Used Car Stock Acquisition 101!,,,, 

The Business That Controls Access To Used Car Stock, Controls Access To Used Car Customers! 

Welcome to the third article in my series of articles further exploring and expanding upon the pieces of used car stock acquisition advice published in the article below, which was originally written for my Used Car Business Development Blog; 

Used Car Stock Acquisition 101! 

The second article in the series being; Used Car Stock Acquisition 101!,,,, Successful Used Car Stock Acquisition Professionals Are Not Buying Used Car Stock From Auctions!  Can be found here. 

Now the statement making up the heading of this article is another vital piece of used car stock acquisition understanding, one heavily linked to one of the other pieces of advice in the original list; Selling is not the most important discipline within your business, buying is! 

There are many used car business development benefits that your business will enjoy from fully understanding and embracing the importance of the statement in the heading. The main one being that you can transition the mentality within, along with the operational capability of your used car business, from one of “Finding Used Cars For Customers” (something that is a complete waste of time and verging on impossible in the used car markets of today) to one that “Finds Customers For Used Cars!” A huge operational and retailing difference. 

But there is a catch; you can only make this transition if you understand and embrace the importance of the statement above. And this is something I suspect the independent online (so called) disruptors (their description of their business not mine) understand; the likes of Cinch, Cazoo and Carwow. 

However, as much as I suspect that the companies listed above may have a deeper understanding of the importance of fully understanding and embracing the advice in the heading, (than manufacturers and their franchise dealer networks), there is a fatal flaw in all their business models; they don’t manufacture anything! So in effect they are reliant on the used car stock acquisition ignorance of manufacturers and their franchise partners, in order to have a business; the harsh truth being that none of the above should’ve ever had a business in the first place! 

Anyway, back to the importance of embracing the heading for the article; something linked to an understanding of customer behaviour, when they are looking for their next used car purchase. As much the internet has expanded the retailing reach of all used car businesses, it has also changed consumer behaviour, to the point where loyalty and obligation are hard to build, without that is, used car stock holdings large enough to generate increased enquiry levels. 

Unfortunately the internet age means that customers looking for a used car are unlikely to wait; they are blessed with easy to access market information so will find the car they want, and will only contact your business if you have the car they want in stock; or if their perception is that you are likely to have it. Ergo the more used cars you have in stock, the more enquiries you will generate and the more opportunities to do business. 

All used car businesses get the enquires (therefore the customers) they deserve and this is entirely dictated by your ability to acquire profitable used car stock holdings; and in volume. At the start of their purchasing journey used car customers have no loyalty other than the desire to purchase a certain profile of used car, and the modern world makes it easy to find examples from their smartphone. Therefore the business with the largest used car stock holding controls access to the majority of customers, because in the internet age, it is the business the customer is going contact. 

From there, and providing the expertise and acumen is available, this is the business that can then go on to generate increased levels of used car profitability; by taking advantage of employing highly advanced used car retailing and acquisition initiatives. Those that their used car business can go on to exploit via the leveraging of increased levels of data, in order to further grow their used car business. 

There is a snow-ball effect, where once you have control of the customer via the purchase of their used car, the initiatives required to retain the customer and their car during their lifetime can then begin. 

However, to deliver you need to have the used car stock acquisition expertise required to make it a reality; something less than 5% of the people reading this will have, so achieving this retailing Status Quo remains the mountain you can’t climb. 

So in the used car markets to come, those with used car vehicle parks of 680,000 less vehicles, (in terms of available stock), my question to everyone would be; how well set up is your business to survive? In truth the vast majority aren’t. It is the inconvenient truth of our times that you can have the best people and operational procedures imaginable, but if you don’t have the professionals required to secure used car stock holdings in the volumes and at the prices required to remain profitable? Well then it is all going to be for nothing. 

I have observed how the used car stock acquisition landscape has evolved during the last 12-24 months and I promise the vast majority reading this, you will not be ready for how the acquisitions landscape has evolved; to the point where all those relying on the initiatives and skills of the recent past will be left floundering. 

