Falling new car prices are currently having a noticeable impact on the used car market. How will the market continue to develop?
Members of the Working Group of Banks and Leasing Companies in the Automotive Industry (AKA) financed or leased 316,000 used cars worth 4.5 billion euros in the first half of the year. This corresponds to an increase in value of 16 percent. Can this trend continue?
At the moment, falling new car prices are having a noticeable effect on the used car market. Residual values fell for several months in a row, but according to Schwacke, they recovered slightly at the end of the year. Small cars and vans increased by one percent, large SUVs by as much as two percent. Luxury cars, however, continue to decline. Also less pleasing: the number of days on the road is rising. From January to September 2012, it took an average of 104 days for a used car to be sold. In contrast, it was only 93 days in the same period last year. Microcars are currently the only segment that is leaving dealerships faster than a year ago.
Tactical registrations soon to decline?
Willi Diez, Director of the Nürtingen IFA Institute, sees another reason for a declining used car market: "The attempt to flood the market with tactical registrations is costing car manufacturers a lot of money and will therefore not be sustainable."
A recent study by the Center Automotive Research (CAR) at the University of Duisburg-Essen also testifies to a discount battle. Almost a third of the market is currently based on tactical registrations, with which a discount of 25 percent or more is possible. According to Autohaus online, DAT is also concerned about this development.
"Banks currently need to keep a particularly close eye on residual values, especially when it comes to Wholesale finance," says afb board member Jan Ph. Wieners. afb CMS connects directly to data suppliers such as Schwacke or DAT and therefore always works with the latest figures. The current market value of the vehicle fleet can be calculated at any time in accordance with Basel III. The updated data can then be transferred to a data warehouse for collateral valuation. There, the bank can read defaults from the value adjustment ratio or identify risk clusters.
