Will Your New Car Franchise Model Be The First To Fail?,,,,,,,, (European Manufacturers Article)

In our last article; Used Car Retailing? There Is No Secret, It’s Just Hard Work we made reference to the recent comments made by KPMG in their Global Executive Automotive Survey, regarding their predictions for the sector in the UK and we promised we would return to this survey, due mainly to the fact that this survey should, (we feel), be sending shivers down the spines of Manufacturers trading in the UK new car market, as well as their European counterparts. 

One of the most startling predictions in the KPMG survey was that 50% of franchise dealer networks will fail during the next 10 years, and we agree entirely with this sentiment. The reasons for which are varied and differ for every manufacturer, but we think the 50% is as a total of the whole network of franchise dealerships, not equivalent to 50% of each network; some manufacturers, those that enjoy dealer networks that are successful used car retailers and are therefore more financially resilient, and those that have market leading products, may remain fairly unscathed but our prediction is that for some, their whole franchise model may be broken and once again some marques will disappear from the UK and other European new car markets. 

This article can’t possibly go into all the reasons effecting every manufacturer and in every European market, it has to be generic because our audience base covers every manufacturer in the UK and continental Europe. As much you all have your individual challenges and, apologies in advance, this article is designed to be forthright, frank and to the point; it will make reference to some trading models, although not by name, so if you feel this is either unfair or not applicable in your case, please say so and open up debate with us, (should you feel it is needed), when as usual this article will be posted on LinkedIn; but only if you wish to openly discuss sensitive trading models via this medium? Those wishing to discuss any element of this article in confidence are free to contact me on my personal mobile or via my personal email address below; I will gladly make time to speak to everyone who wishes me too. 


Quite rightly the KMPG Global Executive Automotive Survey cited many reasons for why the current new car trading model is in a perilous state in the UK, but one thing not mentioned, (which was a surprise), was the lack of emphasis from some manufacturers on building successful used car retailing franchise dealer networks. Now we appreciate that we may sound like a broken record on this point, but the fragility of the narrow new car sales and parts supply model being deployed by some manufacturers, where 2-4% returns are lauded as success, really is leaving some manufacturers and their franchise dealer networks terribly exposed and the risk of failure is now a clear and present danger. 

In our last post we mentioned the groups of manufacturers we feel are most at risk; the up and coming manufacturers, the previously failed but recently revived brands and the new hybrid brands being launched to add prestige to existing brands and in the main, due to very favourable new car trading conditions during the last 10 years, we have seen much success for these new car manufacturers, but now the cracks are beginning to show. 

For example let’s say that, as the manufacturer, you have experienced a journey over the last 20 – 30 years of not being previously associated in the automotive sector, then launching a car brand by purchasing licences to manufacturer models, (long since dropped by another manufacturer), under licence in the UK and other European markets on the basis of value but where you are now looking to sell new cars in Europe that are priced in excess of 40,000 - 50,000 Euros. Well listen, that is fantastic and the hard work involved in this journey is not be underestimated. You might quite rightly point out that the purchase price, (to a point), is irrelevant now that the new car customer has embraced PCP/Personal Leasing agreements and is therefore buying on a monthly rental amount basis! 

Now, do you know what, we would agree but we would also point out that strong used car residual values are going to be imperative, in terms keeping new cars competitively priced on a PCP/Personal Leasing agreement and at the moment we would ask you who is protecting and determining the short to medium term residual values of your new 40,000 - 50,000 Euros plus cars; is it your franchised dealer network or is this unknown? 

We would also point out that there are going to be very few customers who will have travelled this whole trading journey with you and as much as you will be working very hard to tempt some customers away from the longer established competition in your market, keeping them will be key. This profile of customer, those spending in excess of 40,000 - 50,000 Euros will expect more from every area of your business, because they have grown accustomed to these high standards and guess what, they don’t like to then pay a privilege for owning and driving your product; the minute this happens and your new car product becomes uncompetitive, in terms of the price of ownership, then they will flock back to the manufacturers you have worked so hard to tempt them away from. 

But in our opinion no one reading this article should feel immune from the challenges coming to the UK and European automotive sectors; you are all under threat, it is just that the nature of the threat is different. For example, let’s review a trading scenario in the UK, one where you would feel that the manufacturer was far less threatened by the evolving new car trading conditions, because we would hope that this would serve as a warning to all European manufacturers. 

If you run a search through Google for retailers of used cars for a well-known prestige German brand in one of the counties in the South East, a county directly bordering London so an affluent commuter belt where a lot of aspiring professionals will be living; (just the socio-demographical target audience for this manufacturer), well only one franchised dealer appears on the first page of Google, and towards the bottom. The first page of Google is dominated by well-run independent businesses, one of whom had over 500 of this make of cars in stock, and over 2,000 used cars in stock in total; an entire stock holding made up of premium brand German manufactured cars. 

The reality is that for any time poor aspiring professional living in this area looking to buy a used premium brand German car, they need only go to one business to have all the choice they will ever need. So we may say to these manufacturers, for sure your problems are different but what is your used car trading footprint in this very affluent commuter county next to London? Who do you think is setting residual values and therefore influencing new car pricing? Well it is this business, the one who is probably not really bothered about the uncertainty being caused by Brexit, because they are using this market to purchase stock cheaper than ever before because there will be far less competition; we have no doubt that this will be a very profitable time for this business. 

And therein lies the sad irony; regardless of the manufacturer you represent, as the manufacturer you have to appreciate that for your franchised dealer network their used car businesses should be the most profitable part of their business; why? Well used car professionals know that there are no pre-defined trading margins and that they make their money when they purchase used car stock. They also grasp the market reality that it maybe the market that sets retail prices, but that they, as the used car professionals determine the price they pay for stock, because these are skilled individuals who recognise opportunities and they increase margins via skilled acquisition. 

For many of you reading this there will be much to do if your new car trading model is to be protected via a dealer network that is successful at retailing used cars. Unfortunately we are not sure that your networks are going to immediately come to the rescue either because as margins and profits have been driven down, manufacturers have acquired the dealer networks they deserve. Not many of the big PLC’s or the larger private groups are running long term used car business development programmes for their own personnel, not when there is no support from the parent manufacturer, so these professionals are not, (in the main), working in your franchise dealer networks; and why would they, any used car professional working in a business similar to that high-lighted above will have a tremendous opportunity to earn a far higher salary working there, when compared to a comparable franchised dealership. 

