Vehicle shippers in the European Union (EU) are having a difficult time adjusting their respective remarketing strategies. OEMs, along with rental and retail customers, have changed their buying behavior due to a shifting landscape within the automotive industry. The global semiconductor chip shortage halted manufacturing, leaving a limited number of new car models in the market. Moreover, lessees are extending their terms instead of purchasing the vehicle once the lease expires. Lastly, retailers like car dealerships are sourcing used vehicles from greater distances in order to have enough inventory. The combination of all three factors leaves auto shippers scratching their heads and scrambling to meet the needs of their customers in a shifting market.
The shortage of new cars in production has impacted the entire globe, but European countries have been hit especially hard. For example, Germany is a powerhouse in EU automotive production with household manufacturers like BMW, Mercedes-Benz, and Volkswagen, only to name a few. Evidence from a recent European Commission Business survey points to a devastating bottleneck in Deutschland, which has caused a trickle-down effect felt by other EU countries. In fact, the survey results show that 23% of manufacturing firms in the Euro area reported a lack of necessary production materials, supplies, and equipment, which is well above the historical average of 6%.
With a stranglehold of new model production in the EU's epicenter of auto manufacturing, it's no wonder why used car prices are increasing. The demand for pre-owned models is more significant than ever before throughout the EU, and vehicle shippers are sourcing from regions so far that it would never have even been a thought, even a few years ago. Regardless, there are only so many existing units to go around, and shippers from all over the continent are fighting for their piece of the pie. It's a situation that calls for an intelligent remarketing strategy that requires a reliable transportation partner that has the technology, capacity, and flexibility to move inventory within different European markets as quickly and efficiently as possible.
Car rental companies are also feeling the adverse effects that come with a lack of new models in production. These companies have already been hit hard by the pandemic as countries implemented travel bans and stay-at-home orders. We are starting to see the light at the end of the tunnel as travelers are renting for leisure or business once again. But even though EU citizens are ready to rent cars again, there is a lack of quality used models available. Most fleets have older units that show signs of wear and tear, not to mention that many of them have a high kilometer count. Customers have certain standards that need to be met, and car rental companies are shifting their focus to ensure they acquire used units that live up to consumer expectations.
In addition to these challenges, several shippers in the EU sector are hesitant to buy or lease conventional vehicles in general. The EU Green Deal aims to ban sales of any model powered with an internal combustion engine, including hybrids, by 2035. The ambitious plan acts as a cloud hanging over the heads of shippers in a classic "damned if you do, damned if you don't" scenario. For example, fleet managers can add used vehicles to their existing fleet. But older models produce higher emissions, which will not be sustainable over the next decade because the EU Green Deal makes it clear that these models have no future in EU countries.
Partnering with a reliable transportation provider is of the utmost importance to face these challenges head-on. In accordance with AIAG and ECG standards, RPM continues to expand its footprint throughout Europe to deliver real-time results that address these remarketing challenges. The logistics provider has improved its carrier capacity within Europe since October 2019, when the company first began operating in the continent. RPM uses a robust network of carriers to handle seamless transportation services to move vehicle inventory where it needs to go. RPM also offers the flexibility required for this current environment with quick reaction times and true-to-market pricing. Lastly, shippers who work with the transportation provider can expect vehicles to be picked up and delivered within 48 hours for unparalleled performance every time.
For more information on handling supply chain issues within the European sector, see our service ofeerings.