For these businesses, those reactionary businesses purchasing stock on a hand to mouth basis and in the moment, (the “Just In Time” market), it will be a challenge to acquire used car stock at prices (and in the volumes) that ensure your business remains profitable. 

But there are others, albeit very few, those who (like me) spent the lock downs monitoring the market and rewriting previously very successful programmes of used car stock acquisition, from the ground floor up, in order to develop the programmes and initiatives required to ensure that used car stock holdings are being secured for future markets right now. And via campaigns and initiatives that will leave the competition with years of work to catch up; even if they can find the skills required already within the four walls of their business? 

The used car stock acquisition skills now required to secure success can’t be taught via any training programme, it is too fast moving a discipline and covering too vast an array of skills-sets. So in reality successful used car stock acquisition now necessitates an environment of strategic alliances via commercial arrangements. The market value of the skills involved would also make it too financially restrictive to employ genuinely successful used car stock acquisition professionals; there are too few of us, so for the moment those days are gone. 

That said I am working with 2 businesses building and delivering the used car stock acquisition programmes they require; having made a commitment to work with three at all times. So for those grasping the seriousness of their current situation and wanting to take immediate action, I will be working with another business over the next 12 months, in order to deliver the used car stock acquisition expertise and initiatives required, for that business to survive and prosper in the used car market to come. 

Should you wish to explore synergies and the potential to collaborate in this regard, please do not hesitate to contact me via LinkedIn, so we can arrange a mutually convenient time for an exploratory call. 

Andrew.

Used Car Stock Acquisition 101!,,,, 

Successful Used Car Stock Acquisition Professionals Are Not Buying Used Car Stock From Auctions! 

Welcome to the second article in my series of articles further exploring and expanding upon the pieces of used car stock acquisition advice published in the article below, which was written for my Used Car Business Development Blog; 

Used Car Stock Acquisition 101! 

A little “Punchy” this article and it will no doubt touch some raw nerves because it explores some sensitive issues surrounding acumen, expertise and work ethic; when it comes to used car stock acquisition professionals and the programmes deployed by some businesses. 

Now I actually first explored this issue in January 2020 in the article written for my Used Car Business Development Blog listed below: 

Successful Used Car Businesses Aren’t Buying Used Car Stock From Auctions! 

Although the trading landscape has changed since the article was written the premise and the advice contained within the article remains. In fact it has become more relevant as we navigate the used car markets post pandemic. 

So let’s dispense with the niceties and get straight down to the brutal truth: 

“If your used car business is dependent on acquiring retail stock from auctions, you are running a business bereft of used car stock acquisition expertise and/or professionals. If you are going there yourself, (as an individual), then sadly it will be because you are either lazy and/or lacking in used car stock acquisition expertise; ergo you are not a used car stock acquisitions professional!” 

So there you have it people! Now of course I will now go on to expand upon this a little, albeit I will not repeat the context explored in the article above; from a different time but still relevant. I will do it by exploring the used car stock acquisition landscape we are facing today, something explored in terms of the challenges facing Volvo, BMW and Lexus in my recent article below: 

Not Listening Will Ensure That Franchise Dealers Fail! 

Coming fast over the horizon (2023) we have used car vehicle parks that were determined by new car sales volumes during the first year of the pandemic (2020), those that contain 680,000 fewer vehicles. Now the used car business is a numbers game; the number of used car businesses in the UK, from franchised dealers, Independent used car specialists, online disruptors and auctions, means that not everyone will survive this period! 

There will just not be enough used car stock to go around; to demonstrate this point I will repeat the challenge facing the BMW franchised dealer network; taken from the article above. In 2019 BMW registered 169,753 new cars in the UK; a number reduced by approximately 32% in 2020 to 115,500. 54,253 fewer new car registrations and a number that flows straight through to the used car markets of 2 -4 years’ time. 