So if your networks are unprepared, how prepared are you as the manufacturer? In our experience not many are and very few of you have the professionals within your organisations to get the strategy in place to grow used car retailing and protect your new car trading model. In reality it is a huge job, no more highly skilled than any other, but too few manufacturers both in Continental Europe and in the UK have genuinely successful used car entrepreneurs to call upon at this time of need, as we explored in our recent article below; 

Do Successful Used Car Professionals Exist For European Manufacturers? 

We will return to the issues raised in the KPMG Global Executive Automotive Survey over the coming articles and discuss the issues raised in isolation, but there are no easy answers. Although you may have to radically change your new car model to meet the challenges coming to European new car markets “Head On” we can’t see any of these changes fundamentally increasing profitability, the new car market is becoming too fractured to put back as it was. 

No, the answer will always return to the used car market and successful used car retailing, in terms of building financially resilient franchise dealer networks, those needed to support your warranty programmes and to service your vehicle park, and the decision to do nothing is the hands of you and your franchise partners. Many of your franchise partners may not have the stomach for the fight, we can tell you now that these journeys are not for everyone, but the used car market still offers tremendous opportunities to franchise dealer networks to increase revenues and to protect your new car aspirations. 

But as the manufacturer you must also look at yourself; a quick meeting and a tinkering of your warranty cover, a hastily put together standards programme, a rebranding of your used car point of sale material and/or any other “Sticking Plaster” initiatives are just not going to get you to where you need to be. Look around your organisation, into the whites of people’s eyes, who wants to and more importantly, who has the experience to get this massive task by the scruff of the neck and get the job done. The brief is outlined in the article above so we won’t repeat ourselves here other than to stress that this role is not, in our opinion, a sideways move for someone from another area of your business, or with no experience in delivering at this level in the used car industry, the days of growing into the role over a couple of years are gone. 

You need a professional with the experience of building successful used car businesses at both franchise dealer and manufacturer level, because only they will know what will be required from all areas contained within the manufacturers organisation and also know how to then deliver the business development and personnel training required, to your franchise dealer network. 

Now we appreciate that finding genuinely successful used car professionals is very difficult for both manufacturers and their franchised dealer networks 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 Continental Europe. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, or to discuss any part of this article in greater detail, please do not hesitate to contact one of our Used Car Business Development Directors in the strictest confidence; 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. .

Will Your New Car Franchise Model Be The First To Fail?,,,,,,,, (UK Dealers Article)

In our last article; Used Car Retailing? There Is No Secret, It’s Just Hard Work we made reference to the recent comments made by KPMG in their Global Executive Automotive Survey, regarding their predictions for the sector in the UK and we promised we would return to this survey, due mainly to the fact that this survey should, (we feel), be sending shivers down the spines of Manufacturers and their franchise partners trading in the UK new car market. 

One of the most startling predictions in the KPMG survey was that 50% of franchise dealer networks will fail during the next 10 years, and we agree entirely with this sentiment. The reasons for which are varied and differ for every franchised dealer network, but we think the 50% is as a total of the whole network of franchise dealerships, not equivalent to 50% of each network. Some manufacturers, those that enjoy dealer networks that are successful used car retailers and are therefore more financially resilient, and those that have market leading products, may remain fairly unscathed but our prediction is that for some, their whole franchise model may be broken and once again some marques will disappear from the UK new car market. 

This article can’t possibly go into all the reasons and those effecting every manufacturers franchised dealer network, it has to be generic because our audience base covers every manufacturer in the UK and continental Europe. As much you all have your individual challenges and, apologies in advance, this article is designed to be forthright, frank and to the point; it will make reference to some trading models, although not by name, so if you feel this is either unfair or not applicable in your case, please say so and open up debate with us, (should you feel it is needed), when as usual this article will be posted on LinkedIn; but only if you wish to openly discuss sensitive trading models via this medium? Those wishing to discuss any element of this article in confidence are free to contact me on my personal mobile or via my personal email address below; I will gladly make time to speak to everyone who wishes me to. 

Quite rightly the KMPG Global Executive Automotive Survey cited many reasons for why the current new car trading model is in a perilous state in the UK, but one thing not mentioned, (which was a surprise), was the lack of emphasis from both some manufacturers and the PLC’s owning franchised dealerships, on building successful used car retailing franchise dealer networks and businesses. Now we appreciate that we may sound like a broken record on this point, but the fragility of the narrow new car sales and parts supply model being deployed by some manufacturers and their franchise partners, (where 2-4% returns are lauded as success), really is leaving some manufacturers and their franchise dealer networks terribly exposed and the risk of failure is now a clear and present danger. 

In our last post we mentioned the groups of manufacturers and franchised dealer networks we feel are most at risk; the up and coming manufacturers, the previously failed but recently revived brands and the new hybrid brands being launched to add prestige to existing brands and in the main, due to very favourable new car trading conditions during the last 10 years, we have seen much success for these new car franchised businesses, but now the cracks are beginning to show. 

For example let’s say that, as the manufacturer and the franchise dealer network, you have experienced a journey over the last 20 – 30 years of not being previously associated in the automotive sector, then launching a car brand by purchasing licences to manufacturer models, (long since dropped by another manufacturer), under licence in the UK on the basis of value but where you are now looking to sell new cars in the UK that are priced in excess of £30,000 - £40,000. Well listen, that is fantastic and the hard work involved in this journey is not be underestimated. You might quite rightly point out that the purchase price, (to a point), is irrelevant now that the new car customer has embraced PCP agreements and is therefore buying on a monthly rental amount basis! 

Now, do you know what, we would agree but we would also point out that strong used car residual values are going to be imperative, in terms keeping new cars competitively priced on a PCP agreement and at the moment we would ask you who is protecting and determining the short to medium term residual values of your new £30,000 - £40,000 plus cars; is it your successful used car business and those contained within the franchised dealer network you represent, or is this unknown? 

We would also point out that there are going to be very few customers who will have travelled this whole trading journey with you and as much as you and the parent manufacturer will be working very hard to tempt some customers away from the longer established competition in your market, keeping them will be key. This profile of customer, those spending in excess of £30,000 - £40,000 will expect more from every area of your business, because they have grown accustomed to these high standards and guess what, they don’t like to then pay a privilege for owning and driving your new car product; the minute this happens and your new car product becomes uncompetitive, in terms of the price of ownership, then they will flock back to the manufacturers that both you and the manufacturer you represent, have worked so hard to tempt them away from. 

