What Now For Lotus?,,,,,,,,,,,,,, 

Well the new owners of Lotus have certainly got plans to shake up their retailing model, having (according to a recent article by Autocar Business) slimmed down their retail network and having confirmed their intentions to divert to an Agency Model for new and used car retailing. 

Now in principal I am in no doubt that this is the correct strategic business development decision to take moving forward. I have been advocating this for years in my articles, especially when it comes to developing used car retailing, via a strategy of locking future used car vehicle parks into returning to successful used car retailing networks. 

If delivered upon, this is a bold move by Lotus and one I applaud. It is important to remember that if you want to control access to your used car market, (with all the retailing benefits that will deliver) you must control access to the associated used car stock required; in fact all manufacturers should take note, but won’t of course! From what I can read in the statement, this is exactly what Lotus are endeavouring to achieve; so why do I have my doubts? 

Well the clues are there in the quotes from Lotus and their senior personnel, those contained within the article; evidence of an apparent disconnect between what Lotus think their customers want and what the customers actually do. Nowhere in the statement appeared to be an acknowledgement of how customers purchasing their product interact with information sources, the physical product itself and trusted sales professionals, during the purchasing process. 

Lotus quote the success of Nio(?) in their statement (a Chinese manufacturer of electric vehicles) and actually say in their statement that “The standard is ultimately, of course, the Apple Store.” Now I fear for Lotus if these organisations are their examples and business templates, because the analogies and comparisons are not appropriate/bordering on delusional. As much as we all have things to learn from each other, what we are learning must be relevant to our core business model and customers. I’m left wondering where the similarities are between the purchasers of electric cars manufactured in China and/or IPhones and those purchasing niche, specialist high performance sports cars? 

From their statement (and I might be wrong) Lotus appear to be banking their success all on technology (sigh – not again) to drive the sales process. Now I add the caveat that I wasn’t present at any of the strategy meetings but having presented complex business development and retailing strategies to manufacturers for years, I am not surprised and sense that Lotus will be the next manufacturer to fully embrace technology, in the belief that it can deliver them the retailing Nirvana desired. 

Unfortunately this will not happen; well not without the professionals required to leverage the advantages that technology can deliver, with the “Excellence in Execution” sales environment the product requires to remain successful. On the face of it this could be another example of thinking shaped during the pandemic (a trading environment we are unlikely to see again); one where manufacturers appear to have become convinced that technology is the new Super Weapon for successful retailing; well it isn’t. 

For sure technology has transformed some retailing markets, the FMCG market for example, but specialist high performance sports car are not an FMCG product; far from it. Lotus is a very niche, low volume, specialist high performance car and in this market, technology platforms are nothing more than an (albeit very important) information resource. That required by busy successful professionals to explore purchasing options within their chosen market, before then reaching out for further advice when they are ready. During this customer exploration process Lotus will need the very best sales professionals available; those capable of recognising, nurturing and developing electronic engagement to - first contact - to sales; via everything that transpires in between. All of which will be nuanced to every customer enquiry. 

Unfortunately no reference is made to the investment in the professionals required to achieve their aims and this leaves me worried for Lotus, along with their retail ambitions. Lotus should be in no doubt how their market works. Any customer they attract will be hard won; customers purchasing in this market (both new and used cars) tend to be a highly knowledgeable lot, who will look at all manufacturers within the market. 

This will be will where the challenges begin for Lotus because these customers are spoilt for choice and can choose from a veritable “Garden of Eden” of product. Lotus really are going “Toe to Toe” with some serious manufacturers in this market and the notion that sales in this market can be driven from technology based, direct to the manufacturer platforms, (as with Apple) is “For The Birds!” 

Then we come to the used car ambitions; now credit where credit is due, if aligned to the genuinely successful used car professionals required, Lotus are ahead of many of their competitors when it comes to delivering on their used car retailing ambitions moving forward. To add context I will quote the article directly; 

“There’s another angle, too. “It’s not just about selling new cars, it’s trade-ins too. They will control the second-hand car market for five years,” Nima Khandan Nia, owner of Lotus Silverstone, told Autocar. 

Newer cars traded in belong to Lotus, which means they can set the prices, theoretically giving them control of residual values. “Usually trade-ins will be another Lotus. Lotus will then distribute that car internally and control the price,” added Khandan Nia. “It’s a clever mechanism to control the brand for a good five or six years.” 

Now currently used car strategies like this are relatively unheard of and be in no doubt that this is the way ahead of the curve, when compared to other manufacturers operating in niche, specialist and high performance markets; however there are some caveats! Now I’m not here to give Lotus all the answers for free, but to deliver on this ambition Lotus are going to have to secured the genuinely successful and experienced used car strategic thinkers and talent required; those without which Lotus will not succeed! 

To add context, and for fairness, I decided to research LinkedIn to see if the professionals required appear to be in situ at Lotus; sadly it would appear not. The individual quoted above Nima Khandan Nia doesn’t have a profile that I can find and is not listed on the LinkedIn company page for the business he apparently owns; Lotus Silverstone. That is not to say, of course, that he chooses not to be on a platform for business professionals; this would be highly unusual though in this day-and-age! 

Looking at Lotus themselves and looking for personnel with the relevant experience and responsibility for the used car ambitions of Lotus; again there appears to be no one in seniority listed on the company page for Lotus themselves. I’m sure that if they existed and Lotus appreciated the importance of the expertise they could deliver, they would be very high profile and probably quoted in the article. 

This leads me to believe that Lotus (like all manufacturers) are bereft of employees with the genuine used car experience required to build the business environment necessary for successful used car retailing to be delivered. I hope I’m wrong but with no big statements surrounding the professionals required for their Agency Model ambitions to succeed, I have a fear that the most important element is missing; the right people! 

Relations between manufacturers and franchise partners has always been a delicate one, blending different skills and personalities in a single business aim. In all my years working with manufacturers, (constructing and delivering used car business development strategies), I have never met a successful used car professional working within a manufacturer’s organisation; nor many who have any success of retailing and building successful new or used car retailing businesses! If Lotus fall into this category then the business ramifications could be serious to existential. 

In finishing, those who follow my Used Car Business Development Blog, know that I am prone to an analogy; so what to say to the board of Lotus. Well firstly I hope I’m wrong because Lotus appear to be doing so much right, in terms of the strategic retailing decisions moving forward. 

But in truth they remind me of the football team I support and its owners; Tottenham Hotspur. The owners of which have invested so much in the club, the training facilities and a new state of the art stadium; but they have forgotten to invest in the most critical component; the team. The players to do it all justice and deliver the results required! 

Anyone of my connections involved in this project for Lotus can feel free to contact me should they have any questions surrounding this article; especially the used car business development strategies required for success.

The Last Place Specialist High Performance Cars Should Be?,,,,, Right Here! 

An interesting shop window into the specialist high performance used car market this and fascinating to see, in terms of where the specialist high performance used car market is heading; a market that I predict is becoming very volatile, as are prices. To those in “The Know” and working within this market, this image tells us a lot about where the market and therefore values are heading. 

Unfortunately and regrettably over the last 18-24 months there has been a lot of hubris surrounding used car values per se, most of it incorrect and mainly peddled by those with no real life experience of these markets; CAP HPI, Auction Houses, Autotrader etc. In reality their commentary and opinions are rendered of little value and/or expertise because the used car market is fragmenting into many individual highly specialised used car markets; the high performance specialist used car market being just one. 

The picture aside, (I’ll come back to this later), working in this market 24-7 I can advise everyone that the market is beginning to struggle for liquidity, with many retailers rueing previous purchasing decisions and still sitting on now loss making stock, purchased at far too much (in terms of pricing) during the latter part of 2021; and it is this lack of liquidity within the market that could be behind the image above. 