On average (a dangerous assumption but bear with me) that reduction in volume equates to 362 less used cars for each of the 150 BMW franchised dealers in the UK. At an average RGP Per Unit of £1,500 that equates to a £543,000 hole in the accounts that needs filling; just to stand still! And you will all have similar challenges, your decision is whether you will do what is now required to survive, because the battle for used car stock holdings is well underway. 

Taking these harsh realities on board, if your strategy for used car stock acquisition is to purchase from auction houses, then your thinking is fatally flawed. Auctions (the business that shouldn’t exist in its current form but the business that you gave away for free – yes you did, but that’s another article) operate in what I call “The Just In Time” market! 

This is the most expensive market of supply and the market that is run like a “Ponzi Scheme!” It is the market where prices are at their highest, but survives because some businesses have no other options for supply. The only business winning here is the auction, (remember auctions don’t buy stock, they are a facilitator for those used car businesses who don’t have the business acumen to operate any differently), and their model is simple: 

“Let’s put as many uneducated, incapable and stock hungry businesses under one roof as we possibly can, and then get them to all to bid against each other for used car stock!” 

For the used car businesses going here for used car stock, the future is grim; if successful all they have achieved is to pay the highest prices (on any given day) for their used car stock. Worse than this, the price for acquiring this stock has been driven up by a group of individuals who are also desperate; they are in the “Last Chance Saloon” for stock acquisition, so rest assured this stock will be eye wateringly expensive and not very profitable! If at all? 

This is why you see the same old faces at the auction; the embodiment of why there are more sheep in the world than there are lions! 

So in the used car markets to come, those with used car vehicle parks of 680,000 less vehicles, (in terms of available stock), my question to everyone would be; how well set up is your business to survive? In truth the vast majority aren’t. It is the inconvenient truth of our times that you can have the best people and operational procedures imaginable, but if you don’t have the professionals required to secure used car stock holdings in the volumes and at the prices required to remain profitable? Well then it is all going to be for nothing. 

I have observed how the used car stock acquisition landscape has evolved during the last 12-24 months and I promise the vast majority reading this, you will not be ready for how the acquisitions landscape has evolved; to the point where all those relying on the initiatives and skills of the recent past will be left floundering. 

For these businesses, those reactionary businesses purchasing stock on a hand to mouth basis and in the moment, (the “Just In Time” market), it will be a challenge to acquire used car stock at prices (and in the volumes) that ensure your business remains profitable. 

But there are others, albeit very few, those who (like me) spent the lock downs monitoring the market and rewriting previously very successful programmes of used car stock acquisition, from the ground floor up, in order to develop the programmes and initiatives required to ensure that used car stock holdings are being secured for future markets right now. And via campaigns and initiatives that will leave the competition with years of work to catch up; even if they can find the skills required already within the four walls of their business? 

The used car stock acquisition skills now required to secure success can’t be taught via any training programme, it is too fast moving a discipline and covering too vast an array of skills-sets. So in reality successful used car stock acquisition now necessitates an environment of strategic alliances via commercial arrangements. The market value of the skills involved would also make it too financially restrictive to employ genuinely successful used car stock acquisition professionals; there are too few of us, so for the moment those days are gone. 

That said I am working with 2 businesses building and delivering the used car stock acquisition programmes they require; having made a commitment to work with three at all times. So for those grasping the seriousness of their current situation and wanting to take immediate action, I will be working with another business over the next 12 months, in order to deliver the used car stock acquisition expertise and initiatives required, for that business to survive and prosper in the used car market to come. 

Should you wish to explore synergies and the potential to collaborate in this regard, please do not hesitate to contact me via LinkedIn, so we can arrange a mutually convenient time for an exploratory call. 

Andrew.

Used Car Stock Acquisition 101!,,,,,,, 

“If You Are Doing The Same Thing As Everyone Else, Then Stop!” 

