Those of you who read my previous post; Effective Stock Disposal Will Lie At The Heart Of Your New Car Success, will hopefully be in no doubt as to the importance that we place on effective used car stock disposal, in terms of the success of your franchised dealer networks. Without these procedures in place within your franchised dealer networks, the oxygen of funds cannot be returned to businesses and made available to support successful used car operations, the success of which is vital to your new car aspirations.
I return to this subject having received an invitation to attend the 10th Vehicle Remarketing Conference to be held in Amsterdam in January, which I think is a wonderful initiative and one I will do everything to attend, if for no other reason than to get the opportunity to meet many of you who I am in contact with, thanks to our used car business development posts and our used car business development and consultancy programmes.
And I do so having looked at the agenda for the event which looks very in-depth and looking to tackle some important issues; I have even offered to present some content should they feel it appropriate? But one thing is troubling me when I look at the very in-depth agenda and maybe the future direction of travel, in terms of the narrative here, and how, if left unchecked, it may actually harm manufacturer efforts to support their new car aspirations.
I will comment no more because the event has not taken place and therefore I am not fully aware of the content, but I will caution and draw a comparison between European markets and the world’s most successful used car market, the used car market operating in the UK; be wary of allowing a situation to occur where your franchised dealer networks are no longer being seen, (by the customer), as the “1 Stop Shop” for all things associated with purchasing their new or used car.
As a company of used car professionals who have constructed and delivered many manufacturer approved used car programmes, in conjunction with franchised dealership based used car business development and consultancy programmes, the agenda points of most interest to us are the following;
- Used Vehicles Programmes and Strategies That Drive Profits.
- The Relationship of New and Used Vehicle Strategies.
These are two very important issues for manufacturers that will go to the very foundations of both your used car remarketing and your new car success in the future and I for one will be listening very intently to whoever presents on these topics.
Every individual market has its individual challenges but the one constant for all manufacturers is that the only way to ensure future new car success, is via a foundation of used car success. There is no other way to ensure that you protect future residual values and therefore keep the cost of ownership for new cars at affordable levels for new car customers, other than via resilient franchise dealer networks that are successful at selling used cars and supporting approved used car programmes.
Most manufacturers we speak to have stopped looking at their used car and new car operations as separate businesses and accept that they must work together and in unison, in order to ensure success in the future. But how this is achieved is what I would be covering in the topics listed above; in fact they are so important that you could argue that they are “The Conference” as far as manufacturers are concerned.
The other agenda points, as important and as noteworthy as they are, can only be discussed and the operational procedures implemented, after the foundations of successful used car networks have been achieved, because without these foundations, there is a danger that 3rd party businesses will target the new and used car supply chain process and in some instances, become more powerful than your franchise dealer networks in influencing customer purchasing behaviour, the purchasing process itself and your future residual values; just as they are currently doing in the UK market.
We have seen this happen in the UK, where technology entrepreneurs are targeting established markets at will by using technology to work in synergy with changing consumer purchasing habits, and in some cases actually changing them. The automotive sector is being targeted in almost every area of the supply chain, and in reality many manufacturers have to accept that their franchise dealer networks are no longer perceived as the “1 Stop Shop” when it comes to purchasing a new or used car.
Many parts of the sales process including the part exchange valuation/sale to the actual supply of the new or used car have been targeted via 3rd party businesses and they have now become so ingrained in the subconscious of the consumer, that these businesses are now seen as the place to go by customers and the growth of these businesses is relentless. Businesses like “We Buy Any Car,” Carwow and the many professional and successful independent retailers of used cars, (Motorpoint is just one example), are taking over many parts of the new and used car sales process and in my opinion, it is leaving manufacturers and their franchise dealer partners very vulnerable.
Why? Well customers are very valuable to any business but they are also habitual in their behaviour and once you have lost them, it can be very hard to get them back. I will be exploring these businesses in greater detail in some of my next posts, but I caution; in the UK the most powerful and impressive new car website for the supply of new cars is not owned and run by a manufacturer or their franchise partners but by an independent business. The businesses selling the most used cars in some of our largest towns and cities are now not franchised dealers but independent businesses and the most successful purchasing platform for used cars is now an independent business.
These are now very successful businesses but with no shared objective with you as the manufacturer, and in many cases they are now setting prices and therefore effecting the future residual values of new car product, (because they are trading in such high volumes), and bearing in mind the direct effect that future residual values have on the cost of ownership of new cars, I would want to be controlling this myself, as the manufacturer, not leaving it to third party businesses.
Thus we return to the agenda points listed above and the importance of understanding that new car success can only be delivered from the foundations of used car success. It will be fascinating to listen to the speakers delivering the content on these topics and to see if there are any solutions offered. If I were presenting here I would be advocating the strategic importance of having effective approved used car programmes working in synergy with used car business development and consultancy programmes delivered at dealership level.
But I would caution that resilient and successful franchised used car networks cannot be delivered over night, or just off the back of branded point of sale material or via standards programmes alone. For sure these things are important but for any programme to be a success, someone has got to work with your franchise dealer networks and deliver the independent consultancy and business development programmes required, to enable them to grow their used car operations and therefore protect your shared new car objectives for the future.
Unfortunately though, strong and resilient used car dealer networks do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
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. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call us on 0044 345 057 3177.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
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