Now I can’t comment on the pedigree of the stock concerned, (specification, mileage, ownership and maintenance history – all critical to valuations in this market), but perhaps the fact that these cars are appearing at auction, (the last place some of this specialist high performance used car stock should be – in terms of maximising values), and with number plates on full display, is indicative of the volatility and challenges of volume (combined with a lack experience and expertise in the market), that are beginning to hit this market. All of which will not be helping discerning owners of vehicles like this dispose of (and maximise the value of) similar cars. 

So what did it tell me? Well as much as I don’t know the circumstances surrounding these individual cars, it reaffirms some market realities that I have been experiencing and is probably indicative of the perfect storm forming over all luxury commodities markets. Not just the specialist high performance used car market. 

The most important thing images like this tell me is that those owning and/or responsible for the disposal of the cars concerned do not understand the market and how to maximise the return on investment for specialist high performance vehicles. Unfortunately this lack of expertise then resonates throughout the market because it creates a negative market and therefore pricing narrative. 

Let me expand upon this via one the cars in the image (the Lamborghini Urus) because it is representative of how the market has evolved over the last 10 years, and the challenges that this market evolution has created; the first being increased production volumes leading to more challenging “Supply and Demand” equations to navigate. Now increased volumes of production changes markets because it changes the pivotal “Supply and Demand” ratio – inextricably linked to residual values, and few manufacturers get the balance right. There are some but in the main they are the manufacturers that you wouldn’t expect; more on this in another article. 

Lamborghini are a pertinent example of this; 10 years ago the current model line-up and sales volumes could not have been imagined and they reflect what has happened in this sector as a whole. In reality you could say the same for many other marques that I work with; the likes of Porsche, McLaren, Bentley, Rolls Royce, Lotus, Maserati and Aston Martin, to name just a few. 

This has led to a market sector (both new and used) that is becoming over supplied for, something that you can get away with when the market in awash with money, cheap finance, lax lending criteria and high levels of consumer confidence; as we have had for over a decade now. This period though is ending and the market, (I predict), is about to find that 5 into 1 just does not go. 

Now there will be winners in the market that is coming, those owning the most desirable examples and who are prepared to be patient, whilst blessed with the knowledge and experience to achieve the best valuations. As markets evolve and “Supply and Demand” pivots to favour buyers and those with available funds, those buyers will be able to afford to take a relaxed stance, knowing full well that the sellers may need their money more than they need to rush out and buy the first car they see, as there are few disposal routes available to them. 

In these markets, this makes the publicising of the Lamborghini Urus in this way an inept decision and strategy; why? Well in specialist, niche used car markets, those inhabited by specialist high performance product like Lamborghinis, this car (whether it sold or not at the auction) has just become the cheapest car of its kind available within its market. This is a small world, inhabited by very few professionals, all of whom now know about the car; and worse than this, by publicising the car with number plates on, everyone who is minded to find out, now knows the full specification and history of the car. 

No one wants to buy the car the whole world knows about, unless it is so cheap that it becomes a false economy not to purchase. Not in specialist high performance and niche used car markets, and that goes for the customers, as well those professionals acting as market facilitators and conduits to the market. 

In truth, it could’ve all been so different, if handled correctly in the first place. Unfortunately now and for the foreseeable future, the car will come to market as the Lamborghini Urus that went through the auction; and few professionals operating within the associated market will get involved. So in effect this strategy has rendered the car nigh on unsellable within its specialist market; and to those offering the best prices for specialist high performance vehicles. 

With the market evolving and more owners looking to sell cars in this niche and specialist market, much thought must be given to how to go about this highly skilled liquidation process. The inconvenient truth is that anyone can achieve a below market value for your high performance specialist car, and if this is the route you are intending to use, then be quick; the money will run out pretty soon. But be warned, if you gamble on this process ill-advised, you could end up trying to liquidate your asset in similar circumstances to the Lamborghini Urus in image above, a process after which, those operating in this market, (professionals like me), will then not get involved in. 

That may sound harsh, but no one within this market wants to be acting as a market facilitator and conduit for cars that have been “Prostituted” to the market, because no discerning buyer wants to purchase and own the car that has been “Prostituted” to the market either. In truth in the coming market only the best cars handled with upmost expertise and discretion are going to be exchanging hands at prices likely to acceptable to those with a choice as to whether or not to sell. 

Unfortunately the coming market will almost certainly lead to more distress selling and repossessions, generating volumes of supply that will become a drag on the market as a whole; including prices. A negative trading environment further compounded by some cars being marketed within the market by the professionals without the prerequisite skills to do so. Sadly though I think this situation is unavoidable. 

So where to turn for the owners of specialist high performance cars looking for the right expertise and experience, that required to facilitate in the immediate liquidation of their car; a process requiring skill, expertise, the utmost discretion and excellence in execution. 

Well with unrivalled experience in liquidating specialist cars and the contacts base within the trading community, (both franchised dealers and the most knowledgeable independent specialists), you could contact me for a market consultation. However I am not going to promise you for one moment that I work with every car that is offered, or with every owner that contacts me. 

In truth I choose to advise and help everyone but only work actively with 10% of the owners who contact me; and their associated cars. Offering immediate cash purchase, (should circumstances dictate), or the facility to act as your trusted facilitator and conduit to the market, delivering the best return for your specialist high performance car; I am the ultimate solution provider for those looking to dispose of their vehicle. 

Please feel free to reach out to me directly via LinkedIn should you wish to arrange a consultation call.

An Evolving Used Car Market Could Make Life Challenging For Porsche Owners!,,,,,, 

Let’s be honest the used car market and the associated values for specialist cars has made little or no sense over the last 18 months, until that is, you understand the “Drivers” effecting prices during this period. 

Now markets are driven by many things, sentiment and confidence aligned to supply and demand, being just some of the “Drivers” and in truth I predicted (like many) that prices for all commodities would drop during the beginning of the pandemic. However, what no one could have known and/or predicted at that time was that the Government were going to effectively suspend market forces for 18 months; then pump that market full of free cash. 

This appears to have been a political decision akin to those made during the financial crisis and sadly (I predict) will only make the inevitable losses for some owners harder to bear, as the market realigns and returns to normal. Government interventions in markets and attempts to control market forces never end well! 

Now I don’t think we will ever see all these market forces forming within the market again and sadly, for those who purchased in this market and at the associated prices, the inevitable correction in prices will probably be difficult to stomach. Out of all the markets I operate within, in many ways the Porsche market has been the most interesting and difficult to fathom, so much so that I now wonder how this will now play out for some Porsche owners. 

As with any marque, one with a specialised pedigree, history and scarcity of production, running alongside more volume based models, there will be winners and losers depending on the car you own and/or are trying to sell. 

With dealers (both franchised and independent specialists) experiencing slowing sales volumes and enquiry levels during 2022, (on all stock other than the most desirable and scarce), I predict they will soon become the disposal bottleneck for Porsche stock. This will reduce liquidity in the market and make selling a delicate process requiring expertise, discretion and skill. 

The 911 market though has always stood alone from the rest of the Porsche market (in terms of demand and therefore values) and I predict that this will remain so; albeit cars lacking in specification, the right colour combination and of average condition and mileage will see prices soften a little. 

However the other models (Cayman, Boxster, Macan, Panamera and Cayenne), I think the crazy days of paying list price or close to list price for 2 year old cars are over. In reality there is plenty of stock like this within the Porsche network and at reputable independent specialists, but with customers now reticent (for a whole raft of reasons) to pay the current eye wateringly high prices, many dealers will soon not be buying until their current stock holding has been washed through the business. 