Following on from my previous article Used Car Stock Acquisition 101 I promised I would explore all the advice and “One Liners” listed within the article in greater detail. This is the first of those articles and is actually inextricably linked to another piece of advice; If You Are Doing What Everyone Else Is Doing, Then It Can Only Be About Price! 

The purpose of these articles is to expand upon these pieces of advice, in the context of successful used car stock acquisition, the used car business development discipline that (more than any other) will determine who will be the winners and losers in the used car markets to come 

This piece of advice was actually first explored in the article for my Used Car Business Development Blog below: 

TrustFord And How NOT To Buy Used Cars For Profit!,,,,,,, 

At the time of writing this article (July 2021) I was surprised at the lack of genuine used car stock acquisition expertise showcased by Trustford’s decision to effectively go “Toe to Toe” with We Buy Any Car. I have only become more surprised as more and more big dealer groups, and those owned by the PLC’s, have decided to do the same; and let me explain why. 

Effective and successful used car stock acquisition programmes have the leveraging of trading advantages at their foundations; any business deciding to ignore these and compete on the same terms as a business with no trading advantages to leverage, only shows the sector within which they operate, that they have no used car stock acquisition acumen, experience or expertise. 

When I am working with franchised dealers building their used car stock acquisition programmes, this is my starting place; an understanding of why We Buy Any Car operate the way they do and why you should ignore their “Modus Operandi;” something Trustford could and should’ve done. 

We Buy Any Car operate the way they do out of necessity; I have no doubt they would love to have the trading advantages that manufacturers and their franchised dealers have. But they don’t; so instead of looking in marvel at their model, I start by explaining why We Buy Any Car are actually very vulnerable! 

This normally leads to blank faces and a lack of understanding; let me explain why. We Buy Any Car have many problems and challenges, the biggest being that they don’t manufacture anything, so don’t have the ability to control their market. In effect they are a “One Trick Pony” one dimensional business that relies on two things to succeed; the trading and operational ignorance of manufacturers and franchised dealers, and pockets deep enough to change consumer behaviour via highly effective marketing campaigns. Both of which they currently enjoy! 

In reality We Buy Any Car shouldn’t exist and I suspect that their main fear is one of being found out. We Buy Any Car exists because manufacturers and franchised dealer networks dispensed of the skills required to successfully acquire and trade used car stock holdings themselves. Their parent company (BCA) sold you the notion of all auction disposal policies and through your own laziness you fell into their trap! 

The revenue they make from all auction disposal policies has not only probably funded We Buy Any Car, it has probably funded Cinch as well; so in effect you are feeding the business that not only threatens your own trading existence, but also the business that you are trying to copy, but can’t! The only contact We Buy Any Car has with a customer is at the very moment that they want to sell their car; this leaves them trading in what I call the “Just In Time” acquisitions market of opportunity. And of course it is the only moment that they can interact with customers; they have no sight of the customer’s ownership journey, and have no other opportunity of obtaining data on their potential customers and/or of knowing when a customer is in the market. 

In this market (the “Just In Time Market”) it can only be about price; We Buy Any Car have no opportunity to build obligation with customers; they operate in a mercenary, all about price market, where the organisation paying the most money will purchase the car! Why would any business plan to try and operate profitably in this market? You can’t; this is a race to the bottom on profit margins. Yet, and despite all this, too many of you do. 

Unfortunately this then becomes the market/trading environment within which the vast majority of used car businesses (both independent specialists and franchised dealerships) choose to operate; then bemoaning the high prices and reduced profit margins that inevitably follow, if there is any profit at all. 

So, those succeeding in the future will be the used car businesses that know how to build relationships and obligation with customers, in order to secure used stock holdings in advance. These businesses, whether they are an independent used car business or a used car business aligned to a franchised dealership, will never again be operating in the “Just In Time” used car stock acquisition market. They will (quite rightly) view that market as the market for those who do not know how to acquire used car stock for retail profit. 