But in our opinion no one reading this article should feel immune from the challenges coming to the UK automotive sector; you are all under threat, it is just that the nature of the threat is different. For example, if you run a search through Google for retailers of used cars for a well-known prestige German brand in one of the counties in the South East, a county directly bordering London so an affluent commuter belt where a lot of aspiring professionals will be living; (just the socio-demographical target audience for this manufacturer), well only one franchised dealer appears on the first page of Google, and towards the bottom. 

The first page of Google is dominated by well-run independent businesses, one of whom had over 500 of this make of cars in stock, and over 2,000 used cars in stock in total; an entire stock holding made up of premium brand German manufactured cars. The reality is that for any time poor aspiring professional living in this area looking to buy a used premium brand German car, they need only go to one business to have all the choice they will ever need. 

So we may say to these manufacturers and their franchise partners, for sure your problems are different but what is your used car trading footprint in this very affluent commuter county next to London? Who do you think is setting residual values and therefore influencing new car pricing? Well it is this business, the one who is probably not really bothered about the uncertainty being caused by Brexit, because they are using this market to purchase stock cheaper than ever before because there will be far less competition; we have no doubt that this will be a very profitable time for this business. 

And herein lies the sad irony; regardless of the manufacturer you represent, as the owner of the franchise and the individual business, you have to appreciate that your used car businesses should be the most profitable part of your business; why? Well used car professionals know that there are no pre-defined trading margins and that they make their money when they purchase used car stock. They also grasp the market reality that it maybe the market that sets retail prices, but that they, as the used car professionals determine the price they pay for stock, because these are skilled individuals who recognise opportunities and they increase margins via skilled acquisition. 

For many of you reading this article there will be much to do if your new car trading model and franchised dealer business are to be protected, off the back of a used car operation that is successful at retailing used cars, and unfortunately we are not sure that your parent company or the manufacturer you represent, are going to immediately come to the rescue either because as new car margins and profits have been driven down, manufacturers have acquired the dealer networks they deserve. 

Not many of the big PLC’s or the larger private groups are running long term used car business development programmes for their own personnel, not when there is no support from the parent manufacturer, who also runs no used car business development programmes for the benefit of their franchise partners. So big hitting and genuinely successful used car professionals are not, (in the main), working in your franchise dealer networks; and why would they, any used car professional working in the business high-lighted above will have a tremendous opportunity to earn a far higher salary working there, when compared to one of your franchised dealerships. 

So if your businesses and those of your fellow franchise partners are unprepared, how prepared is the manufacturer you represent? In our experience not many are and very few of them have the professionals within their organisations to get the strategy in place in order to grow used car retailing and protect their new car trading model in the UK, and therefore your franchised dealer business. In reality these are huge jobs, both at manufacturer and at franchise dealership level; no more highly skilled than any other, but too few manufacturers or their franchise partners in the UK have genuinely successful used car entrepreneurs to call upon at this time of need, as we explored in our recent articles below; 

Do Successful Used Car Professionals Exist For Manufacturers? 

Do Successful Used Car Professionals Exist For Franchised Dealers? 

We will return to the issues raised in the KPMG Global Executive Automotive Survey over the coming articles and discuss the issues raised in isolation, but there are no easy answers. Although both the manufacturer you represent and your parent company may have to radically change your new car model to meet the challenges coming to the new car market “Head On” we can’t see any of these changes fundamentally increasing profitability, the new car market is just too fractured to put back as it was. 

No, the answer will always return to the used car market and successful used car retailing, in terms of building financially resilient individual businesses and franchise dealer networks; those needed to support the manufacturer’s warranty programmes and to service their vehicle parks, and the decision to do nothing is the hands of you and the manufacturer you represent. But unfortunately many of your franchise partners may not have the stomach for the fight, we can tell you now that these journeys are not for everyone, but the used car market still offers tremendous opportunities to individual businesses and the associated franchised dealer networks, to increase revenues and to protect your long term business aspirations. 

But in order to take advantage of the used car opportunity both you as the franchise holder and the manufacturer you represent must look at yourselves; from the manufacturers perspective a quick meeting and a tinkering of your warranty cover, a hastily put together standards programme, a rebranding of your used car point of sale material and/or any other “Sticking Plaster” initiatives are just not going to get you to where you need to be. From the perspective of the franchise holder, you need used car professionals with the experience of building successful used car businesses, because only they will know what will be required from all areas contained within the manufacturer’s organisation and your business. 

The briefs are outlined in the articles above so we won’t repeat ourselves here, other than to stress that neither of the roles, especially at franchise dealer level, are, (in our opinion), a sideways move for someone from another area of your business, or with no experience in delivering at this level in the used car industry. The days of growing into the role over a couple of years are gone. 

Now we also appreciate that finding genuinely successful used car professionals is very difficult for both yourself and the manufacturers you represent, so you may have no option other than to train and develop the used car professionals required over the medium to long term, and this will be challenging if no one within your organisation has the skills and experience required to develop the used car training and development programmes required, 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 operation 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 in the strictest of confidence; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com 

Alternatively please feel free to call me on 07796 260261.  

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

Andrew Banning. 
Used Car Business Development Director.

Will Your UK New Car Franchise Model Be The First To Fail?,,,,,,,, (UK Manufacturers Article)

In our last article; Used Car Retailing? There Is No Secret, It’s Just Hard Work we made reference to the recent comments made by KPMG in their Global Executive Automotive Survey, regarding their predictions for the sector in the UK and we promised we would return to this survey, due mainly to the fact that this survey should, (we feel), be sending shivers down the spines of Manufacturers trading in the UK new car market. 

One of the most startling predictions in the KPMG survey was that 50% of franchise dealer networks will fail during the next 10 years, and we agree entirely with this sentiment. The reasons for which are varied and differ for every manufacturer, but we think the 50% is as a total of the whole network of franchise dealerships, not equivalent to 50% of each network; some manufacturers, those that enjoy dealer networks that are successful used car retailers and are therefore more financially resilient, and those that have market leading products, may remain fairly unscathed but our prediction is that for some, their whole franchise model may be broken and once again some marques will disappear from the UK new car market. 

