Understanding the Second-Hand Car Market in the EU

Analysis of the pricing mechanisms and the trade patterns of second-hand cars and light commercial vehicles

The objective of this study was to improve the understanding of the second-hand car and light commercial vehicle (LCVs) markets and the implications of that understanding for the cost effectiveness and social equity of LDV CO2 regulation. Car and LCV CO2 regulation in the EU has always emphasized newly sold vehicles. Passenger cars are typically believed to have 3 or 4 owners over their lifetime with the first owner often keeping the vehicle for around 3 years, often as part of a leasing contract. The second-hand car market is a number of times the size of the market for new cars, although the level of resale varies substantially between Member States.

TML, supported by CE Delft, collected relevant data on vehicle ownership and used their own databases to do this analysis.

Our study shows that the fuel consumption of cars has a significant impact on their price on the second-hand car market. CO2 emissions have a negative effect on the value of a passenger car on the second-hand car market of about € 22 per gram of CO2 emitted per kilometre. This means that for a car emitting 120 g/km CO2 instead of 140 g/km, the average value is € 440 higher on the second-hand car market.

Graph: Car-ownership differs between income groups, lower-income households that own a car are more likely to own an older, second-hand car.

We can also conclude that fuel-efficient cars are beneficial for all income groups. In fact the assumption of the initial additional cost of a fuel-efficient car determines how the benefits are distributed among the various income groups. It is the lower income groups, in proportion to disposable income, that benefit most from a fuel-efficient car.

reports

Final report

period

2015

funded by

European Commission, DG MOVE

researchers

Kris Vanherle, Tim Breemersch

contact

Kris Vanherle

+32 16 74.51.29
reference: 15081