As mentioned briefly in my previous post; The Importance Of Your Used Car Business? Well As Sherlock Holmes Would Say, it has been interesting to observe how many manufacturers in the UK, (along with their franchised dealer networks), are responding to the difficult and challenging new car trading conditions and what this in turn means for their long term commitment to their used car programmes?
We are in conversations with many manufacturers who are now looking seriously at what their support for their used car ambitions and their position in the used car market means, in terms of their long term success, and it will be fascinating to observe how their European based counter parts react to the emergence of their own used car markets. In the UK it is striking that the most ambitious and positive used car development ambitions are held by the manufacturers who are not only out-performing the new car market, but those who are also growing.
And of course, it goes without saying that these conversations are confidential and not the subject for an article, but whilst delivering our used car strategic proposal documents, some interesting issues come to light that effect the ability of all manufacturers to build sustainable and long term success in the used car market, and just at the time when they don’t need it! And this made me think about just how European manufacturers are going to react to the imminent requirement to meet the challenges of used car markets that are growing and beginning to outperform new car markets, in terms of volume.
So I thought I would start by looking at the challenges faced by your UK counterparts when it comes to planning to grow their success in the used car market; only because it will bring the magnitude of the task facing European manufacturers to the fore. I wanted to do this because the used car market in the UK is far more advanced than those in continental Europe, however, this fact has not stopped the mistakes that have been made, in terms of the long term used car strategies of UK based manufacturers.
Now, it is worth pointing out, that there are many models of used car programme being delivered and run by manufacturers throughout the UK and in the main, (time for some honesty), with the majority of the focus on the new car objectives, quite understandably it becomes impossible for manufacturers to remain at the forefront of developments in the used car market, let alone the skills-sets of the professionals that will be required to build and sustain long term success in the used car market.
So although outwardly successful, some manufacturers in the UK have chosen, (those with the ability to leverage high levels of consumer desire for their product), to try to manage the used car business in the way they are the new car business; and look, this can and has worked, but there has been a drive under this model to employ a different style and profile of personnel, in order to deliver on this model.
This article is not the platform to do so, so I will not comment here on how teams built with professionals delivering on this business model might or might not be capable of morphing into the used car entrepreneurs required, when markets get tough, down and dirty! But it does highlight an issue that the industry in the UK has as a whole; just where is the talent, the people required to get this business, (the used car business), the one we don’t understand in the way we understand the new car business, by the scruff of the neck and make it happen? And I doubt that things will be any different for European based manufacturers, in fact they will probably be more challenging in this regard.
In truth this has become the perennial problem for UK based manufacturers; so the problem gets ignored during times of buoyant new car markets but this has resulted in no long term thinking, no committed programmes of used car development and an unwillingness to embrace the culture of used car professionals, and more importantly, what they are worth.
Now I had a career in used cars, I was at the forefront of used car development for some of the most successful franchised dealer groups, so why did I leave? Well, and this is not a reflection on my employers at the time or indeed the manufacturers involved; I felt that my skills as a used car professional were under-valued and I felt that lip service was paid to the business I was contracted to develop and make successful, therefore my chances of personal career development were going to be limited. So like many both before and after me, I left to pursue a used car career outside of franchised dealer networks, where better opportunities existed.
Sadly, in the main, (and I speak to a lot of used car professionals), the status quo has not changed for used car professionals in the UK nor has the mind-set of some manufacturers, (in terms of the importance that they place on training and developing used car professionals), and this has led us to where we are today; a situation where when we are strategising the delivery of used car development programmes with manufacturers, questions get asked and invariably the penny drops! “Wow! There Is A Lot To Do!” and “We Don’t Even Have The Staff To Deliver On What Needs Doing!
And invariably there is a lot to do! As a rule if I had to sum up the major points that will need to be grasped, it would include the points below; • This is not a quick fix, so it is not a time for short term thinking!
- It is unlikely that you will have enough staff with the skills required, residing in your franchised dealer networks!
