Are We Buy Any Car Learning A Painful Lesson?
In my opinion the answer is yes and this will result in a very challenging disposals landscape for all owners looking to sell their car; not just those looking to dispose of high performance specialist cars. The customers with whom I am working.
To add clarity to my opinion, let me give you all some feedback from the country’s much talked about valuation and disposals portal; and here’s the headline figure. From my evidence, (which is available to anyone requesting it – including the lawyers acting on behalf of the company), during the period between 15th and 31st March We Buy Any Car have reduced some valuations by 9.4%. Yes, you heard that right, 9.4%; a huge market correction within 16 days and one that will have ramifications for the market and We Buy Any Car.
Now bearing in mind that markets for the stock profile concerned (or any stock profile that We Buy Any Car will be acquiring) haven’t moved that much, the real question is why the collapse in their offer prices? To answer this let me first advise everyone how I use We Buy Any Car Valuations to gauge their sentiment in the used car market.
Being a stock acquisitions professional myself it is important to know what the competition are up to. Although We Buy Any Car aren’t my direct competition (I am operating in the specialist high performance car market – one their algorithm can’t navigate and compute) they are an important barometer to how the logarithm based on-line disposal companies are operating; and, more importantly indicative of how they are still unable to accurately read the market and values.
This is important because courtesy of Philip Schofield they are in everyone’s psyche; with their advertising programme (so effective) that they have convinced the British pubic that they are the “Go To” company for the disposal of their car. All of which is very important when you understand the ownership model and the umbrella of companies under which We Buy Any Car sits.
We Buy Any Car are owned the auction house BCA, which also owns the on-line used car retailer Cinch; remember Rylan Clarke and all the associated adverts? Now in the battle for used car market place share
We Buy Any Car is important to Cinch, which will need used car stock at an industrial level if the bills are to be paid; Rylan and Philip will not be cheap!
As a consequence of all this I continually put a selection of vehicles through their valuations process to gauge the effectiveness of their valuations algorithm; the results of which are both interesting and alarming. So why do I think they have reduced their valuations by such a degree?
Well Cinch are likely to have many operational and delivery problems, some of which were explored and discussed in the recent article written for my Used Car Business Development Blog, link below;
But from what I can see their main problem is their stock level and slowing sales; selling stock at a profit is (of course) vital to the success of every used car business, even Cinch. On the day of writing this article (1st April) Cinch had 10,617 cars in stock; that is double the stock holding I have noticed them carrying thus far this year and significantly more than one of their online competitors Cazoo; who on the same day was carrying 6,686 cars.
Now there are many reasons why Cinch are likely to have gotten into this position, not all of which can be covered in detail in this article, but their problems will include the following.
- They misread the market and weren’t buying at the start of the pandemic when they should’ve been.
- They then joined the “Blind Leading The Blind” feeding frenzy for stock, (along with the associated prices), when they should’ve been focused on retailing and buying selectively.
- Purchasing via a valuations logarithm; which appears to be not fit for purpose and working from a too narrow and flawed data cut.
- A quantity over quality purchasing environment.
- Over reliance on technology and no access to the used car business development professionals required.
- Their model is only fit for purpose in one market but is being deployed in multiple used car markets, in the hope of adding scale.
But the issue I want to discuss here is the problems associated with valuation algorithms and then using a valuation algorithm to scale up a used car business. I want to look at this because you can’t achieve profitable scale in multiple used car markets, let alone via a valuation algorithm. In reality Cinch (just like Cazoo no doubt) are discovering the limits of their valuations process and have been caught out.
There is no doubt that in certain used car markets a valuations algorithm can drive used car success, but it is only as good as the data put into the algorithm; and in the fragmenting used car market of today, it would appear that Cinch are trying to operate in many used car markets, having acquired stock via the same method; their valuation logarithm.
My suspicion is that (and I am happy to be corrected by the person responsible at Cinch) the data for the valuations algorithm is supplied by their auction business; BCA. Now the value of this data is highly questionable; it is too narrow in profile (age and mileage), provided by an unknown mix of private and trade buyers, and is not supported by any ongoing retail sales data. All of which was further explored in the article referenced above, when I did warn that the money would run out!
So what does this mean for the market, values and for those looking to dispose of their car? Well in truth the unsustainable crazy market of the last 12 months is beginning to unwind and effecting sentiment within all used car markets; albeit to varying degrees. Now this is not the article to further expand on this important market dynamic; those interested in a more in-depth analysis can feel free to follow the link to my article below, where this trading issue is explored in more detail.
Unfortunately the trading reality and behaviour patterns of the used car market at the moment, reminds me of the used car market experienced during the financial crisis; a market when liquidity for stock investment ran out, albeit for different reasons than the market of today.
The liquidity problems of today are all caused by inexperienced professionals not knowing how to read the market and paying too much money for stock, in order to cover for their lack of used car stock acquisition expertise.
The majority of this stock remains unsold and can now no longer be profitable; and with the businesses concerned unable to liquidate at the trade losses involved, (in order to free up funds for fresh stock), they are tied into reducing the scale of these losses via retailing, which will take time.
I have no doubt that this will be behind We Buy Any Car’s reductions in their offer prices; I doubt they will ever state again that they are not buying, as they did in the pandemic, which was no doubt damaging to the business. Albeit by cutting offer prices by so much, this in effect is what they are saying, to those in the know!
In reality, the job of reducing exposure to their current used car stock holding will be very challenging and take time. We Buy Any Car are a “One Trick Pony” used car business relying on tech and not the professionals required to keep acquiring used car stock and retailing it at a profit. As we are seeing, the tech has many limitations; getting your business into dire trouble though, does not appear to be one of them!
So with liquidity in used car markets running out, where to turn now for the owners of specialist high performances cars; those looking for the right expertise and experience? That required to facilitate in the immediate liquidation of their car; a process requiring skill, expertise, the utmost discretion and excellence in execution?
Well with funds available for immediate purchase and unrivalled experience in liquidating specialist high performance cars, including the contacts base within the professional community, (both franchised dealers and the most knowledgeable specialists), you could contact me for a market consultation.
As much as I am not going to promise you for one moment that I work with every car that is offered, or with every owner that contacts me, I do choose to advise and help everyone who contacts me. In reality I can only work actively with 10% of the owners who contact me; and their associated cars.
Offering immediate cash purchase, (should circumstances dictate), or the facility to act as your trusted conduit to the market, returning the best prices, I am the ultimate solution provider for those looking to dispose of their specialist high performance car.
Please feel free to reach out to me directly on LinkedIn, via email at andrewb@andrewbanningsalessolutions.co.uk or on 07500 321539; should you wish to arrange a consultation call.
Andrew.
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