Used Car Stock Acquisition,,, It’s Going To Be A Battle!,,,,,,,
I have said much in the previous articles below, those covering the used car stock acquisition challenges and the necessities/requirements for this discipline, when it comes to business survival. All of which has generated much discussion and many questions.
Now I won’t repeat the entire contents from the previous articles here, those interested in reading them can follow the links below, where they will find the articles on my Used Car Business Development Blog;
Understandably many of you have asked me what is going to be required to ensure that used car stock holdings can be secured in the coming markets. Now as much as I can’t give away all my intellectual IP for free, I can advise you all on what will be required, I just can’t share my experience and knowledge on how to deliver on the objectives. But first some context in brevity; for those just joining the discussion and thinking how am I going to ensure that my business survives the used car markets that are looming on the horizon.
Well, my fear for the sector at the moment (therefore the approach to my articles) is that, as a whole, the sector has never been so underprepared for the challenges that are looming on the immediate horizon. As much as all manufacturers, their franchise partners and independent used car businesses, trade within their market so must therefore adapt accordingly, all have a similar challenge when it comes to profitability and the sustainability of their business.
I think we can all agree that the problem with new car supply volumes will not be resolved in the near future and as much as the increased new car margins currently being enjoyed will help to soften the blow, the challenges associated with used car retailing are making themselves felt, with the full effects likely to hit from 2023 onwards.
The reductions in new car registrations experienced during 2020 through to today (and still ongoing) have transformed the used car market and therefore the professionals and strategic alliances required in order to survive. The reduced used car vehicle parks will ensure that not all used car businesses and/or franchised dealers will survive the coming 2 -3 years.
So as much as there are many existential challenges facing franchised dealers and all used car businesses, used car stock acquisition is the one challenge that can no longer be ignored. You can have the best people and systems imaginable but without the ability to secure and acquire used car stock holdings in the volumes and at the prices required, your business will fail.
The volume acquirers of used car stock, Cinch (via We Buy Any Car), Cazoo and the many used car supermarkets have transformed the acquisitions market, but even they are vulnerable. But not as long as used car businesses and/or franchised dealers think and operate like the competition and continue to try and beat them at their own game. This will only ensure that traditional used car businesses and those used car businesses attached to a franchised dealer, continue to struggle.
So what’s the answer? The one thing that all used car businesses and franchised dealers must be able to do, if they are to survive? Well you must stop buying used car stock at the same time and from the same sources as your competition! This is precisely what Trustford and Lookers are not doing; they are choosing to go “Toe to Toe” with the online purchasing platforms like We Buy Any Car, the ramifications of which were explored in the article below.
Now I fully appreciate that there will be vacant looks everywhere at this moment and the odd comment like; “That’s absolute rubbish, you can’t do that!” Well you can, but only if you stop looking at stock acquisition as you always have. Those days are over, the likes of We Buy Any Car have thrown the money required at this operational model to change the behaviour of the consumer; so it’s game over!
Those businesses running under the old structure of employing buyers to run around looking for stock in the here and now, will fail over time. The acquisitions game has been moved on by those businesses able (via the used car stock acquisition professionals required) to leverage their trading advantages to secure stock holdings of the future, years in advance.
This is a totally different operational and delivery model to what 95% of businesses are currently operating under. Over the last 12-24 months genuinely successful used car stock acquisition professionals have delivered what Pete Waterman (he of record producers Stock Aitken and Waterman) once termed the “Thriller Moment” for the Automotive Sector; a moment when the game has leapt forward and left the vast majority bewildered at the pace of change.
These used car stock acquisition professionals are a different breed; you won’t see them at auctions or speak to them in the cosy haunts frequented by trade buyers. They are on a mission to control their used car market via acquiring as much used car stock as they possibly can. The irony being that this will not take endless amounts of money, just a skill-set unavailable to the vast majority of used car businesses and franchised dealers.
As mentioned previously, I can’t (for the protection of my commercial IP) elaborate further, all I can say is that these professionals (myself included) know that used car stock acquisition is a people business, not a car business, and one involving a lot of expertise and hard work; in areas you would never consider and/or appreciate.
To be a successful used car stock acquisitions professional you must know how to secure future used car stock holdings and then manage them to a profitable conclusion; important because I (just like the others) will never not be buying. The stock being acquired will be “Locked-In” to the business, the used car operation will enhance procedures and be selling this stock in advance of it landing on site, and the stock we don’t require for retail will be an additional profit source and placed strategically. All customers (mine and yours – this is important!) will be in no doubt that I want their car and that the business will purchase it; they will never be told that I am not buying!
So up against professionals constructing and delivering used car stock acquisition campaigns like this, all going up against the competition and continuing in the same way as you always have, achieves; is that you waste your marketing budget raising awareness that you are copying the market leader. With the unfortunate consequence that you then pay more money than anyone else for the associated used car stock!
Well done,,,, rounds of applause all round! Unfortunately this is not a recipe for used car success, in fact it is a disaster; as all those businesses out there panic buying in August/September last year are now finding. As they still drive past this stock on their way into work!
Unfortunately the losses associated with this lack of used car stock acquisition expertise will be humbling; this stock will never be sold at a profit. In reality the businesses concerned would have been better off not purchasing any used car stock at all, because they obviously didn’t know how to. If they did, this stock would have been sold within 45 days of acquisition, the 45th day being the last time at which it can be sold profitably.
So in the used car markets to come, those with used car vehicle parks of 680,000 less vehicles, (in terms of available stock), my question to everyone would be; how well set up is your business to survive? In truth the vast majority aren’t. It is the inconvenient truth of our times that you can have the best people and operational procedures imaginable, but if you don’t have the professionals required to secure used car stock holdings in the volumes and at the prices required to remain profitable? Well then it is all going to be for nothing.
I have observed how the used car stock acquisition landscape has evolved during the last 12 months and I promise the vast majority reading this, you will not be ready for how the acquisitions landscape has evolved; to the point where all those relying on the initiatives and skills of the past will be left floundering. For these businesses, purchasing stock on a hand to mouth basis and in the moment, it will be a challenge to acquire used car stock at prices (and in the volumes) that ensure your business remains profitable.
But there will be others, albeit very few, but those who like me spent the lock downs rewriting my programmes of used car stock acquisition from the ground floor up. In order to ensure that used car stock holdings are being secured for future markets right now, via campaigns and initiatives that will leave the competition with years of work to catch up; even if they can find the skills required already within the four walls of their business?
The skills required can’t be taught via any training programme, it is too fast moving a discipline and covering too vast an array of skills-sets; so in reality necessitates an environment of strategic alliances via commercial arrangements. The market value of the skills involved would also make it too financially restrictive to employ genuinely successful used car stock acquisition professionals; there are too few of us, so for the moment those days are gone.
That said I am working with 2 businesses building and delivering the used car stock programmes they require; having made a commitment to work with three at all times. So for those grasping the seriousness of their current situation and wanting to take immediate action, I will be working with another business over the next 12 months, in order to deliver the used car stock acquisition expertise and initiatives required, for that business to survive and prosper in the used car market to come.
Should you wish to explore synergies and the potential to collaborate in this regard, please do not hesitate to contact me so we can arrange a mutually convenient time for an exploratory call.
Andrew.
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