- There is a strong likelihood that no one employed at the manufacturer has the experience of driving used car businesses and/or used car development programmes to success!
- Sadly, you won’t be able to buy enough “Winners” either, because decades of under investment in used car programmes and in used car professionals has left the sector, as a whole, woefully under resourced!
- You will need to separate your strategic thinking from that required to be successful in the new car market!
- It is highly unlikely that you will have the training programmes required to develop the used car professionals you are going to need to be successful!
Now apologies if this sounds overly bombastic, but the “Status Quo” will be no different for European based manufacturers, and please bear in mind that some of the target audience based at UK manufacturers have experienced some cataclysmic year on year declines in new car registrations. Now many are at last looking at their used programmes and what will be required in order to ensure that declines in new car registrations of this magnitude are avoided in the future; and our advice to all manufacturers would be to not under-estimate the size of the task involved, and the fact that the decision’s you make now regarding your support of the used car business will have long term ramifications for your new car performance.
If UK based manufacturers want to transition their business and their franchise dealer networks from one that is a hostage to the fortunes of the new car market, (with no successful used car performance to support both them and their franchise dealer network), to a business that is building long term new car success, from the foundations of a successful used car retailing franchised dealer network, and therefore less susceptible to the socio-economic forces responsible for the current new car declines in the UK, then a continual and sustained programme of used car business development will need to be launched; and guess what, this will not be the commonly deployed in the past, throw some money at the problem, and some inadequate resource for 3-6 months, then turn the other way and hope that the problem will be solved.
The decisions UK based manufacturers make now will be critical and who they partner with to deliver their programmes of used car business development will also be critical. Decades of under investment in used car professionals have left some franchised dealer networks in the UK bereft of the skills required to sustain growth in used car retailing and the final irony for UK based manufacturers is this; at their moment of most need, the professionals they require the most, are now likely to be the highest paid individuals in the sector; so buying “Winners” can’t be the strategy and let me explain why. Those truly capable used car entrepreneurs, those capable of walking into a businesses and turning them around, of building successful used car operations, they are in short supply; they have their pick of opportunities to choose from, so to get them; well be prepared for the sharp intake of breath when it comes to salary and bonuses.
Our advice to European manufacturers in all this; try to learn from the lessons of your UK based counterparts. In the UK we have a thriving used car market place but decades of under investment, (at manufacturer level), in the development of successful used car programmes, has resulted in their approved used car programmes and associated franchise partners struggling to keep up with the top performing businesses in the used car sector.
In future articles I will be exploring why successful used professionals are in such demand in the UK and why they can command some of the most lucrative packages in the sector; their skills are a million miles away from those required by the new car professional, the skill-set by which the majority of franchised dealer networks are built from and therefore why you are unlikely to find them residing in your dealer network, ready to leveraged. Sadly, in the past, the traditional environment within the franchised dealer network in the UK has not encouraged the development of successful used car professionals.
So in looking to grow successful used car businesses the first task for European manufacturers, even before the major task of deploying a used car business development programme capable of developing a network of successful used car operations, may well be the construction of the continual training and personnel development programmes capable of supporting your future used car aspirations, via the development of the, (yet to be identified), key personnel within your franchised dealer network.
Without this, well just where are the used car professionals of the future coming from? In the UK those who are already successful in the used car arena have their choice of businesses to go to, so as a manufacturer just starting to develop used car programmes, why would they choose to leave an already successful environment? Well they just don’t, so you will have to begin the process of developing your own.
In the trading conditions of today it is an inconvenient truth that European manufacturers will only be able to develop strong and resilient franchise dealer networks in the future, those capable of supporting their new and used car aspirations and free from high levels of manufacturer support and subsidies, if they invest in and promote the expansion of approved used car business development programmes, and training and personnel development plans for used car professionals; those that will be required to ensure that a network of successful used car operations can be built.
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, both in the UK and in Europe. 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 me on 0044 7796 260261.
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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