Success In The Used Car Market Place!,,,,Is It Really The Holy Grail?

Welcome to The Used Car Business Development Blog. This is the first post, there has to be one, so the subject for the first post had to be the answer to question I am asked most often; “Why is success in the used car market place so pivotal to our overall success?”

I am asked this questions by senior personnel representing manufacturers and the owners of either franchised or independent dealerships and although the reasoning and objectives can, on the surface, be different between manufacturers and dealers, the reality is that success in the used car market place is of paramount importance to the overall objectives of both manufacturers and dealers.

I couldn’t possibly cover every aspect of the benefits of success in the used car market place in one blog post, it would be impossible, but it should be of no coincidence to either the owners of dealerships or the senior personnel within manufacturers that the most successful new car retailers, are invariably the most successful retailers of used cars.

So just what is the opportunity and what are the benefits to both the owners of dealerships and to manufacturers, of long term success in the used car market? Well the benefits to the owners of dealerships are unlimited, we are talking about a market with unrestricted potential that can deliver benefits to the dealership as a whole.

The tentacles of a successful used car operation spread far and wide within the business increasing profits for the new car department, the service and aftersales departments, the finance department and the overall bottom line for the dealership. Potentially, no other department within the business can match the potential to make profit that the successful used car operation has.

The Used Car Operation is not restricted by allocation or restrictions on the number of cars, the model mix and in most cases the brand. It can attract customers of all budgets and has the ability to tie customers to the both the dealership and the brand very early on in their ownership cycle, offering the potential of increased levels of reciprocal business and increased new car sales and profitability in the future.

All used cars need an element of preparation which supports and adds to the bottom line of the service and aftersales departments, including any bodyshop and smart repair operations contained within the business. Every used car sale is another finance opportunity, another warranty sale and another opportunity to generate another profit opportunity, in the form of a part exchange.

For manufacturers the upside of having a dealer network that is successful in the selling of approved used cars is immeasurable. Everything from;

• Increased new car profitability for both the manufacturer and the dealer network.
• Increased overall profitability of the dealer network, resulting in a stronger more resilient dealer network.
• The maintaining of core standards set by the manufacturer.
• Increased levels of customer loyalty to the brand.
• Increased residual values.
• More competitive financial packages and reducing costs of ownership for customers.
• Increased warranty sales.
• More control over the used car vehicle park.
• Protection of the brand.

All this and more can be achieved by the manufacturer supporting dealer networks in their growth and future success in the used car market place. Currently the used car market sector enjoys 8 million sales per annum, 0ver 3 times the size of the new car market place, and is enjoying growth of 7% per annum.

So how do you take full advantage of the opportunity currently presented by the used car market place? Well, everyone one reading this post will probably represent a different manufacturer or be in a different position, in terms of their current used car performance, (If they are the owner of a dealership), so there is no stock answer.

But some constants remain; no matter how successful you are currently in the used car market, you can always improve and grow, it’s just the operational focus for growth that changes. As well as the fact that success in the used car business presents some sizeable challenges, the main one being that there is no guarantee of a pre-determined level of used car stock that is going to be delivered to your business. The inconvenient truth is that if you want to sell a 1,000 used cars per annum, you are probably going to have to purchase 1,200!

If this post has resonated with you and you would like to know more about used car growth strategies, rest assured that help is available? The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers.

We construct and deliver used car business development programmes for dealer networks, independents and manufacturers. If you would like to know more about our used car business development programmes, then please do not hesitate to contact either Andrew Banning or Malcolm Thomas at ajb@autoformance.com  or mgt@autoformance.com  

Alternatively please do not hesitate to call us on 0345 057 3177, when it will be our pleasure to help.

For more information about our services please visit our website at www.autoformance.com.

Andrew Banning.
Used Car Business Development Director.