This article can’t possibly go into all the reasons and those effecting every manufacturer, it has to be generic because our audience base covers every manufacturer in the UK and continental Europe. As much you all have your individual challenges and, apologies in advance, this article is designed to be forthright, frank and to the point; it will make reference to some trading models, although not by name, so if you feel this is either unfair or not applicable in your case, please say so and open up debate with us, (should you feel it is needed), when as usual this article will be posted on LinkedIn; but only if you wish to openly discuss sensitive trading models via this medium? Those wishing to discuss any element of this article in confidence are free to contact me on my personal mobile or via my personal email address below; I will gladly make time to speak to everyone who wishes me too. 

Quite rightly the KMPG Global Executive Automotive Survey cited many reasons for why the current new car trading model is in a perilous state in the UK, but one thing not mentioned, (which was a surprise), was the lack of emphasis from some manufacturers on building successful used car retailing franchise dealer networks. Now we appreciate that we may sound like a broken record on this point, but the fragility of the narrow new car sales and parts supply model being deployed by some manufacturers, where 2-4% returns are lauded as success, really is leaving some manufacturers and their franchise dealer networks terribly exposed and the risk of failure is now a clear and present danger. 

In our last post we mentioned the groups of manufacturers we feel are most at risk; the up and coming manufacturers, the previously failed but recently revived brands and the new hybrid brands being launched to add prestige to existing brands and in the main, due to very favourable new car trading conditions during the last 10 years, we have seen much success for these new car manufacturers, but now the cracks are beginning to show. 

For example let’s say that, as the manufacturer, you have experienced a journey over the last 20 – 30 years of not being previously associated in the automotive sector, then launching a car brand by purchasing licences to manufacturer models, (long since dropped by another manufacturer), under licence in the UK on the basis of value but where you are now looking to sell new cars in the UK that are priced in excess of £30,000 - £40,000. Well listen, that is fantastic and the hard work involved in this journey is not be underestimated. You might quite rightly point out that the purchase price, (to a point), is irrelevant now that the new car customer has embraced PCP agreements and is therefore buying on a monthly rental amount basis! 

Now, do you know what, we would agree but we would also point out that strong used car residual values are going to be imperative, in terms keeping new cars competitively priced on a PCP agreement and at the moment we would ask you who is protecting and determining the short to medium term residual values of your new £30,000 - £40,000 plus cars; is it your franchised dealer network or is this unknown? 

We would also point out that there are going to be very few customers who will have travelled this whole trading journey with you and as much as you will be working very hard to tempt some customers away from the longer established competition in your market, keeping them will be key. This profile of customer, those spending in excess of £30,000 - £40,000 will expect more from every area of your business, because they have grown accustomed to these high standards and guess what, they don’t like to then pay a privilege for owning and driving your product; the minute this happens and your new car product becomes uncompetitive, in terms of the price of ownership, then they will flock back to the manufacturers you have worked so hard to tempt them away from. 

But in our opinion no one reading this article should feel immune from the challenges coming to the UK automotive sector; you are all under threat, it is just that the nature of the threat is different. For example, if you run a search through Google for retailers of used cars for a well-known prestige German brand in one of the counties in the South East, a county directly bordering London so an affluent commuter belt where a lot of aspiring professionals will be living; (just the socio-demographical target audience for this manufacturer), well only one franchised dealer appears on the first page of Google, and towards the bottom. 

The first page of Google is dominated by well-run independent businesses, one of whom had over 500 of this make of cars in stock, and over 2,000 used cars in stock in total; an entire stock holding made up of premium brand German manufactured cars. The reality is that for any time poor aspiring professional living in this area looking to buy a used premium brand German car, they need only go to one business to have all the choice they will ever need. 

So we may say to these manufacturers, for sure your problems are different but what is your used car trading footprint in this very affluent commuter county next to London? Who do you think is setting residual values and therefore influencing new car pricing? Well it is this business, the one who is probably not really bothered about the uncertainty being caused by Brexit, because they are using this market to purchase stock cheaper than ever before because there will be far less competition; we have no doubt that this will be a very profitable time for this business. 

And therein lies the sad irony; regardless of the manufacturer you represent, as the manufacturer you have to appreciate that for your franchised dealer network their used car businesses should be the most profitable part of their business; why? Well used car professionals know that there are no pre-defined trading margins and that they make their money when they purchase used car stock. They also grasp the market reality that it maybe the market that sets retail prices, but that they, as the used car professionals determine the price they pay for stock, because these are skilled individuals who recognise opportunities and they increase margins via skilled acquisition. 

For many of you reading this there will be much to do if your new car trading model is to be protected via a dealer network that is successful at retailing used cars. Unfortunately we are not sure that your networks are going to immediately come to the rescue either because as margins and profits have been driven down, manufacturers have acquired the dealer networks they deserve. Not many of the big PLC’s or the larger private groups are running long term used car business development programmes for their own personnel, not when there is no support from the parent manufacturer, so these professionals are not, (in the main), working in your franchise dealer networks; and why would they, any used car professional working in the business high-lighted above will have a tremendous opportunity to earn a far higher salary working there, when compared to a comparable franchised dealership. 

So if your networks are unprepared, how prepared are you as the manufacturer? In our experience not many are and very few of you have the professionals within your organisations to get the strategy in place to grow used car retailing and protect your new car trading model in the UK. In reality it is a huge job, no more highly skilled than any other, but too few manufacturers in the UK have genuinely successful used car entrepreneurs to call upon at this time of need, as we explored in our recent article below; 

Do Successful Used Car Professionals Exist For Manufacturers? 

We will return to the issues raised in the KPMG Global Executive Automotive Survey over the coming articles and discuss the issues raised in isolation, but there are no easy answers. Although you may have to radically change your new car model to meet the challenges coming to the new car market “Head On” we can’t see any of these changes fundamentally increasing profitability, the new car market is just too fractured to put back as it was. 

No, the answer will always return to the used car market and successful used car retailing, in terms of building financially resilient franchise dealer networks, those needed to support your warranty programmes and to service your vehicle park, and the decision to do nothing is the hands of you and your franchise partners. Many of your franchise partners may not have the stomach for the fight, we can tell you now that these journeys are not for everyone, but the used car market still offers tremendous opportunities to franchise dealer networks to increase revenues and to protect your new car aspirations. 

