, there will be performance and safety standards that need to be met. There cannot be performance differences at Level 4 autonomous technology. Just to reiterate, if the car is on a Level 4 route or in a Level 4 area, there is no driver required. That means that the car needs to fully manage any upcoming challenges or emergencies independently. There is no human intervention on a Level 4 route or in a Level 4 area. Once this cannot be guaranteed, you are effectively talking about Level 3 autonomous driving.
  • Physical lane separation will likely be a requirement for the coming years of Level 4 autonomous technology. Any unnecessary challenges will need to be avoided (for example, a non-Level 4 vehicle driver interfering with a Level 4 vehicle) both for safety reasons but also as they would disrupt the flow. A physically separated lane, that hosts Level 4 vehicles exclusively, is expensive. Dubai is considering establishing such a system as an addition to its public transport infrastructure. A train on rails would serve the same purpose.
  • Level 3 technology – a system where intervention from a driver may be required – is questionable as a concept. Asking drivers to monitor an autonomous driving system could be a stretch. Imagine dosing off while driving 130 km/h on a highway when an engagement request suddenly sounds. This hypothetical situation may leave drivers feeling unsafe. Not to mention questioning whether they would be willing to pay a medium-to-high five-digit Euro premium to equip such a system? Moreover, what would that mean for used-car values? For those reasons, Level 3 is currently not a concern for many OEMs. Level 4 is and Level 3 could be a spin-off, as it would not make sense to develop a Level 3 system as a stand-alone technology.

Gartner publishes a hype cycle for emerging technologies (Figure 2). Last year’s curve already shows Autonomous Driving Level 4 is post-hype and Level 5 almost at its peak. In their next update, the disillusionment might be even more visible.

Figure 2: Gartner Hype Cycle for Emerging Technologies 2019

Gartner Hype Cycle for Emerging Technologies 2019

To conclude, autonomous driving Level 4 is the desirable technology as there are business cases that could work.

Take the following example. A non-autonomous truck delivers goods to a hub, where the trailer is hooked to a Level 4 truck. That truck drives a distance of 500-1,000km in a dedicated lane, autonomously and without a driver, to the next hub. From there, a non-autonomous truck delivers the goods to the final destination. On university campuses,factory sites, or places like airports, transport could be organised with Level 4 people movers. For private individuals and their vehicles, consumers can look forward to improved ADAS, or Level 2+ technologies as expensive features: for example a 60km/h hands-offsteering wheel and eyes-off-road traffic jam assistant.

Autonomous cars will continue to be insured by the vehicle holder

Under the scenarios described above, cars with autonomous features will continue to be insured as individual vehicles by the holder of the vehicle. That system has proven to be highly effective. Suing an OEM, or one of the many suppliers, in an attempt to hold them liable for causing an accident is not what the holder of the vehicle or victim of the accident should be concerned with; insurers should pursue that route and they already do.

With Level 2+ features or further advanced driver-assistance systems, differentiation is possible between one OEM and another. These features will also impact the ability to remarket the vehicle – the most important building block for any leasing rate. Furthermore, it will be of interest for those looking at total cost of ownership optimisation for their fleet.