This will prove to be a very challenging and highly skilled process for the retailers (more on this later), with retailing to customers the only disposal method. With the inevitable lack of liquidity that will follow within the Porsche network effectively making the trade disposal of overage stock impossible (unless at eye wateringly high losses), this will leave a shortage of funds available within the Porsche market. This lack of liquidity will leave those owners needing and/or wanting to sell their car in a tight spot; that of either selling now (at the inevitably reduced prices and/or for a big loss) or holding on to their asset gambling that the market and therefore prices, will rise again. 

Personally I think this will be unlikely for the Cayman, Boxster, Macan, Panamera and Cayenne market because, albeit for different financial and economic reasons. I think this market will become very similar to the market we navigated just after the financial crisis; one where cars struggled to find buyers with the money to spend, even if the owners themselves were reconciled to the lower offers they had received. This just leaves the Taycan; a car retailing in a market that gives me the shudders. I will not use this post to articulate entirely my fears for the values electric cars, especially very expensive and specialised high performance versions. 

This sector of the used car market is yet to play out, (in terms of used car demand), and I’m not convinced that there is long term demand in the numbers required, to keep prices high. We shall have to see how the market evolves but I certainly wouldn’t be buying one. 

In truth the right Porsche with the right specification may still find a buyer, provided owners have the skill and expertise to navigate these market conditions; this though is very unlikely! In truth the market in the UK is not set up to support the owners of specialised used cars and Porsche is no exception. 

With manufacturers giving up on used car retailing and developing the professionals required to succeed in the used car market, it has cast owners of their product adrift and struggling to find the expertise required. 

The algorithm based on-line companies are also of little use to the owners of specialised used car product – like Porsche; We-Buy-Any-Car, Cazoo etc. A valuation algorithm is just a tech based valuation tool devoid of any experience and enough data to navigate the nuances involved in the valuation of specialist cars. That said though the irony is that for those with cars with base/low levels of specifications and less than perfect service records, (those that the Porsche network and independent specialists won’t purchase), the on-line purchasing platforms can the best route for disposal for these cars and their owners. 

But be quick, I have analysed the companies concerned and commented in articles written for my Used Car Business Development Blog, articles such as; Cazoo?,,,,, As A Used Car Business It’s Mad As A Box Of Frogs! With losses mounting the associated companies are bound to re-engineer their valuations algorithms and soon, probably closing this route of disposal. 

So where to turn for Porsche owners looking for the right expertise and experience, that required to facilitate in the immediate liquidation of their car; a process requiring skill, expertise, the utmost discretion and excellence in execution. 

Well with unrivalled experience in liquidating specialist cars and contacts base within the Porsche community, (both franchised dealers and the most knowledgeable Porsche specialists), you could contact me for a market consultation. I am not going to promise you for one moment that I work with every car that is offered, or with every owner that contacts me. 

In truth I choose to advise and help everyone but only work actively with 10% of the owners who contact me; and their associated cars. Offering immediate cash purchase, (should circumstances dictate), or the facility to act as your trusted conduit to the market, returning the best return for your Porsche, I am the ultimate solution provider for those looking to dispose of their Porsche. 

Please feel free to reach out to me directly via LinkedIn should you wish to arrange a consultation call.

Used Car Values?,,,,, Be Very Careful Who You Listen To!...... 

Well, well. Well; the used car market at the moment? It’s certainly a challenging trading environment for those without the experience, skills, common sense and nerve to navigate. Especially with all the opinions on pricing being banded around; mainly from those with little or no experience in actually buying and selling used cars, (or any commodity for that matter), for a profit. 

In truth, to the uneducated outsider the used car market and the opinions surrounding pricing would make crypto currency traders blush; it’s beginning to look like the “Wild West” meets Pyramid Selling meets a Ponzi Scheme! And for many reasons I would advise those without the used car experience required to operate in misleadingly complex distress markets like those we are experiencing now, to think carefully on this: 

Just Because You Can Buy, It Doesn’t Mean To Say You Should! 

At centre of this trading environment is also a misinformation problem; a problem that lies squarely at the doors of the guides and auction houses; including those who work for them. Thus my criticism of the guides and auction houses, when it comes to the blanket reporting of used car values. 

In truth it’s not that they aren’t of value, just that in a fragmenting and very complex used car market, the value of the data being published is of very limited value. My astonishment comes at the credence, (in an overall market sense), that this data is given, in terms of the market as a whole. In fairness though I would add the caveat that I think compiling an accurate guide to used car values is now impossible; in the same way as writing an accurate guide for any commodities market is impossible. 

Why? Well any publication of values is only as good as the sources of data it has access to and if we have learnt anything over the last 2 years, it is the importance of understanding where the data we are reviewing is coming from; why you ask? Well it is a fact that data has proven without doubt that 99% of Belgians have more than the average amount of legs! 

With this in mind I think it important to understand where those most vocal in their opinions on total market used car pricing and future market performance, (Auction Houses, Cap-HPI etc.), get their data from? With the auction houses it is pretty transparent, they collate their own data from their own auction businesses; for guides like CAP HPI though, it is a little murkier. 

Because data source and depth is so important, I thought I would call one of the guides, (CAP HPI), to ascertain just where their pricing data comes from. We are now over 3 weeks since that call and I am still awaiting a call back, having been unable to get through to anyone on the day. So for this article I am having to presuppose, but I get a sense that CAP HPI collates the vast majority, (probably in excess of 95%), of its pricing data from auctions as well; then applies that pricing performance upwards and throughout all the age ranges for cars. 

Now this worries me and in my opinion this renders CAP HPI misleading for the majority of used car businesses looking for stock. However, (and in the interest of balance and fairness), where it is probably not misleading is in the reporting of values being achieved for the stock that is passing through auction houses; sadly though this results in a critical flaw, one of a narrow data cut. 

As an example; I read a very interesting article by Cox Automotive using data from Manheim Auctions, which was then used to go on and make far reaching predictions for used car values and the performance of the used car market throughout 2022. Using just this data and the problems of new car supply delays, it then went on to justify their predictions. However when you dug deeper into the article and the data being published it appears that, once again, the sweeping statements and predictions are dangerously misleading. 

As much as we are all allowed an opinion, there is an onus on those reading any article and the associated predictions to assess their value; just as you would if you were getting your news from Facebook! The article openly states that the data showed the average age of the cars in the data cut was 100.9 months; that’s over 8 years old! And that the average mileage was over 70,000 miles; both these figures were up from their previous data cut. Oh and the average selling price was up by £1,917 from last year’s average price of only £6,133. 

Now this data still has value, (in terms of the prices being achieved for cars over 8 years old with an average of 70,000 miles on the clock), but I’m not sure it is a data cut big enough to then go on to make sweeping predictions about used car values across the entire market and/or the performance of the used car market during 2022. Nor is it the data upon which a complete guide to used car valuations can be published, in the case of the guides, CAP HPI etc; why? Well where do we start? 

Firstly the used car market (like all commodities markets) is made up of individual markets, all with differing drivers on prices and therefore performing differently; ergo publishing a guide to used car values is now impossible. No one has the required grasp on values in the entire market and the data above proves this point; but let’s explore this in greater detail. Firstly, and this important, auction values are misleading for many reasons; the first one being the narrow data cut, the second being the purchaser profile, (the mix of trade and private buyers looking for a deal – pushing prices up), and then the most important reason of all. 

The fact that successful used car acquisitions professionals, those who know how to secure and lock used car stock into their business, are not buying retail used car stock from auctions. The prices these professionals and businesses are paying is unknown and only recorded within the 4 walls of their business. Whereas auctions sadly are only frequented by those who do not know the first thing about acquiring used stock, in volume and for a retail profit. They are the last bastion, where all those who have no other options go to buy used car stock. Successful used car businesses have sources of used car stock secured and locked in years in advance and via proven acquisitions initiatives and programmes. 