But as the manufacturer you must also look at yourself; a quick meeting and a tinkering of your warranty cover, a hastily put together standards programme, a rebranding of your used car point of sale material and/or any other “Sticking Plaster” initiatives are just not going to get you to where you need to be. Look around your organisation, into the whites of people’s eyes, who wants to and more importantly, who has the experience to get this massive task by the scruff of the neck and get the job done. The brief is outlined in the article above so we won’t repeat ourselves here other than to stress that this role is not, in our opinion, a sideways move for someone from another area of your business, or with no experience in delivering at this level in the used car industry, the days of growing into the role over a couple of years are gone. 

You need a professional with the experience of building successful used car businesses at both franchise dealer and manufacturer level, because only they will know what will be required from all areas contained within the manufacturers organisation and also know how to then deliver the business development and personnel training required, to your franchise dealer network. 

Now we appreciate that finding genuinely successful used car professionals is very difficult for both manufacturers and their franchised dealer networks 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, or to discuss any part of this article in greater detail, please do not hesitate to contact one of our Used Car Business Development Directors in the strictest confidence; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com 

Alternatively please feel free to call me on 07796 260261.  

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

Andrew Banning. 
Used Car Business Development Director.

Is Effective Enquiry Management The Immediate Key To Growing Your Used Car Sales Volumes? (European Manufacturers Article)

During consultancy visit we are often asked by our customers, whether they are based at manufacturers or at franchised dealerships, “Where does the next growth in used car sales volume come from?” Now the answer to this question is difficult to discuss in finite terms in a blog post; why? Well it depends entirely on where the business concerned is in its growth cycle and to add to the complexities, the answer to this question will change for the business involved, year on year, as growth is achieved and the focus for further growth in used car sales changes and evolves. 

So as you can already see, the answer to this question is not a “One Size Fits All” solution for every business, or indeed for the same answer for the business concerned, on a year by year basis. 

However one constant for all the manufacturers and their associated used car operations that we are working with is the need to either manage the used car enquiries currently being generated more effectively, or to generate more used car enquiries. However in truth, many manufacturers and their associated franchise partners make the mistake of assuming that, in order to grow used car sales volumes, more and more money needs to be found on a continual basis, for ever more advertising and marketing initiatives, (if they are to increase used car sales volumes), and this is not always the case. 

Now there is no doubt that effective marketing and advertising campaigns are paramount to the successful used car sales network, but the reality for every business we have either run ourselves, or delivered business development consultancy programmes for, is that in the majority of cases, the next years’ growth in used car sales volume is already within the four walls of the business, you just need to understand where to find it and how to maximise the opportunities you are already generating. 

We say to all our clients, look at the process of growing your used car sales volumes as being like walking; one leg is labelled “Generating Opportunities To Do Business” and the other leg is labelled “Maximising Opportunities To Do Business”. 

You are only walking and moving forward when you are putting one leg in front of the other; if you are doing the same thing again and again, whether it be relying solely on increased advertising/marketing initiatives or continuing to solely focus on closing ratios and maximising opportunities to do business; well think of the walking analogy again and your legs. 

If you are trying to grow and move forward using just one leg; well that’s not walking, that’s hopping, and as much as you can move forward for a while by hopping, it is exhausting and eventually the process collapses. So my question to every manufacturer and the associated franchise business owner is thus; “If you have two perfectly good legs available to you, why would you not use them both?” 

Now I know this sounds simple and in reality of course, the complexities of any business, especially a network of franchised used car operations, means that finding the answers and implementing them can often be the challenge. But once the correct procedures and measurement processes are in place, combined with an understanding of when it is the right time to change the focus, growing your used car sales volumes year on year becomes second nature, just like walking! Let’s look at the 2 legs and why it is critical to understand which leg to use, in order to keep forward momentum and thus used car sales volumes growing. 

Let’s look at the leg labelled Maximising Opportunities To Do Business because this is the correct place to start. Start by thinking of your closing ratio to enquiries received and what you think is acceptable? 

If you think that a 25% closing ratio for your franchise partners is acceptable, (and we won’t comment either way in this article), that means you will sleep soundly at night, happy in the knowledge that for every 100 customers contacting the businesses in your franchise dealer network, 75 of them will be lost! 

So think first about the closing ratio that you are happy with and decide whether or not you think that your franchise partners have an accurate measurement of this? Without an accurate measurement of used car enquiry levels your franchise partners will be unable to act effectively and shift their growth focus for used car sales to the other leg, (Generating Opportunities To Do Business), at the right time. 

This accurate measurement of enquiries and closing ratios in used car operations is of paramount importance in building the foundations of both effective sales enquiry management and operational processes. If your franchise partners are not achieving your/their desired closing ratio for used car enquiries, (let’s say at 25% of enquiries), then why would you as the manufacturer, (or your franchise partners for that matter), invest more money into advertising and marketing at this stage, only to generate more enquiries that your franchise partners continue to close at a ratio that you are not happy with? 

With accurate measurement of enquiry levels and closing ratios, your franchise partners will then be able to assess when you reach the desired closing ratio; and until they do, our advice would be that they continue to focus their attention on the operational procedures required within their businesses, in order to achieve their desired closing ratio, not on investing more and more funds into marketing and advertising. 

However, this is not to dismiss the importance of advertising and marketing to the successful franchised used car dealer network. Once they have achieved their desired closing ratio and implemented the management controls required within the business, in order to maintain this closing ratio for 3 months, they will then have to look at the other leg, (Generating Opportunities To Do Business), because if they don’t, they are in danger of hopping once again! 

This is when your focus for growth must shift back to advertising, marketing and the generation of opportunities to do business. What you and your franchise partners have done so far and the initiatives you both have in place have got you to where you are, so don’t rush to change them. Look at what is required to build on what has been achieved; if some initiatives have not worked, divert that money elsewhere and into new initiatives. 

The world of advertising/marketing and the initiatives required in order to generate more used car enquiries, are changing at an incredible rate; the days of branded golf umbrellas and relying on adverts in local papers are well and truly over. Some of you with successful networks containing successful franchised dealer used car operations, will benefit from the desire created by manufacturer based advertising campaigns, and some won’t. I’m sure the average BMW, Jaguar, Mercedes Benz or Audi dealership doesn’t have to work as hard as some other franchise dealerships, in order to drive customers through the showroom doors and to the waiting sales department. 

