Latest EU5 market analysis based on JATO’s Monthly Payments insights

How consumers purchase their vehicles has vastly shifted over the last 10 years, with more and more choosing to spread the cost over monthly instalments via one of many available finance options rather than buying upfront. This change in behaviour has transformed the automotive industry in how they sell to customers. More expensive cars are now more accessible and pave the way for the much talked about subscriptions-based model of the future. However, what is happening in the market today? And how can OEMs and NSCs use this information to tailor their strategies to refine vehicle positioning and increase market share by delivering on what the consumer wants? Using data from JATO’s Monthly Payments insight, we take a look at the recent trends in the EU5 market.

Average monthly cost has fallen
Since the beginning of Q3 2022 to early 2023, the average monthly cost of financing a car across all EU5 markets has fallen by 7.4%, equivalent to €47. The biggest fluctuation had been recorded within Great Britain, although it seems to have stabilised towards the end of the reporting period. Spain has also maintained a typical monthly payment above the EU5 average.

The German market has shown signs of a recovery following a steep decline in Q3 2022 but is yet to catch up with the EU5 average.

This is also the case for the premium brand segment in Germany, which has seen the average monthly payment value bounce back following a turbulent period in late 2022.

Over in Great Britain, both premium and volume brands recorded a decline in average monthly payment value towards the end of 2022. Recently, those figures have been steadily, although slowly, increasing again.

A stable small SUV market
Over the last two quarters, the average monthly payment value within the small SUV (B SUV) segment has been relatively stable across the EU5 markets. While the core EU4 markets are comparable in terms of average monthly finance price (€350-€450), Great Britain has remained ahead by around €100, despite a setback in late Q3 last year.

Within the segment, Germany recorded a healthy recovery back to an average monthly figure of €445, whereas Spain observed turbulent fluctuations, with figures falling as low as €350. Overall, the small SUV segment remains highly competitive and somewhat stable across Europe.

The average Guaranteed Minimum Future Value (GMFV) in the same segment (B SUV) has however seen some turbulent times lately, mainly across the premium brands. GMFV amongst volume brands has been consistently hovering around the 49% mark since Q4 of last year. While the same value amongst premium brands has been more sensitive to market changes resulting in more frequent fluctuations.

It is worth noting that nearly all volume brands have at least one model competing in the B SUV segment whilst only few premium brands produce such models. Meaning adjustments done by even single premium brand impact the average GMFV in this segment.

BEV market showing signs of growth
Average monthly payments for both premium and volume battery electric vehicles (BEVs) in the European market have recently stabilised after suffering a sharp decline in early Q4 of 2022. The premium segment has experienced more volatility, whereas the volume segment has seen only minor price changes since October.

Across the reporting period, average monthly payments for premium BEVs have been nearly €200 more expensive than their volume counterparts. This is unlikely to change in the near future as finance options offer consumers a chance to embrace new technologies and try premium vehicles.

Tesla Model Y puts pressure on competitors
Tesla’s recent price reductions took the industry by surprise with many businesses throughout the automotive supply chain having to quickly adapt their strategies. Tesla’s high margins had given the manufacturer the headroom to shave a very substantial €10k off Model Y’s list price as a way to gain market share and put its direct European competitors under increased pressure. Although similar tactics have not been seen as of yet for one of its key combustion competitors (Audi Q5), with its average monthly payments, remaining stable whilst the list price for the same model has increased over the reporting period.

Maximising insights to adapt strategies in line with market changes
This small excerpt from JATO’s Monthly Payments insight solution demonstrates how fast-paced the market is and how quickly the it changes. OEMs and NSCs need to be able to react and adapt strategies based on what is happening. Having access to compliant, timely, and reliable data that enables a clear comparison of vehicle finance offers, will revolutionise the future of benchmarking.

More insights and research on consumers’ attitudes towards monthly payments can be viewed in JATO’s latest report: Driving Decisions with Data: Global Automotive Consumer Finance Insights 2023