Having written about this for my Used Car Business Development Blog, I will not expand anymore on this point further; anyone interested can following the link below to one of the associated articles. 

Successful Used Car Businesses Aren’t Buying Used Car Stock From Auctions!,,,,,, 

There also appears to be a very one dimensional understanding of the used car market amongst those making their sweeping statements surrounding values and the performance of the used car market; and all routes lead back to delays in new car production resulting in rising used car prices! 

Well this is too simplistic and wrong; why? Well simply, a lack of new car production will not necessarily lead to rising used car prices across the board. Anyone thinking this is the case is naïve and shows the world nothing other than the fact that they don’t know how to read and/or operate in commodities markets. Probably because they have spent their careers reporting on used car markets, not operating successfully within them; a small but very critical point! 

The pivotal effect on commodities pricing comes from a very important ratio; Supply and Demand! It is wrong to assume that just because there are production problems with new cars that this fact, (in isolation), will drive both used car demand and pricing up; and let me explain why? 

Firstly we must try to understand all the “Drivers” at play, those that have driven the used car market and the prices being paid for stock in sectors of the used car market upwards; because it is a lot more complex than delays in new car production. The used car market of the last 2 years experienced a “Perfect Storm” and was influenced by some “Drivers” that have never seen before; 

 • A worldwide pandemic. 

• Customers staying at home with time on their hands. 

• A shortage of new and used car product. 

• The suspension of market forces via Government support during the pandemic. 

• And most importantly; the government then pumped this market full of free money. 

Now this is a dangerous cocktail for the prices of any commodity, as it was for the housing market as well, but guess what people? Apart from the delays to new car production all these “Once in a Lifetime” powerful pricing drivers and influences have gone! The long term effects of this are still to play out and in some aspirational used car markets, (more of that in a future article), prices may remain robust; but with no credible evidence that consumers are rushing out to pay these overinflated prices, I think the market is entering a dangerous period. Especially for those “Sheep-Like - Follow The Herd Businesses” that have been paying the overinflated prices for used car stock, because they had no other option. 

In reality, after years of PCP driven sales, at the moment most customers would probably be better off refinancing the Residual Value on their current car, than being tempted to pay over the odds for a used car, (if no new car production is available); in many cases being a backward step from the car they already have. In fact, this could be the next disruptive trading model to hit the sector, a finance company refinancing Residual Values, which could affect both the new and the used car market; we shall have to wait and see. 

So in finishing what would be my recommendations and strategies for those running and/or owning successful used car businesses? 

Would I Pay For CAP-HPI (or any guide for the at matter) Subscription? No! 

Not until I have had the discussions required with those responsible for the valuations being published; in regard to where the data is coming from. And I wouldn’t want to hear that they speak to a few “Pet Dealers” to get a read on prices, activity and customer levels. 

Once I have this level of understanding I would assess whether or not my business would be operating in these markets and the associated profile of used car stock? If not, what’s the point? The successful used car professional, (one skilled in acquisitions), should know how to acquire and value the product they are supposed to specialise in. They should not need their decisions validated by a guide, written by people reporting on values and having never operated successfully in the market they are reporting on. 

Would I Listen To The Auctions? 

No! There would be no need or point; any business I ran would not be sending any cars to auction houses; full stop! Rather I would use the valuable stock resource to further build relationships of supply for my used car business; not to line the pockets of the “Wolf in Sheep’s Clothing” businesses that pose an existential trading threat to my own. 

Lots for everyone to consider and acquisitions expertise will be the most important skill within used car businesses moving forward. With reduced used car vehicle parks looming on the horizon, only those businesses with the professionals possessing the skills to acquire and secure used car stock in the volumes required, (and at the prices required to remain profitable), are going to survive. 

Be in no doubt that no business can out run the numbers and the financials; anyone wanting to know how their business can be the right side of this equation, via successful programmes of used car stock acquisition and used car retailing, can feel free to contact me in confidence. Alternatively you could always leave your business in the hands of the valuations published by the guides, CAP-HPI etc.? It’s your choice?

Cinch, Cazoo or Carzam? Who Will Be The First To Fail? 

An interesting question that has been on my mind for a while and more so since we have seen the expansion ambitions of Constellation, (the owners of BCA - We Buy Any Car - Cinch), via their acquisition of Marshall Motor Holdings and in acquiring a 20% stake in Lookers. 

This has been a fascinating period and trading landscape for an acquisitions and used car business development professional to watch play out, especially when you add into the mix the many other challenges facing the retail automotive sector in the UK. So having read a recent article by James Baggott at Car Dealer Magazine; an article salivating over who will be the next (Cinch, Cazoo or Carzam), to be out there acquiring franchised dealer groups, I was prompted to write this analysis? Personally I think there is far too much hubris surrounding this trio and that this is the wrong question to be asking! 

 So what do I think is the right question to be asking? Well it is in the title of this article and before answering I thought it prudent to cast an eye over them all, the trading landscape and what, (I think), makes them vulnerable, because they all are. However, I must add the caveat that I have no internal knowledge of their operations, only what can be seen when you know where to look and you have the experience required to be able to understand the used car market and offer a qualified comment. 

For the record, (and to all the associated legal people), these opinions are my own; I have no shares in any of the companies and no axe to grind, having worked for none of them either! 

So where to start? Well let’s look at the challenges facing them all; namely reduced used car vehicle parks and the fact that they manufacturer nothing for themselves; (both of these are critical trading and operational flaws and pose an existential trading threat to all the businesses concerned). From there let’s look at the businesses concerned and what they are offering, how they have disrupted and/or changed the used car market for the better; because here’s the truth, (wrapped up as another problem), none of them have! 

They all enjoy the same primary trading challenges of a crowded used car market, their parasitical business models and a lack of used car stock looming on the horizon. New car registrations of today are the used car vehicle park of the future and with the dramatic reductions in new car registrations during 2020, 2021 and likely during 2022, the used car vehicle park during 2023, 2024 and 2025 doesn’t look like it can sustain any businesses lacking the strategic capability to lock used car stock into their business. 

Control Access To Stock and You Control Access To Markets! 

Only the manufacturers possess this ability; they manufacture the product, sell it to the first owner and via this transactional process, (if they possessed the strategic acumen and the used car experience to do so), they could control access to their future used car stock holding and therefore their market place. At the moment very few do and the remainder do not appear to be taking the steps to do so either. Not Yet! 

Unfortunately for the manufacturers, and having spent a large part of my career presenting complex used car business development strategies to the boards of manufacturers and franchised dealer groups, I know that the professionals required to achieve this are not currently working within the 4 walls of many – if any. 

The decision taken by manufacturers and their franchise partners to ignore used car retailing and the development of used car professionals for in excess of ten years, is the reason why the Trio being discussed exist today; and until this changes there is still hope for the businesses we are discussing. But be in no doubt, should manufacturers decide, in line with other changes to their retailing model, (Ageny Agreements etc.), to look at fully exploiting and monetising their trading advantage, (as much as there is work to be done), the associated used car stock could be removed from the independent used car market. More on this in a future article. 

So if acquisitions expertise and ability, is the key to success in the coming used car market, (and it is), who do I think is best placed to win this battle, should the manufacturers let them do so? Well to an outsider looking in, (at first glance), Constellation look best placed, but I’m not sure. 

There is no doubt that they have joined up more of the strategic dots than any of the three; they have tricked franchise dealer networks and manufacturers into using their auction disposal services, which no doubt became the engine room of their further growth. We-Buy-Any-Car has been a work of genius, in terms of changing consumer behaviour and in feeding stock to both Cinch and BCA Auctions. 