But eventually you and your franchise partners will need to look at your own advertising, marketing and enquiry generation initiatives, in order to generate the increase in opportunities to do business required in order to grow used car sales volumes. This process will inevitably lead to many questions; 

• What are our platforms of engagement? 
• How are we utilising social media? 
• Do we have a complete understanding of how used car stock profiling can drive used car enquiry levels? 
• What are our targeted contact customer acquisition initiatives? 
• Are we running any successful lead generation initiatives? 
• Is our existing customer follow up structure effective and generating the results required? 
• Are we blogging? 
• What are our content marketing initiatives? 
• What are our direct marketing initiatives? 
• Are the current initiatives relevant and in-line with the cyclical demands of the used car business? 
• And most importantly, are we delivering The Right Used Car Message, To The Right Used Car Customer, At The Right Time? 

In order to grow your network of franchised used car operations on a continual basis you are going to have to find the answers to the questions above, and many more. 

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 7796 260261, Andrew Banning, or 0044 7834 600642, Malcolm Thomas.  

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

Andrew Banning. 
Used Car Business Development Director.

Is Effective Enquiry Management The Immediate Key To Growing Your Used Car Sales Volumes? (UK Dealer Article)

During consultancy visit we are often asked by our customers, “Where does the next growth in used car sales volume come from?” Now the answer to this question is difficult to discuss in finite terms in a blog post; why? Well it depends entirely on where the business concerned is in its growth cycle and to add to the complexities, the answer to this question will change for the business involved, year on year, as growth is achieved and the focus for further growth changes and evolves. 

So as you can already see, the answer to this question is not a “One Size Fits All” solution for every business, or indeed for the same answer for the business concerned, on a year by year basis. 

However one constant for all the used car operations we are working with, is the need to generate more used car enquiries but in truth, many make the mistake of assuming that, in order to grow used car sales volumes, more and more money needs to be found on a continual basis, for ever more advertising and marketing initiatives, (if they are to increase sales volumes), and this is not always the case. 

Now there is no doubt that effective marketing and advertising campaigns are paramount to the successful used car sales operation, but the reality for every business we have either run ourselves, or delivered used car business development consultancy programmes for, is that in the majority of cases, the next years’ growth in used car sales volume is already within the four walls of the business, you just need to understand where to find it and how to maximise the opportunities you are already generating. 

We say to all our clients, look at the process of growing your used car sales volumes as being like walking; one leg is labelled “Generating Opportunities To Do Business” and the other leg is labelled “Maximising Opportunities To Do Business”. 

You are only walking and moving forward when you are putting one leg in front of the other; if you are doing the same thing again and again, whether it be relying solely on increased advertising/marketing initiatives or continuing to solely focus on closing ratios and maximising opportunities to do business; well think of the walking analogy again and your legs. 

If you are trying to grow and move forward using just one leg? Well that’s not walking, that’s hopping, and as much as you can move forward for a while by hopping, it is exhausting and eventually the process collapses. So my question to every business owner is thus; “If you have two perfectly good legs available to you, why would you not use them both?” 

Now I know this sounds simple and in reality of course, the complexities of any business, especially a used car operation, mean that finding the answers and implementing them can often be the challenge. But once the correct procedures and measurement processes are in place, combined with an understanding of when it is the right time to change the focus, growing your used car sales volumes year on year becomes second nature, just like walking! 

Let’s look at the 2 legs and why it is critical to understand which leg to use, in order to keep forward momentum and thus used car sales volumes growing. Let’s look at the leg labelled Maximising Opportunities To Do Business because this is the best place to start. Start by thinking of your closing ratio to enquiries received and what you think is acceptable? 

If you think that a 25% closing ratio is acceptable, (and we won’t comment either way in this article), that means you will sleep soundly at night, happy in the knowledge that for every 100 customers you attract to your business, 75 of them will be lost! 

So think first about the closing ratio that you are happy with and then decide how you can get an accurate measurement of this? Without this you will be unable to act effectively and shift your growth focus to the other leg, (Generating Opportunities To Do Business), at the right time. 

This accurate measurement of enquiries and closing ratios in your used car operation is of paramount importance in building the foundations of both effective sales enquiry management and operational processes. If you are not achieving your desired closing ratio, let’s say at 25% of enquiries, why would invest more money into advertising and marketing at this stage, only to generate more enquiries that you continue to close at a ratio that you are not happy with? 

With accurate measurement of enquiry levels and closing ratios, you will then be able to assess when you reach your desired closing ratio; and until you do, continue to focus your attention on the operational procedures required within your business, in order to achieve your desired closing ratio, not on investing more and more funds into marketing and advertising. 

However, this is not to dismiss the importance of advertising and marketing to the successful used car business. Once you have achieved your desired closing ratio and implemented the management controls required within the business, in order to maintain this closing ratio for 3 months, you will then have to look at the other leg, (Generating Opportunities To Do Business), because if you don’t, you are in danger of hopping once again! 

This is when your focus for growth must shift back to advertising, marketing and the generation of used car opportunities to do business. What you have done so far and the initiatives you have in place have got you where you are, so don’t rush to change this. Look at what is required to build on what has been achieved; if some initiatives have not worked, divert that money elsewhere and into new initiatives. 

The world of advertising/marketing and the initiatives required in order to generate more used car enquiries, are changing at an incredible rate; some of you with successful franchised dealer used car operations, will benefit from the desire created by manufacturer based advertising campaigns, some won’t. I’m sure the average BMW, Jaguar, Mercedes Benz or Audi dealership doesn’t have to work as hard as some other franchise dealerships, in order to drive customers through the showroom doors and to the waiting sales department. 

But eventually you will need to look at your own advertising, marketing and enquiry generation initiatives to generate the increase in opportunities to do business required in order to grow used car sales volumes. This process will inevitably lead to many questions; 

• What are our platforms of engagement? 
• How are we utilising social media? 
• Do we have a complete understanding of how used car stock profiling can drive enquiries? 
• What are our targeted contact customer acquisition initiatives? 
• Are we running any successful lead generation initiatives? 
• Is our existing customer follow up structure effective and generating the results required? 
• Are we blogging? 
• What are our content marketing initiatives? 
• What are our direct marketing initiatives? 
• Are the current initiatives relevant and in-line with the cyclical demands of the used car business? 
• And most importantly, are we delivering The Right Used Car Message, To The Right Used Car Customer, At The Right Time? 