However, this trading status will not happen by accident; there is no secret, it will involve a lot of hard work. This is what I tell every business that I enter into exploratory conversations with surrounding my outsource resource used car stock acquisition programmes. I counsel that they must stop looking outward and start looking inward, at the opportunities to acquire used car stock holdings; in effect, to build their own used car stock acquisition business, not to worry about anyone else’s. 

In truth, as a franchised dealer you hold so many of the aces, when it comes to building successful used car stock acquisition programmes; too may though have no idea what the aces are or how to play them. Even the successful well run independent used car specialist has advantages over We Buy Any Car, when it comes to securing profitable used car stock holdings; again though, I see few doing what will be required to secure their trading future. 

So in the used car markets to come, those with used car vehicle parks of 680,000 less vehicles, (in terms of available stock), my question to everyone would be; how well set up is your used car stock acquisition business to survive? In truth the vast majority aren’t. It is the inconvenient truth of our times that you can have the best people and operational procedures imaginable, but if you don’t have the professionals required to secure used car stock holdings in the volumes, and at the prices required to remain profitable? Well then it is all going to be for nothing. 

I have observed how the used car stock acquisition landscape has evolved during the last 12 months and I promise the vast majority reading this, you will not be ready for how the acquisitions landscape has evolved; to the point where all those relying on the initiatives and skills of the past will be left floundering. For these businesses, those reactionary businesses purchasing stock on a hand to mouth basis and in the moment, it will be a challenge to acquire used car stock at prices (and in the volumes) that ensure your business remains profitable. 

But there will be others, albeit very few, those who (like me) spent the lock downs monitoring the market and rewriting programmes of used car stock acquisition from the ground floor up, in order to develop the programmes and initiatives required to ensure that used car stock holdings are being secured for future markets right now. And via campaigns and initiatives that will leave the competition with years of work to catch up; even if they can find the skills required already within the four walls of their business? 

The used car stock acquisition skills now required to secure success can’t be taught via any training programme, it is too fast moving a discipline and covering too vast an array of skills-sets. So in reality successful used car stock acquisition now necessitates an environment of strategic alliances via commercial arrangements. The market value of the skills involved would also make it too financially restrictive to employ genuinely successful used car stock acquisition professionals; there are too few of us, so for the moment those days are gone. 

That said I am working with 2 businesses building and delivering the used car stock acquisition programmes they require; having made a commitment to work with three at all times. So for those grasping the seriousness of their current situation and wanting to take immediate action, I will be working with another business over the next 12 months, in order to deliver the used car stock acquisition expertise and initiatives required, for that business to survive and prosper in the used car market to come. 

Should you wish to explore synergies and the potential to collaborate in this regard, please do not hesitate to contact me via LinkedIn, so we can arrange a mutually convenient time for an exploratory call. 

Andrew.

Used Car Stock Acquisition 101!,,,,,,,,,,,,,,, 

A short article today and one linked to the disciplines, advice and “One Liners” explored during my discussions with franchised dealers and used car businesses; the discussions surrounding my used car stock acquisition programmes, synergies and the potential to work together. 

Invariably during these discussions about how the used car stock acquisition profession and landscape has evolved (leaving franchised dealers and independent used car businesses without the skills and experience required to secure profitable used car stock holdings) many gems of strategic used car stock acquisition and business development advice get mentioned and discussed; so much so that I have decided to run a series of articles exploring them all. 

However, before that I thought it prudent to publish a list of some of the Used Car Stock Acquisition 101 statements, disciplines and observations; little gems if you like. I refer to them as the “Humbling List” or the list of disciplines and advice your business must take on board and heed; it includes the following. 

