UK RESIDUAL VALUE FORECASTS DROP AFTER YEAR OF OPTIMISM

29-Sep-2011

Following an +11% rise in forecasted UK residual values since September last year, a -3.5% reduction in the latest Quarter reflects an err of caution as we move into the second half of 2011.

Similarly, following positive 12 month forecasted RV trends in Germany (+6.9%), France (+4.8%), Spain (+2.1%) and Portugal (+1.9%) all nations have softened their optimism in the future used vehicle markets with only Italy predicting a downward trend across both 12 and 3 month figures.

The latest experteye European Leasing Index report which tracks forecasted residual values, maintenance costs and rental rates in six European countries uses data supplied by major leasing companies in each market.

Of the six countries surveyed, it is French fleet customers that are seeing the largest hikes in rental costs with a +3.6% price rise in the last Quarter, establishing a 12 month trend of +4.1%.

Yet it is the UK that has seen service maintenance and repair (SMR) rates increase the most with budgets rising by +3.5% in the last Quarter and +4.8% over the course of the last year.

Market summaries – 3 and 12 months to August 2011

France: France is showing the biggest hike in rental costs of all nations surveyed with a +4.1% rise over the last year and a +3.6% increase since June 2011. Yet France has also shown optimism in the future used vehicle market with a +4.8% rise in forecasted RVs over the past 12 months, steadying to a nominal +0.1% rise in the last Quarter.SMR budgets have pushed up more in the last Quarter (a +3.3% rise) than they have during the course of the year (+1.5%)  and rental prices will have inevitably been affected by the +2.9% rise in new car prices – the highest annual increase of the 6 nations in the Experteye survey.

Germany: German optimism in the future used vehicle market is the highest this Quarter with a +2.9% increase in forecasted RVs. With a +6.9% rise during the course of the past year a positive upward trend remains in place. Whilst relatively stable, SMR costs have come down with a -2.7% reduction in the last 12 months and a -1.5% reduction in budgets in the last Quarter. Perhaps as a result of climbing anticipated RVs and falling SMR rates,  German fleet customers have enjoyed one of the greatest reductions in rental prices of the nations surveyed with rates coming down by -4.6% since September 2010, but a more marginal -1.1% price drop since June 2011.

Italy: Italy is the only nation surveyed to show a fall in forecasted RVs across both 3 and 12 month periods, albeit a very marginal -0.3% reduction across the past year and a -1.2% in the latest Quarter. With SMR budgets also showing a -2.4% drop in the last 3 months and a nominal -0.5% reduction during the course of the year the overall trends appear relatively stable. Rental prices have come down by -3.1% since September 2010 and -1.8% since June 2011 and new car prices have also seen a price drop in the last Quarter after a +2.3% rise over the year.

Portugal: Portuguese fleet customers have seen a +1.7% price rise in their rental rates over the last 12 months and, whilst not significant, this is the second highest price rise across the nations surveyed. Rental prices have, however, come back down by -1.5% in the last Quarter. SMR budgets continue to rise with a +3.2% increase since June 2011 after Portugal had reported a +3.4% rate rise over the course of the year. However with forecasted RVs increasing by +1.9% over the year, then optimism being downgraded with a -1.6% reduction in the last Quarter, this area appears relatively stable.

Spain: Spanish customers have seen the greatest reduction in rental rates with a -5.2% drop in prices over the last 12 months, although this has stabilised in the last Quarter with a +0.3% rise. Optimism in the future used vehicle market has been steady over the course of the year with a +2.1% rise in forecasted RVs although the recent Quarter has shown a -2.9% drop. Spain continues to lead the league table of nations surveyed when it comes to bringing down its SMR budgets, with a -5.2% drop since September 2010 and -4.8% since June this year.

The UK: With a significant +11% annual increase in forecasted RVs, UK leasing companies appear most optimistic about their future used vehicle market of all nations surveyed. Yet, this optimism has been downgraded in the last Quarter with a -3.5% reduction; the greatest reported 3 month drop. UK leasing customers have seen the largest hike in SMR rates in the Experteye survey with a +4.8% rise in budgets since September 2010 and a +3.5% increase in the last Quarter. Rental rates have dropped by -2.3% in the last 3 months after a marginal +0.4% rise over the course of the year.

Notes.

• The comparisons are for vehicles with a contract duration of 36 months / 90,000 KM with the exception of Portugal (48 Months / 120,000 KM)
• Twelve month comparisons show change since Sept 2010.
• Three month comparisons show change since June 2011.
• Rental rate changes compare the rates in effect at the time of the survey with those in effect three or twelve months ago.
• RV and smr changes show the change in participating leasing companies' forecasts of residual values and maintenance costs over the period.

 

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