The screenshot above should send shivers down the spines of all senior professionals based at franchised dealerships; why? Well this screenshot was taken from the used car section on the website of one of the tech based market disruptors currently targeting the used car market, and before we get into “The Meat” of this article, just let the picture above sink in for a moment!
To save some professional blushes I have left the car and dealership details out of the screenshot however, those of you who received our direct email covering and discussing this trading threat, will appreciate that every franchised dealer network actually has this problem! In effect what you see here is a tech based market disruptor whom, (from what we can see), have employed no successful and experienced used car professionals, deigning to tell your potential customers whether a car being offered for sale represents good value or not!
Excuse me! A company of, albeit very clever tech professionals, thinking they know used car values and are instantly experts in our market place!? However, be under no illusion that the threat is real; those of you who are subscribers to the used car business development articles taken from our Used Car Business Development Blog will have already seen our recent article, (The Fatal Mistake Made By Franchised Dealers Over The Last 10 Years?), when we last discussed the growing threat that these tech based market disruptors pose to your current trading model. And that is before we discuss the fact that no customer who is using this site to look for a used car, would then look to purchase a car described as “Overpriced” in bold red type; so effectively this tech based market disruptor is rendering a proportion of your used car stock holding as unsellable!
Now we will start by saying that if it is your choice to partner with these organisations, it is not our place to criticise decisions you have made in good faith and for the benefit of your trading model; and by these organisations we mean the likes of Carwow, Heycar, the soon to be launched Cazoo and many others.
However if you haven’t, and are too immersed in other issues to see the danger creeping up on your business, well please read on because if we have learnt anything from the last 2 – 3 years, it is that those with the power to manipulate mind-sets and buying behaviour hold real power over markets, and both the new car and used car markets are no different.
No doubt some of you reading this will go on to think that I am describing a world that doesn’t exist but for many of you, especially those with no effective and “Fit For Purpose” programmes of used car personnel and business development to take advantage of, the real power and influence in used car strategies is now coming from outside influences, not your associated parent manufacturer.
The lack of any real investment in developing used car professionals over the last decade has resulted in franchised dealer networks where unproven, under-developed and therefore under-skilled professionals are being influenced by tech based market disruptors and this trend will only be set to continue, unless you as the franchised dealer or your parent manufacturer come up with the answers. For many of you reading this, we will have been auditing used car operations contained within your franchise dealer networks, so have seen first-hand just how influenced by market disruptors the staff employed within some of your businesses are; and this includes the following practices, (including the consequences), taking place on a daily basis;
- The websites associated with these companies now being the first port of call for advertising used car stock, and in preference to the manufacturer’s approved used car website.
- These websites being used by your staff to value used car stock, because many do not possess the skills to value stock themselves.
- This in turn is creating a race to the bottom on used car pricing and will be reducing both profitability and residual values, therefore increasing the cost of new car ownership.
- The actions of your staff are resulting in these tech disruptors becoming the de facto first port of call on used car pricing for consumers.
So how can they own nothing, (in terms of used car stock), yet wield such influence? Well only because you, your fellow franchise partners and your parent manufacturer allow them to do so! And be under no illusion, the biggest threat to your trading model and that of your franchise partners today, is these tech based market disruptors and their ability to manipulate markets. Without owning a single piece of used car stock and with little or no actual previous trading experience in the used car market, they have targeted the weaknesses in your business model and are looking to manipulate the behaviour of both the consumer and your businesses.
We would ask your parent manufacturer why they have allowed a situation to occur where these market disruptors now offer opinions on whether or not a car represents good value, and more importantly why are you as the franchised dealers also allowing this to happen? In effect you and your franchise partners are supporting a group of businesses that are actually trying to undermine your own. With all due respect to those involved with these businesses, who are generally professionals from technology, marketing and data collation backgrounds, what on earth do they know about the used car market?
Yet they are successful! Their genius is in convincing the businesses making up your franchise dealer network that they need them, that they can only sell used cars and develop a used car business if they use their platforms; well this is fanciful, yet it goes on and all the while you and your fellow franchise partners are “Feeding The Beast” that will eventually consume yours.
More worryingly though is that we fear that there is an agenda here that hasn’t yet been identified, so our advice would be to stop these practices right now! If you want your business to survive, it would be our recommendation that you must do the following and without delay;
- Remove all used car and new car stock from their websites.
- Work with and support your parent manufacturer to develop your existing on-line used car offering, this is what consumers expect.
- Develop the used car business development and personnel training programmes required to secure your own future.
Now of the 3 points listed above the most pressing is the first! Do not allow these businesses to build the perception with your customers that they control used car stock; their whole business is undermined without stock and should fail within 6-12 months if they are seen as the “Busted Flush” they are by consumers, so take back control of your own destiny.
But you will have to develop your staff, who currently perceive these platforms as vital in terms of selling both new and used cars. But here’s the thing; one of the most important lessons we teach aspiring used car professionals is that the successful used car business is advertising and selling used car stock before it arrives into stock!
To some the above will seem old fashioned, impossible and/or draconian but all the above initiatives are both possible and required in the first instance, if you are to succeed in the battle against the used car market disruptors. You will all have different strengths and weaknesses so this article is not the platform to expand on our thinking and recommendations; but if you would like us to discuss strategies with you in greater detail, please feel free to contact us directly.
The owners of Autoformance have owned and run successful used car operations, been at the forefront of the development of approved used car programmes for a host of manufacturers and more importantly, are still trading and running used car businesses in specialised used car markets. 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
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
No comments:
Post a Comment