• If you are doing the same thing as everyone else, then stop! 
• If you are doing what everyone else is doing, then it can only be about price! 
• There is no such thing as an unprofitable acquisitions opportunity, just poor acquisitions professionals. 
• If you don’t know why you are good at something, you are not good at it! 
• If you are failing, it will be because of your belief culture! 
• There’s a big difference between wanting things to get better and committing to make things better! 
• The business that controls access to used car stock, controls access to used car customers! Customers do not need to “Like” your business, but they do need to Trust it! 
• You lock in profit margins during an effective and professional acquisitions process! 
• Your biggest used car challenge is not selling the right stock, it is acquiring the right stock! 
• The successful used car stock acquisitions professional knows how to ensure that they never pay market value for used car stock! 
• Successful used car stock acquisitions professionals are not buying used car stock from auctions! 
• Be warned; if you are sending used car stock to auctions or making it available to third party tech sites, then you are an unnecessary middleman. 
• Selling is not the most important discipline within your business, buying is! 
• Used car stock acquisition is a people business, not a car business! 
• Your business must NEVER be not buying! 
• Never not buying is a financial structures and people business, one aligned to a successful used car business! 
• The right professionals will take your business further than good tech! 
• The “Just In Time” used car stock acquisition model is an unprofitable and broken model! When it comes to genuine used car stock acquisitions professionals, you have only 2 options; learn to attract the talent you require to your business, or to develop that talent! 
• Developing the used car stock acquisition skills required is impossible if you don’t know what you are teaching! 
• There is no such thing as the used car market; know your used car market and know your customers. 
• Success will involve building a used car stock acquisition business, a separate business that is aligned to your current business! 
• You can have the best sales operation imaginable; if you don’t know how to secure used car stock holdings it will all be for nothing! 
• Stop worrying about the competition; choose to identify and leverage your trading advantages! Credibility comes from the questions you ask, not the answers you give! 

So in the used car markets to come, those with used car vehicle parks of 680,000 less vehicles, (in terms of available stock), my question to everyone would be; how well set up is your business to survive? In truth the vast majority aren’t. It is the inconvenient truth of our times that you can have the best people and operational procedures imaginable, but if you don’t have the professionals required to secure used car stock holdings in the volumes and at the prices required to remain profitable? Well then it is all going to be for nothing. 

I have observed how the used car stock acquisition landscape has evolved during the last 12 months and I promise the vast majority reading this, you will not be ready for how the acquisitions landscape has evolved; to the point where all those relying on the initiatives and skills of the past will be left floundering. For these businesses, those reactionary businesses purchasing stock on a hand to mouth basis and in the moment, (what we call the “Just In Time” market), it will be a challenge to acquire used car stock at prices (and in the volumes) that ensure your business remains profitable. 

But there will be others, albeit very few, those who (like me) spent the lock downs monitoring the market and rewriting programmes of used car stock acquisition from the ground floor up, in order develop the programmes and initiatives required to ensure that used car stock holdings are being secured for future markets right now. And via campaigns and initiatives that will leave the competition with years of work to catch up; even if they can find the skills required already within the four walls of their business? 

The used car stock acquisition skills now required to secure success can’t be taught via any training programme, it is too fast moving a discipline and covering too vast an array of skills-sets. So in reality successful used car stock acquisition now necessitates an environment of strategic alliances via commercial arrangements. The market value of the skills involved would also make it too financially restrictive to employ genuinely successful used car stock acquisition professionals; there are too few of us, so for the moment those days are gone. 

That said I am working with 2 businesses building and delivering the used car stock acquisition programmes they require; having made a commitment to work with three at all times. So for those grasping the seriousness of their current situation and wanting to take immediate action, I will be working with another business over the next 12 months, in order to deliver the used car stock acquisition expertise and initiatives required, for that business to survive and prosper in the used car market to come. 

Should you wish to explore synergies and the potential to collaborate in this regard, please do not hesitate to contact me via LinkedIn, so we can arrange a mutually convenient time for an exploratory call. 

Andrew.

 

BMW And How Not To Sell Specialist High Performance Cars!,,,,,,, 

Firstly some context to save everyone some time; if you work for a BMW retailer, BMW the manufacturer or own a specialist used car business, and cannot see the problems associated with the screen image above? Well I’m not sure you can be helped in your professional development for retailing specialist high value products in the automotive sector. 