They appear mightily powerful right now but I see how vulnerable their trading model makes them. Can they really rely (long term) on the continued business naivety of manufacturers and franchised dealer networks and the associated volume of used car stock through their auction houses; via All Auction Disposal Polices and the like? 

My views on All Auction Disposal Policies are well known, from the articles I wrote for my Used Car Business Development Blog; 

Successful Used Car Businesses Aren’t Buying Used Car Stock From Auctions 

and 

Your All Auction Policy?,,,, I Bet It Seemed Like A Good Idea At The Time?,,,,,,, being just a few. 

My fear would be this; combine Manufacturers and Franchise Dealer Networks making the correct business decision to no longer feed their most powerful competitor, with the eye wateringly high and unsustainable prices currently being paid by We-Buy-Any-Car for used car stock, and there could be a profitability storm heading their way. 

To add context, before writing this article I sold We-Buy-Any-Car two cars, just to understand the process which in truth is excellent; I turned up on two separate occasions with a car, because they offered me the most when searching on line, and to be fair within 15 minutes, an appraisal was carried out, (to a level that I would have sacked any of my staff when I was running used car operations), and I left having been paid for the cars. 

Absolutely the best service I have ever experienced in terms of being paid far too much by the trade for my car; undoubtedly a 5 star review. Whether this is a sustainable and profitable long term business model remains to be seen; but it got me thinking where they get their valuation data from? 

Why? Well this is a dangerous time for those with little or no experience, to be out there purchasing used car stock; my advice at the moment would be very careful who you listen to. This is such a big issue that an article is to follow outlining the flawed data and misinformation out there, a lot of it being produced by CAP HPI, (who appear to rely mainly on auction data), and the auction houses themselves. But in brevity, if Castellion (via their BCA auction houses), are also looking at the pricing data from CAP HPI, then I think they may be in trouble. 

I have commented many times on the ridiculous valuations and the predictions for used car pricing being published by CAP HPI, and have questioned their data sources on many occasions. So in order to ascertain their data sources I rang their Head Offices to qualify this; sadly my call has not been returned for over a week. 

But if as I suspect, their pricing data is being driven by prices obtained at auctions then in my opinion the data is flawed; why? Well because in over heated commodities markets, those where market forces are put on hold by Governments, where there is little stock and the market has been flooded with free cash (Government support), the only data on pricing that really matters is what retail customers are paying for cars, not what those in the trade attending auctions are paying for stock. 

On top of this It is also important to remember that the auctions are frequented by those who do not know how to acquire retail used car stock for retail profit; and I have yet to see the long term credible evidence to suggest that consumers are rushing to pay these overinflated prices for their next used car; in the volumes required for those paying these prices to remain profitable. 

So combine an ageing used a car stock holding with a declining supply of used car stock and the Constellation “House of Cards” could be in trouble. 

Then we come to Cazoo and as an outsider looking in I just don’t know where to start. I am going to be careful with my words but this really looks like a tech based “Pump and Dump” and if the recent reductions in the share price are anything to go by, there could be trouble ahead. 

Those reading my Used Car Business Development Blog will remember my concerns surrounding the numbers and the ambition when the investment prospectus was supposedly leaked to the press in 2020; link to the article below. CAZOO’S NUMBERS?,,,,,, WTF?,,,,,,,,,,, 

The current woes surrounding the share price and the appearance of running a “Scatter Gun” approach to acquisitions/strategic investment and taking the business forward, have just never made sense to me; perhaps I am missing something? In truth it just looks like they have no plan and are clutching at straws; if I was a shareholder my first question might be, why are we expanding into European used car markets with no experience of said markets, (they are entirely different to the UK used car market), when it appears we haven’t quite cracked the UK used car market first? 

So add to this ever growing portfolio of challenges, the problems associated with stock acquisition in the future, and I am confused as to how this ends well. At launch and ever since the Founder, Alex Chesterman, has had plenty to say about the used car market, how poorly it serves it customers and how it was ripe for disruption. 

Do you know what; he might be right but I’m not sure Cazoo are disrupting the market for the better, or offering anything that changes the market and moves it into a new space? In fact if the used car market is the Christmas Dinner, the Cazoo offering appears to be the Boxing Day Bubble and Squeak; the same ingredients, but the leftovers, just reheated and served up as something different, when in reality it isn’t. More on this in a future article. 

But the thing that worries me most about Cazoo and makes me think they are most likely to find that 3 into 2 just won’t go, (in the used car market of the future), is the people at the top. I have written before about my time owning shares in a company that supplied outsourced resource sales and business development solutions to IT providers and tech companies, and the arrogance and hubris I have experienced from our so called tech-geniuses. 

Many I had discussions with weren’t providing a solution to anyone’s problem or improving on an offering in anyway, but what was common was a perception that they could disrupt any market at will; an opinion that tech always trumps people. 

For some reason I get a sense that this is the case at Cazoo; I can’t qualify these comments but when I wrote my original article, I questioned the strategy of employing no one with any used car expertise. For sure there were tech geniuses in abundance, and in order to remain balanced, I looked at their company page on LinkedIn again, to see if this has changed. Sadly it hasn’t; everyone with “Head” or “Director” in their title and all those at the very top, have no experience of used car retailing and running successful used car businesses! 

To have no one in senior positions with any success at running and scaling a successful used car business, someone that can advise on the competitive leveraging of technology when aligned with a used car business; a business that acquires, prepares and retails commodities in a very small window of fiscally profitable opportunity, and at scale? Well I find this astonishing and it is this fact that leads me to think that they will be the most probable casualty in the used car market of the future! 

There is a lot more to be said in qualifying these views; for those interested I will be expanding upon these thoughts in a future article, exploring Cazoo in isolation. 

That just leaves Carzam; although they have the same challenges of securing used car stock they are my favourites to succeed; why? Well in a nutshell their journey to here and the people involved. At the very top of Carzam you will find a genuinely successful used car professional and entrepreneur, Peter Waddell, the owner of Big Motoring World. 

In my opinion this is the important differentiator. As some are learning the used car market is not an easy market to disrupt; it is a fast paced trading environment where successful used car professionals can leverage technology to further drive a business forward. What doesn’t work so well is when the onus is put on technology and you think you can achieve great things without the professionals required? 

I will add at this point that I haven’t met Peter Waddell or any of the owners of Carzam, nor have I ever used their services, but as a used car professional looking in, this business looks set up to succeed. Provided they can continue to feed the business with the levels of stock required to remain profitable. 

That said this is not a given and stock acquisition will remain the primary challenge moving forward for all used car businesses. But if I had to back someone? My money would go on Carzam. 

Anyone curious as to how to take your used car business back, via the only strategy capable of delivering on this objective; successful and fit for purpose used car stock acquisition polices, can feel free to contact me. No doubt it will be a robust, frank and to the point, and maybe a difficult conversation, but who knows, you may learn something. Andrew.

Cazoo?,,,,, As A Used Car Business It’s Mad As A Box Of Frogs! 

 Since my recent article Cinch, Cazoo or Carzam? Who Will Be The First To Fail? (an article to found in my feed), I have been planning this little analysis, a consultancy shop window – if you like, in to why I think Cazoo will be the disruptor to fail out of the 3 discussed in the article above. Although they are all vulnerable should manufacturers restrict availability to future used car vehicle parks; that said there is much to done for this to be achieved. 

So why Cazoo? Well I could start anywhere; their determination to take a single business model into multiple used car markets, (all of them operating very differently to each other), along with the delusion and assumption that as tech based professionals they know more about specialised used car markets than successful used car professionals? In fact from the outside looking in the charge sheet of fatal used car operational flaws is very long, including but not limited to; 

• Fit for purpose valuation processes, or lack of them. 

• Stock acquisition initiatives at the volumes required. 

