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Used car residual values (RVs) across major European markets are forecast to experience some continued pressure, but with a glimmer of optimism, over the next three years. This is due to a combination of shifting market dynamics and consumer finance trends.

In June, RVs for used cars after 36 months and 60,000km dropped in all seven observed markets. The steepest decline was seen in Italy, with a 4.4 percentage point drop, ending the month at 47.9%. Switzerland followed closely, with a marginal increase in June compared to May, but a year-on-year decrease of 0.9%.

The average number of days needed to sell a used car in Germany increased by two days to 60 days in June. However, Germany's SVI showed a strong increase, up by 11.8% compared to the previous month and 3.2% year on year.

The fleet composition in Europe indicates an aging car fleet, with 77.1% of private cars being over 10 years old as of 2023. This may keep demand steady for reliable used cars. On the other hand, only a small percentage (8.2%) of new registrations are recent vehicles, which could impact the supply-demand balance and thus residual values for used cars.

In terms of powertrain, hybrid electric vehicles (HEVs) retained the most value in Switzerland, with 48% of their original list price after three years and 60,000km. Petrol cars followed closely, with 44.2%, while diesel models held 41.8% and plug-in hybrid electric vehicles (PHEVs) had 40.3%. All-electric cars (BEVs) once again had the lowest value, holding only 36.7% of their original list price.

HEVs sold fastest at 61.2 days, followed by petrol cars at 74.5 days, diesel cars at 77.7 days, and BEVs at 89.5 days. PHEVs needed the most time to sell at 90 days on average.

In Switzerland, the AMVI of two-to-four-year-old passenger cars remained almost stable compared to the previous month. However, the supply volume of passenger cars in this age bracket slumped by 10.5% compared to the previous year.

Despite the overall negative trend for three-to-four-year-old BEVs, there is some improvement expected in Austria, Germany, and Switzerland, although further downward adjustments are still necessary for used BEVs over the coming years.

The UK was the most resilient market, dropping by 1 percentage point to 50.5%. Austria is expected to see a 0.2% fall in RVs in 2025, followed by a 0.7% drop in 2026 and a 0.6% decline in 2027. Italy is predicted to see the largest drop in values out of the seven markets in 2025, with a decrease of 8.2% by the end of the year.

Looking ahead, a trend of relatively stable supply and low demand will continue in Switzerland, with %RVs expected to decrease in the next years, but at a slower pace. By the end of 2025, %RVs are anticipated to decline by 4.2% compared to December 2024. In 2026, a lower year-on-year drop of 1.5% is expected.

Although RVs have stabilized recently in Germany, demand remains rather weak. RVs are forecast to remain under pressure, with a decrease of 2.7% expected by the end of 2025 compared to December 2024.

In summary, used car RVs in Europe are projected to experience some continued pressure, especially for older BEVs, but may stabilize or improve slightly for younger used electric vehicles and certain popular models, supported by financing trends and market demand.

1. The forecast for the next three years suggests continued pressure on used car residual values (RVs) in the European industry, but with a hint of optimism due to evolving market dynamics and consumer finance trends.
2. In June, RVs for used cars after 36 months and 60,000km saw a decline in all seven observed markets, with Italy and Switzerland showing the steepest drop.
3. The rise in the average number of days needed to sell a used car in Germany provides an insight into the slower pace of car sales in the countrfy's transportation sector.
4. The fleet composition in Europe shows an aging car fleet, with over 77% of private cars being over 10 years old as of 2023. This may maintain demand for reliable used cars in the lifestyle segment.
5. In the area of powertrain, hybrid electric vehicles (HEVs) maintain the highest value in Switzerland, while all-electric cars (BEVs) have the lowest value, raising concerns for the automotive industry.
6. The smartphone and gadgets market could be impacted by the variations in the days needed to sell different types of used cars, as those with faster sales could indicate higher demand.
7. As for technology, the shift towards electric vehicles is evident, with hybrid models retaining the most value and all-electric models the least. This trend could influence the home-and-garden sector, as consumers may invest in charging solutions for their homes.
8. The Premier League and other European leagues could witness a slight improvement in the value of used cars due to the steady demand from fans seeking to afford sports-themed relics or support their favorite teams. Travel could also be affected, as demand for reliable used cars could increase among travelers seeking transportation in Europe.

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