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European Used Car Market Shows Signs of Stability Amid Adjustments
The European used car market is experiencing a period of relative stability, with some signs of adjustment due to easing supply constraints and moderation of new-car price inflation.
According to recent reports, the supply of two-to-four-year-old used cars continues to fall year on year across Europe. The active-market volume index (AMVI) of these cars saw the biggest advert slump in Spain, down by 43.6%. RVs, presented as a percentage of retained new-car list price (%RVs), declined across all seven observed markets. However, France recorded the largest year-on-year increase of 9.2%, while also observing the biggest monthly list price growth of 3.3%.
In Italy, the average selling times of two-to-four-year-old used cars have increased compared to last month, reaching 60.4 days. BEVs took the longest time to sell, needing 72.9 days to leave dealerships. The average three-year-old car retained 49.1% of its original cost new price last month, a decline of 1.5pp from June and 1pp lower than the same period last year.
The UK, Austria, Switzerland, and Germany also recorded notable changes in their used car markets. In the UK, dealers needed an average of 37.4 days to sell a used car, almost unchanged from June. Petrol cars sold in 36.9 days on average, while hybrids needed the shortest amount of time to sell at 33.4 days. In Austria, the sales-volume index (SVI) fell across all seven observed markets, except for France, which posted a 3.7% increase.
The AMVI of two-to-four-year-old passenger cars in Switzerland increased slightly by 0.9% in July compared to the previous month. However, the supply volume of passenger cars in this age bracket slumped by 8.8% compared to the previous year. In Germany, the supply of two-to-four-year-old passenger cars remained stable compared to June but dropped by 7.2% year-on-year.
Despite these changes, the major European automotive markets, led by Germany (holding an 18% market share), continue to see steady demand especially for 3-5 year old cars released from lease returns with full maintenance and warranty coverage. This contributes to a stable mid-age used car stock supporting demand and residual values.
Battery-electric vehicles (BEVs) form the fastest-growing segment in the used car market with an annual growth rate near 19%, which may influence future RVs as BEVs gain prevalence despite challenges around battery health certification.
Looking ahead, the forecast for European used car RVs in 2025 is one of cautious stability with a mild downward price correction as market supply normalizes. The used market remains sizeable and growing (projected 4.4% CAGR through 2030) with BEVs gaining importance. Residual values are expected to remain generally strong for petrol and diesel vehicles in the near term, while evolving new car pricing and supply-demand rebalancing will shape the residual value landscape progressively.
- The stable demand for three-to-five-year-old cars, especially those released from lease returns with full maintenance and warranty coverage, is a key area in the finance sector, reflecting the European used car market's resilience.
- The rapidly growing segment of battery-electric vehicles (BEVs) in the used car market, with an annual growth rate of almost 19%, could potentially impact finance, as BEVs gain prevalence and influence future residual values.
