Used Car Business Development

On Average BMW Franchised Dealers Have All Lost £543,000 In 2023!,,,,,, 

I won’t use this article to re-hash content from articles of the recent past, even though this article continues the thread explored in the previous articles written for my Used Car Business Development Blog. 

No let’s cut straight to the chase; on average, every BMW franchised dealer in the UK has a £543,000 hole in their accounts for 2023. On top of that, those needing to read the rest of this article to understand why, will be unlikely to remedy the situation! 

So let‘s expand upon the heading and understand why the statement is being made. To do so we have to go back to 2020 and compare it to 2019; in terms of new car registrations. The reason for doing this is to measure the likely used car vehicle parks coming in 2023, a number dictated (in the main) by new car registrations 3 years earlier; 2020. 

Now this is not an exact science, but it is an accurate barometer of the likely used car vehicle park available (plus or minus) and for BMW franchised dealers the picture is looking challenging and here’s why. Apparently 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 again a number that flows straight through to the used car markets of 3 -4 years’ time. 

If we assume (and we can’t) that they all return to the market after 3 years and to the BMW franchised dealer network (the majority will return to the market but not all to the BMW franchised dealer network), that equates to an average of 362 less used cars for each of the 150 BMW franchised dealers in the UK. When compared to the used car vehicle park generated by new car registrations in 2019. 

Assuming (again this is flawed but bear with me) that BMW franchised dealers are successful used car retailers making £1,500 RGP Per Unit; well at £1,500 RGP Per Unit that estimated reduction in the size of the used car vehicle park for 2023 equates to an average hole in the accounts of £543,000; for every BMW franchised dealer in the UK. Got your attention yet? 

So, bearing in mind that this is an issue for the sector as a whole, (I am just using BMW as an example), what would I be saying if I was in exploratory discussions about working with a BMW business and becoming responsible for constructing and delivering their car stock acquisition programmes. Those that will be required to ensure that the used car business continues to grow and is not one of the inevitable victims of the market to come? 

Well, I would go straight to the owner(s) of the business and although I can’t expand upon the measures required to ensure that the business is successful, my initial conversation would involve the following statements; not all of which will be comfortable listening, but in brevity; 

1. The harsh reality is that the size of the used car vehicle park has shrunk by 32%; that is a very big number! 

2. Unfortunately, the number of BMW franchised dealers has remained the same; so you will all be fighting over the same reduced used car stock holding. Not every business will survive this “Darwinian” culling process! 

3. Luckily, very few (if any) have the used car stock acquisition skills required to be successful, so there is hope. 

4. However, delivering on that hope comes at a price. But we will start by ensuring that we have the used car stock acquisition initiatives and programmes in place to protect our used car vehicle park; that supplied by the business from new. 

5. Once secured things get a little sensitive. From these foundations the only way the business has of expanding its used car stock acquisition volumes and therefore used car retailing profits, is by acquiring used car stock from the customers of your fellow franchise holders. 

6. If you want to be successful (and I do) I would advise that moving forward, the business adopts a used car stock acquisition policy of “Observing The Masses And Doing The Opposite!” 

7. We will not follow the “Sheep!” Those businesses acquiring used car stock on a hand to mouth basis in what I call “The Just In Time Market” from auction houses and by copying the trade or We Buy Any Car. There is no money in this and we will elevate the business above those operating in this way; something they only do because they possess no used car stock acquisition expertise. 

8. With this in mind, I will put in place the specialised and highly effective used car stock acquisition programmes and initiatives required, in order to target the customers of your fellow franchise holders directly; thus securing the associated used car stock holding. 

9. This will be successful but very unpopular with your fellow franchise holders, so expect the phone to ring! 

Upon finishing, there is one very simple question I would ask; So Do You Want To Be A Winner In This Market Or Not? 

So for those owning and/or running a BMW franchised dealership (or any used car business for that matter – you all have the same challenge) and is curious, ambitious, capable of opening their minds and taking their strategic used car business development thinking on the journey required, I would say this. 

In the used car markets to come, those with used car vehicle parks of 680,000 less vehicles, (in terms of available stock), 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 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 (as mentioned above) all those relying on the used car stock acquisition 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 two 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.