• The aforementioned one size fits all business model for multiple specialised used car markets. 

• Apparent lack of understanding of the used car market; therefore the individual markets. 

• Lack of genuine used car experience and acumen within the business. 

• The sheer weight of the financial overhead. 

Now as much as I am not here to give Alex Chesterman and his pals any free used car business development consultancy or any of the answers free, I thought I would at least offer some feedback and analysis; after all it easy to find fault, but as Cazoo are obviously finding it is not so easy to find the answers. So I put my used car business development hat on, the hat I wear when advising manufacturers on used car business development; manufacturers like BMW, Toyota Motors Europe and Lexus. 

I then imagined I was sitting with Alex Chesterman and the board; what would I say and where would I start? Well before advising I thought I’d better look at the Cazoo website, their stock, their customer offering etc. so what did I find? 

Well at first glance the problem for Cazoo is an easy one, although I would be careful to point out to Alex the danger in approaching a highly complex trading market in an overly simplistic manner. In addition the feedback I am going to give Cazoo has tentacles extending into all operational areas of the business. But if I had to sum up the major problem it would be thus; Alex, you have launched a business that doesn’t appear to know its identity, its core customer, its market or what it is doing! 

Now as a piece of feedback on a used car business, (or any business for that matter), this is a pretty damming and terminal state of affairs; no doubt inextricably linked to the dropping share value and the low levels of profit per unit. So let me expand a little on one of the core problems at the foundation of this. 

That of approaching the used car market, a market made up of individual highly complex trading markets, (all operating in execution very differently from each other), with a single service and operational model. Combine that FUBAR with the huge overheads involved and I think there is a real danger that Cazoo will get taken down under the pressures of both the overhead and the expensive mistakes that this policy appears to be leading to. 

Let’s expand and look at your operational model and service offering. I have no doubt that for customers in certain purchasing profiles you have vastly improved the service model. However the fatal flaw in this sector of the used car market, is that the available trading profit margin makes it impossible to pay for the model in execution, whilst remaining profitable. 

The reason why your competitors in this market don’t indulge this model is not because they are delivering poor customer service, it is primarily because it doesn’t pay, nor does the customer necessarily expect it; you are in effect the “Knight in Shining Armour” that nobody needs or requested! In order for this to be financially viable on a long term basis, you are going to have to acquire the associated used car stock holding at prices that allow for this operational overhead in their trading margin. Unfortunately this will prove impossible, as you will no doubt be finding out Alex? 

Acquisitions expertise (or the lack of it) appears to be another major flaw running throughout Cazoo, and the aforementioned is not the only trading sector of the used car market where problems are raising their ugly head; oh no! Sadly Alex from what I can see there are far bigger financial problems looming and ones that are going to cost Cazoo a lot more. 

I don’t know if it was arrogance, naivety or both Alex but Cazoo have taken this model into some far more specialised markets; markets where your “Knight In Shining Armour” – I’m here to fix the used car market people, operational model is woefully short of what customers expect or already experience. 

Now remember “Customers” Alex, because it is their purchasing nuances that dictate how businesses have to operate in specialised sectors of the used car market and quite frankly, in some of these markets, Cazoo and the operational and servicing offering are the burger van in a landscape of Michelin starred restaurants. Not only that Cazoo are trying to sell burgers at £30,000 plus! 

Let me expand; on the day I wrote this article I popped onto the Cazoo website and noticed that you had some very expensive and specialised used car stock profiles; including 9 Maserati’s, 50 Porsche’s and 22 Tesla’s. Alex I couldn’t catch my breath; with no profitable and quantifiable trading success in used car markets, you have entered some of the most specialised markets. Markets where if you get it wrong you are going to lose your shirt; and boy, I fear Cazoo are about to lose their shirt! 

For example there were 39 Porsche Macans listed on the Cazoo website; now I don’t know what you paid to acquire this stockholding but I do know that it will be in excess of £1Million; a serious level of investment in a profile of used car stock you have a very small window within which to sell profitably. 

Now there are problems aplenty for Cazoo in entering specialised markets such as this; including acquisitions expertise and experience, utilisation of funds employed to this stock holding, the Porsche offering and customer purchasing experience expectations, to just a few. So let’s look at the 3 in greater detail. 

Customer Expectations 

Alex, Porsche customers are a very discerning bunch, they know their stuff, and many will have been with the brand for many years. Aside from these very important considerations, customers spending the sums of money involved do expect a very different level of service and attention than Cazoo are offering. This is a market of long term business relationships revolving around experienced and knowledgeable sales professionals, and a specialised product. 

They are also very successful people, buying cars with very high individual specifications; people who value dealing with sales professionals with the knowledge of the product required. Price is not so much the issue here and if you want their business you are going to have to raise the bar of experience and expertise to a far higher level; and let’s be honest Cazoo is not set up to deliver and achieve this! 

All this aside I thought I would look at some of the 39 Macans that were listed; and let me tell you what Cazoo are offering these very discerning buyers. One Macan being advertised for in excess of £55,000 has had one service done in 2 years, by your prep centre in Long Bennington; as had another 4 year old example on sale for in excess of £39,000. Just 1 service in 4 years and done by Cazoo. 

The third Macan that I looked at, a 2016 example with 21,000 miles, costing in excess of £35,000, had no service history at all! In fact the description on the website actually states; “The service history for this car is not available. Its documents or books are either missing, or not officially stamped. “ 

Now as much as there are other serious problems associated with stock acquisition expertise evident here, you cannot expect to retail premium used car product, in specialised markets and to discerning customers, that have a Cazoo stamp in the service book or worse; no service history at all! I will not expend on this point Alex because with all respect, if you don’t know why this the case, then Cazoo should leave this market sector immediately, because the inevitable losses are going to be eye watering; more on this later. 

Utilisation of Funds Employed 

Now Alex, this is a critical measurement of profitability for any used car business; scale does not lesson the problem it only increases it and if two of the Porsche Macans discussed above, are indicative of the utilisation of funds being deployed to your stock holding? Well you would be better off putting the funds involved under your mattress. 

Now in order to demonstrate this I’m going to be kind; I’m going to assume that you serviced the 2 cars on the day you purchased them, although if I’m honest I think we both know that this is very unlikely. But let’s be kind; according to your website both the Macans serviced by Cazoo were done so in November 2021; one on the 14th and one on the 30th. So at the time of writing this article (22nd February) one car had been in stock 84 days and the other 100 days. 

So the average days in stock so far, (although they remain unsold so this will increase) is 93 days. Now Alex, I’ve been building successful used car businesses, business development programmes and acquisitions programmes for over 25, so trust me when I tell you this; after 45 days in stock the successful used car business is trading at a loss. 

Now if you had thought to employ and/or seek the expertise of genuinely successful used car professionals, those with a proven record of success in the market you are trying to disrupt, then you could have listened to this before you were staring down the barrel of approaching £200,000 of losses on your Macan stock holding alone! 

More on this bombshell later, along with the ramifications that rates of stock turn have on your used car acquisition requirements. 

Used Car Stock Acquisition 

Alex, at the foundations of any successful used car business are effective stock acquisition programmes; the volume objectives for which are inextricably linked to the rate of stock turn being achieved by the business. Now if we assume that on average, the rate of stock turn being enjoyed by Cazoo is comparable with the Macans discussed above, then currently you appear to have a rate of stock turn of approximately 4 times per annum; or 90 days per unit. 

Now be in no doubt Alex, if you are not measuring Cazoo’s rate of stock turn then you should; this is one of your most important KPI’s; why? Well let’s add some context; I read your recent press release confirming the ambition to retail 100,000 used cars during 2022, all very laudable. However there are some problems Alex and they start with the retail sales ambition, aligned with stock levels; all inextricably linked to the rate of stock turn Cazoo are able to operate at. 

