Why 2021 was a golden occasion year

While the new passenger car market will be worse in 2021 than it has been in more than half a century, the used car market is breaking record after record. The sale of used cars by the specialist trade amounted to 1,285,166 units up to and including November and will even exceed the 1.3 million mark for the first time in 2021, industry association Bovag predicted at the beginning of December. Those figures are partly at the expense of private-to-private trade, which with 621,000 transactions from January to November of this year was 9 percent lower than in the same period in 2020.

Relatively speaking, these figures mean that at the moment just under one in three used cars sold goes from private to private and if we look at these figures from previous years, it appears that private trade is relatively worse than ever since we were able to retrieve this data. , just before the turn of the century. Between 2001 and 2017, the private sector share was (often well) above 40 percent each year, with a peak of 44.3 percent in 2008.

Complex interplay

We speak with used car market expert and chairman of Bovag Independent Car Companies Gerard ten Buuren, who explains what causes the shifts. “It is a complex interplay of factors,” he notes. “At the start of corona last year, you suddenly saw a boom in the purchase of smaller cars in particular, because people found it more pleasant than public transport. In addition, far fewer new cars were sold, resulting in fewer trade-ins. Leased cars made fewer kilometers and therefore drove longer, which also results in less supply. All these things together cause a shortage of used cars. As a result, the prices of used cars rose, so that they are now really sky high. I have to say that that increase now seems to be a bit lower. In addition, the large dealer holdings are paying much more attention to the sale of used cars due to the weak new sales. They keep a lot more cars to sell to private individuals themselves, so fewer cars go to trade.”

As mentioned, the used car trade is increasingly shifting from private individuals to professional trade. “This development has been going on for quite some time and is related to, among other things, the increasing desire for maintenance, service and warranty,” says Ten Buuren. “After all, it involves a lot of money and people are rightly careful with that. People want security. They want to know if it is a good company where they buy their car, and what they can expect from it, before and after the purchase. They want to be sure that they can go back if something goes wrong and the Bovag guarantee plays a major role in that.” Ten Buuren also points to the growth in companies that actively enter the market to purchase cars from private individuals and then resell them to car companies. “That is the so-called C2B trade, such as Ikwilvanmijnautoaf.nl and the Bovag purchase service. You have to realize that as a private individual you always get a better price at a car company, especially now that there is such a shortage. The used car used to have the name that it was a problem and that you got a discount if you didn’t trade in, but that is no longer the case due to the current shortage.”

Big investment

You could assume that the rapid rise of electric driving makes people reluctant to invest in a new (fuel) car, but Ten Buuren puts that assumption into perspective. “Electricity will of course only become more, but you have to put it in perspective,” he says. “We have a fleet of 9.2 million passenger cars in the Netherlands and at the beginning of this year we had around 200,000 EVs. That’s why I think it matters less. The purchase price is much more important. Cars are still a major investment for private individuals. That is why you see that fewer and fewer private individuals are buying a new car, although private leasing also plays a role in this.”

According to Ten Buuren, part of the used car shortage is made up for by the import of young cars. “That is increasing enormously and, in my opinion, is only increasing,” he says. “The range of Dutch cars largely consists of business cars, many diesels with a lot of kilometers because they have been leased for the full five years for the tax addition scheme. These are of little interest to private individuals and are therefore exported, which in turn is compensated by parallel imports of very young, almost new used cars from other countries. You can see that the market is becoming increasingly international and is less limited to the Netherlands. That is a good development, because young cars have modern, cleaner engines. Incidentally, I do not think it is justified that those diesels with many kilometers are so unpopular. You are now seeing a revival in their prices, because there are fewer and fewer diesels on the market and there are still people who like to drive them.”

almost new

According to Ten Buuren, the perception of used cars is also changing. “Young cars from a few months to a year old with low mileage are also more or less seen as a new car. More and more people are opting for this and who are also looking abroad and picking up a car themselves,” says Ten Buuren. This does pose risks, because the past of such cars is more difficult to check. “That is a reason for many people to buy such cars from recognized channels, for example from a Bovag car company. This has access to much more information, such as the Carfax history. Such car companies can also better interpret the data from the digital service register (formerly the service booklet; ed.), so they can help the buyer with that.”

Ten Buuren thinks that used car prices have seen their biggest growth, although he doesn’t think they will fall for the time being. “We are still having delivery problems for new cars and that affects the traffic flow,” he notes. “That’s why the scarcity of used cars will continue for a while. On the other hand, I can also imagine that people, because they work from home a lot, will consider whether they still need two cars.”

With the shift from new to used, should we be concerned about potential climate impacts? Ten Buuren thinks not. “The Dutch vehicle fleet is relatively old, but that is because we generally have good maintenance, the Dutch General Periodical Inspection and a good road network. For that reason too, cars from the Netherlands are popular for export. It is of course important that the fleet is rejuvenated because people switch from very old cars to younger ones. For example, I don’t see anyone who now drives a 2001 Corsa trading it in for an electric Corsa, just to name a few.”

goldcrests

Ten Buuren does, however, watch with concern as relatively clean cars leave the country. “It has been a trend for a while that electric cars, which are heavily subsidized by the government, were exported as used cars because they were more profitable abroad. That is the law of the euro; the car goes where it makes the most money. That’s a shame. You saw it with the Outlanders and the Leafs, among others. They went abroad, while they were also very suitable for our market. Plug-in hybrids with their limited electric range are particularly interesting for private use.”

Finally: what are the goldcrests on the used car market that you can wake up every car dealer for? Ten Buuren: “Particularly the smaller cars up to about five years old and about 80,000 km. They are all sold like that. But the small crossovers are also on the rise.”