For those like me who look at this in disbelief, let’s discuss; but firstly a personal declaration. I have a soft spot for BMW, my Father worked for them in the 70’s and 80’s, so I was lucky enough as a young boy to grow up surrounded by BMW’s like 2002’s, 3.0 Si saloons, 3.0 CSL’s and the original M Cars. 

I cut my teeth in the automotive sector working for BMW franchised dealers, before going on to construct and deliver their used car business development programme; so I remember well just how closely protected and well managed the product was in the past. Then, just as I revisit many happy memories looking at the M Power display at the Festival of Speed, celebrating 50 years of BMW M Power, I see the image above and wonder just how far retailing excellence and competence at BMW appears to have fallen. 

Now I also add an important caveat; it is not for me to tell BMW how to run their business, so I won’t, but in order to explore the ramifications of what they are allowing to happen, I want to explore the image above from 2 perspectives; from the used car market perspective and then from the perspective of customers. 

And before we start by picking apart the image above in forensic detail, some context regarding my experience in terms of commenting. Having left my corporate association with BMW in 1998, I went on to run and own some of the largest independent buyers of BMW’s in Europe; something I did for 11 years, before moving on to other projects. During this time I learnt (to my cost) just how the decisions manufacturers and franchised dealer partners make, can affect the perception surrounding, and the values then achievable, of a product. 

So let’s start by looking at the effect that this screen image has on how the product is viewed from within the used car sector and the trade as a whole. Basically this is a sh1t show and “Manna from Heaven” for BMW’s competition; why? Well as an indication that a manufacturer has no idea of what they doing, well there are none better; and as an example of how to take a premium product and completely screw your own market? Well once again this is unparalleled. 

So where do we start? Firstly this image was taken from the Carwow website within the last 2 weeks. So question number one for BMW; what the f#ck is premium product like a top of the range M5 doing being advertised on Carwow? Now I am happy to receive any replies and counter arguments from senior personnel from BMW in regard to this post, but if you really can’t appreciate the wider ramifications of how damaging to your M Power brand and your network, having cars listed on a third party website like Carwow is, well again you probably have bigger problems to face. 

So let’s discuss how the automotive sector perceives the fact that your premium M Power product is listed here? Quite simply the perceptions will be; you can’t sell it yourself because you and your network don’t have the expertise – this is extremely worrying, there is too much volume of the product for the market, there is no desire in the market for the car, there will limited demand for a 1 -2 year old example so there is no certainty of pricing. 

Now all of these perceptions are damaging to the product in their own way but it is the last point that is critical because it not only affects sentiment, but pricing. As an experienced acquisitions professional this picture puts the fear of god into me, in terms of purchasing an M5 in either the trade market or as a personal individual purchase. 

My thought process would be this; 

1. The M5 Competition Ultimate Pack is being listed for sale with a discount of £22,360; a reduction of 17.6%! 

2. But this price is only the starting price; you can’t advertise a distress message in your pricing and expect that this will be the price you will receive; not from the profile of customer purchasing one of these cars. 

3. My next question would be what the price really is? It will probably be in the £90K’s somewhere. 

4. So if a new car is actually £95,000 - £100,000? What is a 6 – 12 month old car worth? 

5. Well if a new car is available between £95,000 and £100,000, and the manufacturer is distress marketing the car to this degree, we know there is probably not a shortage of product. 

6. With this in mind, there needs to be a commensurate gap price between a new car and a 6-12 month old car; otherwise customers will just buy the new car. Now this is down to professional opinion but with no positive message to keep residuals high, professionals hedge against the risk of buying, if at all? And it is the “if at all” that does the damage to confidence and therefore residuals. 

7. If I was asked to underwrite or purchase one for stock my thought process would be as follows; this may be a good car but the manufacturer and their franchise dealer network are undermining the product; do I really want to take the risk? 