On 18th February your website confirmed that you had 6,067 cars in stock; great but at the current rate of stock turn being achieved by the Porsche Macans, (a small data cut but probably indicative of the overall average), you are only turning your stock level over 4 times per annum. Unfortunately, and this unavoidable, unless things change you are on tracking to retail 24,268 cars. 

If the rate of stock turn taken from the Porsche Macan stock holding is indicative of the business as a whole, you will need to increase your stock level to 25,000 cars on a continual basis throughout the year. Where are these cars coming from is the obvious question here Alex? Alternatively if your stock level remains the same, you need to increase your rate of stock turn from 4 times per annum to 16 times per annum. A reduction in the average days in stock from 90 days to 22 days in stock! Just let that sink in for a moment Alex. 

Now I don’t want to be overly negative Alex but the used car business capable of achieving these improvements (in such a short space of time) would not be in this position in the first place! As a used car professional looking in, I know full well that you won’t achieve this. 

Anyway back to your Porsche Macan stock holding and what it tells me about Cazoo’s ability operate in specialised used car markets. Well it tells me that Cazoo can’t operate successfully in these markets; and reasons why also extend into Cazoo’s used car stock acquisitions expertise, or a lack of it! Now I am not privy to how your website values cars, but from what I can see I know it isn’t “Fit for Purpose;” not in specialised markets. 

In truth Alex, and I hope you are sitting down, all your technical valuations platform has achieved is to build Cazoo the worst stock holding of Porsche Macans I have seen in the UK; one consisting of the lowest levels of specification, and the three I looked at being advertised without Porsche service histories. In truth I think Cazoo are just a “Useful Idiot,” a dumping ground for anyone who has a Porsche Macan to sell that the Porsche network wouldn’t buy! Exactly what Cazoo should have done by the way! 

Unfortunately Cazoo appear to have put everything into technology and allowed it to make far too many of the critical purchasing decisions in your business, rather than trusting human beings; you remember human beings Alex? If you had thought to seek the advice of a successful used car professional Alex, (someone like me), you wouldn’t be looking down the barrel of huge losses on this stock holding; why? 

Well I would’ve told you how to make money from this stock holding, (and it is not from retailing and trying to go “Toe-to-Toe” with who now how to operate in these markets), I would have advised you that Cazoo are not set up to operate credibly in these specialised used car markets; especially from a platform of retailing this substandard stock holding to discerning and knowledgeable group of buyers. 

The cost of this folly Alex? Well let’s do “The Math” and quickly because the ageing profile, (an inconvenient operational truth it appears not yet grasped by Cazoo), dictates that you are already bleeding money! How much? Well let’s be kind and let’s ignore completely the utilisation of funds employed equation (one step at a time) and let’s look at some of the likely losses for the stock holding. 

To bring clarity let’s apply some sympathetic averages; from what I have seen I think you are on course to lose (on average) £5,000 per car on the Porsche Macan stock holding. Provided you grasp the nettle now and seek the advice on how to limit these losses; again I have no doubt that Cazoo do not possess the skills to limit these losses. If Cazoo did, it would not be in this position. 

Anyway, back to the maths; 39 Porsche Macans at an average loss of £5,000 per unit is an eye watering loss across this stock holding of £195,000! Perhaps now you will appreciate my disparaging comments Alex; because it appears that Cazoo have taken over £1 Million of investors’ capital to invest it in a stock holding that will, in all probability, return close to a 20% loss! 

Now you can go back for further investment rounds as often as you like Alex but more money, more tech and more of the same will not dig Cazoo out of operational stock investments like this! In fact the real danger here is that Cazoo continue buying stock like this, thus only compounding the problem. 

Sadly Alex these used car stock acquisition inadequacies aren’t just limited to your Porsche Macan stock holding; for balance I thought I would look at one of the Maserati Levante’s that Cazoo have in stock. Now Alex, Maserati owners, where do I start? Different than the average Porsche owner, (in terms of the nuances surrounding purchasing and ownership), but still a VERY knowledgeable, discerning and some might say high “Maintenance Bunch.” 

So I looked at a 2017 example with 46,000 miles being advertised for £32,000, only to find that the problems were just problematic. The service history section states that it didn’t have its first service until it was 3 years old and had covered over 37,000 miles; at least this was completed by an associated franchised dealership. That said, and I am not here to train Cazoo for free Alex, but let’s just be reassured that the servicing schedule for a Maserati Levante IS NOT once every 3 years or 37,000 miles! 

However Alex, Cazoo then compounded this terrible servicing picture by putting a Cazoo stamp in the service book at 46,000 miles on 2nd November 2021. Now Alex, as clever man albeit one with no experience in successful used car retailing, you may not see the damming significance of all this, so let me use some performance statistics from your business to ring the alarm bells. 

I note that the car concerned has just enjoyed a distress selling message price reduction of £1,500 and that it has been in stock since at least the 2nd November; 112 days in stock on 22nd February! Now if no one in your senior team can see the problem here and tell you the remedies? Well Alex, you are surrounded by the wrong people! 

So where to go from here Alex? Well undoubtedly Cazoo will have a target market and the associated customer base; whether Cazoo knows where this lies is difficult to ascertain. The problem really lies in the numbers; can this target market, (the one aligned to Cazoo’s operational and delivery model), pay for the overhead? I don’t know and more alarmingly, I’m not sure that anyone in Cazoo does either! 

Anyway Alex, back to the beginning and back to Cazoo; a used car business employing no successful used car professionals in senior strategy positions and one that appears to have no obvious and transparent idea of its market niche; where and how it can be profitable? Only you know if the numbers will ever add up, the one thing I know without doubt though is this; if you want to be successful in used car markets, you have operate as a successful used car business in your target markets. 

Trying to disrupt specialised used car markets with poor quality stock and an operational and delivery model far below what the associated consumer base expect, is not a recipe for success; or how you disrupt an established market. If you or anyone within a senior operational position in charge of strategic change want to know more? Well I’ll give you an hour of my time for free; not something I would normally offer. 

Whether you or anyone responsible is humble enough to reach out? Well only time will tell; but be quick, problems like those above for a used car business have a nasty habit of getting totally out of control, and quickly!

Volvo Selekt Direct?,,,,, How To Snatch Defeat From The Jaws Of Victory?,,,,, 

 I read with great interest the recent press release from Volvo regarding their Selekt Direct Programme; very interesting. If delivered with operational and strategic competence this initiative could be the first in the process of securing and protecting their used car retailing future. In many ways it could be the strategy I have been advocating for years; creating the ability to lock in used car stock into successful used car retailing networks. 

However for some reason the press release (as much as it’s not any concern of mine) has left me with some concerns! For those who didn’t see the press release the highlights were as follows; • Volvo Cars have launched Selekt Direct; “The UK’s first end-to-end online service for buying pre-owned cars direct from the manufacturer.” 

• The “Service launch provides a blueprint for Volvo’s ambitious digital sales strategy.” 

• “The company has announced its intention to sell all its new electric models online and for the majority of its UK retail sales to be online by 2025, while all Volvo’s global new car sales are expected to be through online transactions by 2030.” 

• The statement confirmed that “Volvo’s UK retailer network remains key to its business, continuing to provide all aftersales services.” 

Now I wasn’t present at the meetings at Volvo when the operational decisions were made but if implemented with strategic competence, Volvo could now have the ability to lock used car stock into their own used car retailing network, with all the benefits this will deliver. Provided of course they have the used car professionals required to deliver and make this initiative successful. 

However I get a sense that they are about to fall spectacularly short in what will be required for this initiative to work; why? In short no mention whatsoever regarding the their investment in the used car professionals required; leading to a perception of a naïve over reliance on technology to drive sales and a lack of understanding of what many customers experience during the purchasing process. 