In order to grow your used car operation on a continual basis you are going to have to find the answers to the questions above, and many more. If this post has resonated with you and you would like to know more about used car business development and growth strategies, rest assured there is help 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 feel free to call us on 07796 260261, Andrew Banning, or 07834 600642, Malcolm Thomas. 

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

Andrew Banning 
Used Car Business Development Director

Is Effective Enquiry Management The Immediate Key To Growing Your Used Car Sales Volumes? (UK Manufacturers Article)

During consultancy visit we are often asked by our customers, whether they are based at manufacturers or at franchised dealerships, “Where does the next growth in used car sales volume come from?” Now the answer to this question is difficult to discuss in finite terms in a blog post; why? Well it depends entirely on where the business concerned is in its growth cycle and to add to the complexities, the answer to this question will change for the business involved, year on year, as growth is achieved and the focus for further growth in used car sales changes and evolves. 

So as you can already see, the answer to this question is not a “One Size Fits All” solution for every business, or indeed for the same answer for the business concerned, on a year by year basis. However one constant for all the manufacturers and their associated used car operations that we are working with is the need to either manage the used car enquiries currently being generated more effectively, or to generate more used car enquiries. 

However in truth, many manufacturers and their associated franchise partners make the mistake of assuming that, in order to grow used car sales volumes, more and more money needs to be found on a continual basis, for ever more advertising and marketing initiatives, (if they are to increase used car sales volumes), and this is not always the case. 

Now there is no doubt that effective marketing and advertising campaigns are paramount to the successful used car sales network, but the reality for every business we have either run ourselves, or delivered business development consultancy programmes for, is that in the majority of cases, the next years’ growth in used car sales volume is already within the four walls of the business, you just need to understand where to find it and how to maximise the opportunities you are already generating. 

We say to all our clients, look at the process of growing your used car sales volumes as being like walking; one leg is labelled “Generating Opportunities To Do Business” and the other leg is labelled “Maximising Opportunities To Do Business”. 

You are only walking and moving forward when you are putting one leg in front of the other; if you are doing the same thing again and again, whether it be relying solely on increased advertising/marketing initiatives or continuing to solely focus on closing ratios and maximising opportunities to do business; well think of the walking analogy again and your legs. 

If you are trying to grow and move forward using just one leg; well that’s not walking, that’s hopping, and as much as you can move forward for a while by hopping, it is exhausting and eventually the process collapses. So my question to every manufacturer and the associated franchise business owner is thus; “If you have two perfectly good legs available to you, why would you not use them both?” 

Now I know this sounds simple and in reality of course, the complexities of any business, especially a network of franchised used car operations, means that finding the answers and implementing them can often be the challenge. But once the correct procedures and measurement processes are in place, combined with an understanding of when it is the right time to change the focus, growing your used car sales volumes year on year becomes second nature, just like walking! Let’s look at the 2 legs and why it is critical to understand which leg to use, in order to keep forward momentum and thus used car sales volumes growing. 

Let’s look at the leg labelled Maximising Opportunities To Do Business because this is the correct place to start. Start by thinking of your closing ratio to enquiries received and what you think is acceptable? 

If you think that a 25% closing ratio for your franchise partners is acceptable, (and we won’t comment either way in this article), that means you will sleep soundly at night, happy in the knowledge that for every 100 customers contacting the businesses in your franchise dealer network, 75 of them will be lost! 

So think first about the closing ratio that you are happy with and decide whether or not you think that your franchise partners have an accurate measurement of this? Without an accurate measurement of used car enquiry levels your franchise partners will be unable to act effectively and shift their growth focus for used car sales to the other leg, (Generating Opportunities To Do Business), at the right time. 

This accurate measurement of enquiries and closing ratios in used car operations is of paramount importance in building the foundations of both effective sales enquiry management and operational processes. If your franchise partners are not achieving your/their desired closing ratio for used car enquiries, (let’s say at 25% of enquiries), then why would you as the manufacturer, (or your franchise partners for that matter), invest more money into advertising and marketing at this stage, only to generate more enquiries that your franchise partners continue to close at a ratio that you are not happy with? 

With accurate measurement of enquiry levels and closing ratios, your franchise partners will then be able to assess when you reach the desired closing ratio; and until they do, our advice would be that they continue to focus their attention on the operational procedures required within their businesses, in order to achieve their desired closing ratio, not on investing more and more funds into marketing and advertising. 

However, this is not to dismiss the importance of advertising and marketing to the successful franchised used car dealer network. Once they have achieved their desired closing ratio and implemented the management controls required within the business, in order to maintain this closing ratio for 3 months, they will then have to look at the other leg, (Generating Opportunities To Do Business), because if they don’t, they are in danger of hopping once again! 

This is when your focus for growth must shift back to advertising, marketing and the generation of opportunities to do business. What you and your franchise partners have done so far and the initiatives you both have in place have got you to where you are, so don’t rush to change them. Look at what is required to build on what has been achieved; if some initiatives have not worked, divert that money elsewhere and into new initiatives. 

The world of advertising/marketing and the initiatives required in order to generate more used car enquiries, are changing at an incredible rate; the days of branded golf umbrellas and relying on adverts in local papers are well and truly over. Some of you with successful networks containing successful franchised dealer used car operations, will benefit from the desire created by manufacturer based advertising campaigns, and some won’t. I’m sure the average BMW, Jaguar, Mercedes Benz or Audi dealership doesn’t have to work as hard as some other franchise dealerships, in order to drive customers through the showroom doors and to the waiting sales department. 

But eventually you and your franchise partners will need to look at your own advertising, marketing and enquiry generation initiatives, in order to generate the increase in opportunities to do business required in order to grow used car sales volumes. This process will inevitably lead to many questions; • What are our platforms of engagement? 

• How are we utilising social media? 
• Do we have a complete understanding of how used car stock profiling can drive used car enquiry levels? 
• What are our targeted contact customer acquisition initiatives? 
• Are we running any successful lead generation initiatives? 
• Is our existing customer follow up structure effective and generating the results required? 
• Are we blogging? 
• What are our content marketing initiatives? 
• What are our direct marketing initiatives? 
• Are the current initiatives relevant and in-line with the cyclical demands of the used car business? 
• And most importantly, are we delivering The Right Used Car Message, To The Right Used Car Customer, At The Right Time?

