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Europe's major used-car markets have witnessed a general decline in residual values (RVs) throughout 2024. This trend is expected to continue into 2025, albeit at a slower pace than the previous year.
In December 2024, Spain recorded one of the highest RV levels at 58.7%, but this was down by 2.6 percentage points (pp) year on year. The country's new-car market also achieved over 100,000 registrations in December, pushing the 2024 total above the one million mark for the first time since the COVID-19 pandemic.
France and Italy also experienced a decrease in RVs. France recorded a %RV of 53.9% for three-year-old used cars in December, while Italy's RVs were 8.9pp higher last month than in December 2020. Spain saw a similar result with levels up 8.4pp. Germany was up by 7.3pp, Switzerland and France were up by 5.9pp, the UK and Austria saw higher levels by 4.6pp and 4.3pp respectively.
Italy's used-car market saw all powertrains experiencing a drop in RVs in December 2024. HEVs retained the most value in Switzerland, with a %RV of 51.1%. BEVs were the worst-performing powertrain, retaining only 40.7% of their original list price. PHEVs in Italy also saw a significant drop in %RVs, down to 44.3% from 51% a year ago.
The UK was the only major market where RVs slightly increased, reaching 51%. In Germany, values were only slightly higher at 49.6%, down from 54.1% recorded in the same month of 2023.
The average number of days needed to sell a used car increased to 61 days in December in Germany. Austria, Germany, Italy, Spain, and Switzerland hit new lows for the year.
The electrification of the market remains slow in Spain, with 11.4% of new-car deliveries being BEVs and PHEVs in 2024, down from 12% in 2023. In Switzerland, used-car supply is falling again, influenced by constant supply and declining demand.
The price premium for battery electric vehicles (BEVs) compared to internal combustion engine (ICE) vehicles remains a barrier to widespread BEV adoption. However, Chinese manufacturers are offering lower-cost BEVs that challenge European brands, which in turn impacts residual values across the board.
Tariffs on new cars and imported parts are contributing to maintenance cost increases and impacting resale values by raising new car prices, which usually supports used car values. These dynamics add uncertainty to residual value trends going forward.
In Germany, the used EV market is growing fast, with projected compound annual growth rates (CAGR) through 2034 around 15.5%. However, challenges such as battery degradation and competition from Chinese EV brands remain.
In summary, while used-car residual values in Europe are expected to face gradual downward pressure driven by new market entrants, tariff impacts, and evolving consumer preferences towards EVs, they are not expected to crash. The market is adapting, with remarketers and manufacturers playing key roles to manage inventory and pricing dynamics in this transitional phase.
[1] Research Report: European Used Car Market Outlook 2025 [2] Article: Used Car Prices Starting to Fall in 2025 [3] Analysis: Chinese EVs Challenge European Brands in Used Car Market [4] Study: German Used EV Market Growing Fast but Challenges Remain [5] News: Tariffs Impacting Used Car Resale Values in Europe
- The slow electrification of the market, particularly in Spain, could invite technology advancements in European used-car finance, as buyers might seek affordable electric vehicles to offset the price premium.
- The constant supply and declining demand in Switzerland's used-car market, along with the entrance of Chinese EV manufacturers, indicate a shift in the European used-car market's financial landscape, necessitating closer examination of technology trends and adaptation strategies.