It is an inconvenient truth that the potential rewards from this initiative and the “Locking In” of future used car stock vehicle parks into their own used car retailing network, will only be enjoyed by blending all the initiatives (technical and operational) with successful and proven used car professionals; both at the manufacturer themselves and within their franchise dealer networks. 

Sadly though the evidence of the fatal flaws, in terms of the delivery of these benefits for Volvo, is hidden in plain sight; in their statements. In fact, once read and digested they are indicative to me that there are no genuinely successful used car professionals working within the 4 walls of Volvo; if there was the statement would have read very differently. 

Take the statement above, that Volvo has; “announced its intention to sell all its new electric models online and for the majority of its UK retail sales to be online by 2025, while all Volvo’s global new car sales are expected to be through online transactions by 2030.” 

And then read that in the context of their further statement that; “Volvo’s UK retailer network remains key to its business, continuing to provide all aftersales services.” And this has the appearance of a manufacturer giving up not just on used car professionals (sales, acquisitions and business development) but on all sales professionals, along with their franchise partners; whether intentional or not? More on that to follow. 

Those of you who have been following my Used Car Business Development Blog will know that I have been advocating the strategy of developing the best used car sales professionals and leveraging the best technology, for years. But I have warned about the consequences of over relying on technology at your peril; as discussed in my articles; 

The Secret To Used Car Success?,,,, Going Back To The Future!,,,,,, 

A Pivotal Piece Of Used Car Business Development Advice!,,,, And For Free!,,,, 

In the press release Volvo also confirm that; “Volvo Car UK’s research confirms growing consumer interest in new purchase models, with one in four people surveyed already saying that they find the direct-to-consumer used online concept ‘very appealing’. This positive shift in consumer attitude is reflected in the early success of the Care by Volvo car subscription service, which in its first year has delivered more than 2,500 online new sales, equivalent to 15% of all Volvo’s retail sales and 7% of the brand’s total UK new car sales.” 

So what do I take from all this? Well Volvo appear to be betting their retail sales future on the basis that one in four people surveyed found a direct to consumer used online concept “Very Appealing” and the fact that in the first year of their Care by Volvo car subscription service it delivered 2,500 online sales; 7% of the brand’s total UK new car sales.” 7%? 

Now I was not privy to any discussions that took place between Volvo and their franchise partners prior to the statement being released. But there is a danger here that for 7% they will have affectively lost the trust of their franchise partners, and will endure a sales talent drain, that will (I predict) leave Volvo’s sales ambitions floundering; let me explain why. 

Firstly their franchise partners. If I had invested my career and financial future in a Volvo franchise, (bearing in mind that before Chinese investment it was a challenge wrapped up in a disaster), I would be pretty angry and worried right now. In fact it would be “Pitchforks and Burning Torches” on the walk down to Volvo HQ. 

Go back to their statement; “Volvo’s UK retailer network remains key to its business, continuing to provide all aftersales services.” Wow! Thanks a bunch Volvo; why am I imagining a “Crumbs From The Table” arrangement here? At first glance this is transitioning to an “Agency Agreement” but on steroids and with the cat now out of the bag, I’m not sure how the diplomacy required between manufacturer and franchised partners works from here? But as an owner of a Volvo franchise I know that aftersales revenue probably doesn’t pay the overhead, let alone put food on the table; so urgent reassurances would be required. 

Then there is the sales professionals, (both new and used), currently working within the Volvo network; unfortunately it would appear that this is your “Night of the Long Knives!” To everyone currently working in sales within the Volvo network, let me be frank and honest. Effectively this appears to be the first step in Volvo transitioning to an Agency Agreement via (no doubt) an “Apple Store” style retail environment; one with polo shirt wearing “Product Geniuses” helping customers through an ordering process. 

All genuinely successful sales professionals know that this is not the environment for successful sales professionals or the salaries involved; I have no doubt that the majority of you will have already worked this out and be planning your exit. 

Now, despite all the hubris surrounding Volvo at HQ; indulged in no doubt by those believing their own hype, this will be a dangerous moment. So let’s hope that someone working at the manufacturer has been brave enough to stick their head above the parapet and throw a few hand grenades into the equation. 

If I had been in this “Masters of The Retail Automotive Universe” strategy meeting I would have cautioned by saying this. 

Listen everyone, tech based sales platforms are now pivotal in the sales and customers research and purchasing process but we must remember at all times; they are nothing but the shop window, the hook to gain engagement. They are not sales platforms, regardless of what the tech geniuses tell us! 

We need to start thinking like the customer; they are very busy and like to do a lot of research online during the decision making process, but without professional sales networks this initiative will fail. Let me tell you why. 

Of late we have been very lucky; off the back of some very deep pockets, an expanded product line up has taken us to “Nose Bleed” heights. But let’s not let get ahead of ourselves. At the moment Volvo are flavour of the month, but this will not always be the case; our competitors are evolving product line ups and our own product line ups will age. 

If we are lucky over the course of a product cycle our product will be the “Must Have” car in class at launch, a status that slowly ebbs away over the period of time before replacement, as other competitor products are launched; those that will be better than ours. Therefore it is both naive and dangerous to assume that the consumer will just continue to log onto our platform/website and order cars in the volumes required, just because we have an excellent online offering; that is for the birds! 

During the process of researching the market, consumers are very likely to look at our competitors and then begin to ask questions before making a decision on the second biggest purchase they will make, after their house. At this moment we will need sales professionals capable of developing electronic engagement into sales, via the inevitable process of overcoming objections. If we don’t provide this environment we will lose sales to manufacturers that do still employ sales professionals within the evolving sales model. Rendering our state of the art new world all about price and the inevitable race to the bottom that that will become. 

And when it comes to used car sales, the ability to align tech platforms with capable sales professionals is even more vital, because guess what; when it comes to investing vast sums of capital into used car stock, we only have a 45 day window of profitability, before we are effectively losing money. Regardless of where that money comes from? 

Sadly and critically, it appears that we are betting everything on tech and this will cost us our professional sales network, just at the time we will need them; let’s think on that for a moment people. 

Now I might be wrong of course, I might be reading the statement all wrong, but the perception here is vital; especially when it comes to their own sales professionals. There was nothing within the statement to appease my professional selling senses; if I was employed as a sales professional within the Volvo franchise dealer network, I would be planning my exit. Volvo’s biggest mistake in all this may be the inability to understand its sales resource, or the arrogance to believe that it doesn’t need to. 

When it comes to used car retailing, securing used car stock at prices enabling your business to be profitable, although an incredibly skilled process and a vital foundation, is no guarantee of success; it is just one piece in the jigsaw of a very complex and highly specialised trading environment. 

If I owned a Volvo franchise right now I would be waiting for urgent clarification from Volvo as to the new business arrangement, including the financial rewards involved in supporting the aftersales ambitions of the manufacturer. Being an acquisitions and used car business development professional I would also know full well that I was now in battle to secure used car stock with and against the parent manufacturer, in order for my business to survive in the long term. 

Luckily, and having done this many times before, I would have absolute confidence in my ability to do this which would effectively put me in competition with, and hinder the online used car retailing ambitions of my parent manufacturer. The initiatives would be under way right now and as matter of urgency; after all my business is at stake. 

This appears to be quite a “Can of Worms” for any manufacturer to open, but with an evolving (probably less financially lucrative) relationship with the parent manufacturer looming, I’m not sure that franchise holders have any other option other ensure that they secure as large a used car stock holding in the future as they can; aligned with the used car professionals required to acquire and retail this stock profitably. 

Any Volvo franchise holder wishing to explore how this can be achieved can feel free to contact me in confidence.