8. If I do, it must be on my terms. If a new car is £95,000 - £100,000 then a 6-12 month old example will need to be advertised at £85,000; maximum. Allowing for a sensible risk based retail margin (£10,000) I will offer £75,000. 

So there you have it folks; a demonstrable picture of £51,520 or 41% depreciation within 6-12 months, over list price, for a top of the range BMW M5!  This product deserves better than this; and sadly word will spread within professional elements of the used car industry, including to customers, so the product becomes tainted. In reality prices never recover (in the short term) from here! 

So how about the customer, what is the likely perception to be here? Well this depends on how well informed they are regarding the market. Some customers, those duped into paying list price or close to list, are looking down the barrel of some heavy depreciation; once experienced they tend not to trust the brand again. 

For those doing their homework and looking to purchase a car in this sector of the market, the picture is even more damaging. In demonstrating this let’s be fair, in terms of comparisons, and assume that they just look at Carwow for a picture of the market, including all the competition. 

The M5 does have some serious competition from Mercedes Benz and Audi; most notably the AMG E63 S and the RS6 Avant. Now as much as these were both listed on Carwow’s website (not something I would not recommend) the picture painted for the Mercedes and the Audi were very different. 

I have the screen shots available for anyone wanting to see them but on the same day that I took the screenshot for the M5, prices for the 2 cars listed above were as follows; 

Mercedes AMG E63 S: List Price £102,150. Carwow Discounted Price £102,051. Carwow Discount £99 or 0.01%. 

Audi RS6 Avant: List Price £100,750. Carwow Discounted Price £98,796. Carwow Discount £1,954 or 1.9%. 

Now at all times we must remember that a picture paints a thousand words and that to the customer, perception is reality. What we have here is 3 cars all priced within £4,000 of each other, but also 3 very different ownership and investment propositions. 

The picture with the M5 is entirely negative; one of weakness and one of wondering just how much more they will be reduced in price. This is not a stable purchase environment and nobody wants to be made to look stupid by losing lots of money during the ownership period of their car. 

Regardless of the merits of the M5, all BMW are demonstrating here is that they clearly don’t understand the market and how to retail low volume specialist high performance cars. The manufacturer out the three who does is Mercedes, who affectively are offering nothing, in terms of inducements. 

They are telling the customer that they are supremely confident in their product, we don’t need to discount this car and because we don’t, we will look after and protect your investment better than BMW. These trading principals will keep residuals high, because the market and our customers can have confidence in our ability to manage our product within specialist high performance markets. 

For BMW, and I doubt they are listening, the lesson here is that regardless of the actual trading and pricing situation, you are only as strong as your weakest link. For it is the weakest link that sets perceptions on pricing, for good or bad, and the perception above is all bad. The sad reality is that the M5 set the benchmark for high performance saloons back in the 80’s, it is probably the best car out of the three, but would I recommend anyone should buy one as an ownership proposition? 

Only if they were prepared for the likely eye wateringly high levels of depreciation that will be associated with the car. My money would go into the AMG 63 S; not because I really want it over an M5, but because Mercedes are proving that they will protect my investment better than BMW. 

For what it’s worth I would not have had the M5 (or any car for that matter) listed on Carwow in the first place and I would’ve trusted a well-trained network of sales professionals to discuss with customers why the M5 is worth more new, than the Mercedes and the Audi, something that shows strength in the product. 

However, in order to do this you need a network of sale professionals capable of conversing and dealing with this profile of customer, rather than leaning on third party tech platforms, when it becomes all about price! If I were a senior professional at BMW this situation would worry me, especially when I look at how the competition use platforms like Carwow. 

Many of BMW’s competitors aren’t even listed on the platform, many are but offer no discounts at all. It’s not for me to provide this information to BMW but if this is where the customer is looking, it paints a picture in the eyes of both the sector itself and potential customers. 

Much to ponder as BMW are one of the manufacturers trialling and considering agency retailing models.

Andrew