In order to grow your network of franchised used car operations on a continual basis you are going to have to find the answers to the questions above, and many more. 

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 07796 260261, Andrew Banning, or 07834 600642, Malcolm Thomas. 

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

Andrew Banning. 

Used Car Business Development Director.

Used Car Retailing And Warren Buffett! (European Manufacturers Article)

I think it is fair to say that we live in interesting times at the moment! I will leave all mention of the geo-political issues aside other than to emphasise that they can bring turbulence to all markets, especially commodities markets driven in the main by sentiment and confidence, markets just like the automotive sector. 

However, turbulent markets can be a time of great opportunity for those businesses prepared for, and with the skills in-house to do so. When it comes to investment in asset derivatives it was the great American Business Magnate Warren Buffett who said “Be Fearful When Others Are Greedy And Greedy When Others Are Fearful” and used car stock is just another form of asset derivative. 

Sadly though, and if I’m honest, in the main the automotive sector is not ready to take advantage of the opportunity that exists at the moment and many franchise dealer networks are not agile enough and/or employing the professionals with the skills-sets required, in order to grow their businesses in turbulent markets, where the values being achieved for used car stock in the trade will drop. 

It is important to remember that most franchise dealer networks reflect the ambitions of the manufacturer they represent and over the last 10 years the understandable desire to take advantage of the opportunity to grow new market share, off the back of cheap interest rates and the uptake in PCP agreements as a purchasing model by consumers, has been the main driving force within dealer networks and guess what, the staffing structure at both manufacturers and franchised dealer networks is reflective of this. 

Now this has been a great success, but at a time when new car retailing has been, and is becoming more challenging, many manufacturers do not enjoy franchise dealer networks that are successful used car retailers and this is about to become a serious operational oversight. As the manufacturer you need a financially resilient franchise dealer network to support your new car ambitions and businesses that are just retailing new cars will begin to look like a “One Trick Pony” as the customer begins to look for “Value” in what may well be a recessionary market over the next 12 – 24 months. 

I say this because when it comes to new car retailing, supply and demand is key, (the delicate relationship that drives pricing and profitability), and with new car retailing you can end up with a franchise dealer network all selling the same cars, at the same price, to too few customers; and when this happens you will invariably end up in a race to the bottom on price. However, it is also important to remember that turbulence can hit new car markets at any time, but your new car retailing model and your franchise partners are better able to weather these storms when you have a franchise dealer network that is successful at retailing used cars. 

In truth though for most of you reading this post, your network is probably not prepared to take advantage of the turbulence building in the used car market because of both, a chronic under investment in used car professionals at franchise dealer level over the last 10 years and the over systemising of the new car purchasing process. And I’m sorry but when you under invest in your people, you do not invest in the future of your business and to quote Mr Buffett once again; “Someone Is Sitting In The Shade Today Because Someone Planted A Tree A Long Time Ago!” 

Now these issues will be the thread for the next couple of articles so I will be covering many of the issues raised in isolation and more depth in the coming weeks, but for now let’s return to the original quote from Mr Buffett at the start of this article, because it is inextricably linked to a very important question in our business, that of “How Much Is A Used Car Worth?” 

The answer of course is “As Much As Someone Is Prepared To Pay” and this goes to the heart of the discussion for today, because the retail price of assets is normally set by the consumer in turbulent markets and that is where we are heading, but for those businesses that invested in used car professionals the future will be very bright, but why? 

Well turbulent markets, those where confidence and sentiment waivers and competition for used car stock reduces, present the most profitable purchasing and retailing opportunity for the business with the professionals required and in situ, in order to take advantage of the opportunity now presenting itself. The main reason for this is a simple one, only the businesses with the used car professionals required will know what the market value for used car stock is going to be and therefore what the consumer is prepared to pay. 

This is critical because only good buying can lead to good selling and to quote Mr Buffett again; “Price Is What You Pay. Value Is What You Get!” So those businesses employing proven and successful used car professionals can now be ambitious and out purchasing used car stock when others aren’t, purchasing that used car stock at reduced prices because there is little or no competition, therefore setting pricing in the used car market and actually increasing margins and overall used car profitability. But this opportunity has not happened by chance; these will be the dealers who retained and trained used car professionals when other businesses thought that it wasn’t necessary; they weren’t sending all their part exchanges to auctions and removing themselves from the responsibility for part exchange and used car values, by leaving them in the hands of an independent third party auction business with no loyalty to anyone apart from their shareholders. It is important to remember that auction houses do not write cheques out for used car stock on a speculative basis, they present used car stock for sale and send you a cheque when the car is sold, which is great, right up until the moment when people stop buying! 

So there will be many challenges out there in the used car market during 2019 and for the manufacturer and the manufacturer based in-house finance company, these truly successful used car operations will be vital to your cash flow and on-going success, but unfortunately they know this, and the fact that they have their pick of used car stock to invest in, and at prices that they want to pay. If I was running a used car operation with the team in place and the funds available for stock right now, I would be licking my lips happy in the knowledge that I probably wouldn’t need to be paying market value for any used car stock, including used car stock returning from PCP and hire agreements to the manufacturer owned finance company! 

And herein lies one of the many problems for manufacturers when they do not enjoy a franchised dealer network that is successful at retailing used cars; you have a network that is not capable of returning the values required for your own stock holding and that of your in-house finance company, so you invariably lose money now and drive residual values down, thus increasing the cost of ownership for new cars and putting your new car business under threat. 

So if you are not prepared for these used car market conditions what’s the answer? Well in truth there is not a simple solution to the immediate problems coming to the sector, other than to learn from these lessons and ensure that it doesn’t happen again. The market is fast moving and the professionals required to thrive in these conditions are not available “Off The Shelf” and sadly haven’t been invested in enough, either a manufacturer or franchised dealer level, so there is a shortage, as covered in my recent posts; 

Do Successful Used Car Professionals Exist For European Manufacturers? 

Do Successful Used Car Professionals Exist For Franchised Dealers? 

So in your hour of need finding genuinely successful used car professionals is going to be very difficult for both you as the manufacturer and your franchised dealer networks 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 and deliver a successful and profitable used car business development 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 Continental 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 in the strictest of confidence; Andrew Banning at 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.