Used Car Business Development

Used Car Stock Acquisition 101!,,, 

Successful Used Car Stock Acquisitions Professionals Never Pay Market Value For Used Car Stock! 

In this, the 5th article in the series exploring used car stock acquisition best practice and principles, I wanted to explore some of the most contentious issues, those contained within the heading and inextricably linked to the statement below;

You Lock In Profit Margins During An Effective And Professional Acquisitions Process! 

Now in saying this I readily accept that 95% of those working within the automotive sector will scoff at the heading; they will say it can’t be done, but these people aren’t my audience, they represent “The Market” not “My Market.” So to the remaining 5%, those curious and representing “My Market,” I promise it can be done, I have been doing it for 20 years. So keep reading. 

Now in discussing the principles contained within the heading, it is important to understand one very important thing; when it comes to successful used car retailing you make your money by locking in profit margins when you are buying, not when you are selling. Selling (although important) is the process of crystallising all your acquisitions expertise and the profit locked in during the acquisitions process. 

However, (and I add the very important caveat), in order to deliver on this you must have the expertise, commercial acumen and the people skills to know how to put yourself in the position of NOT having to ever pay market value for used car stock holdings. This is paramount, but in reality very few have this this expertise. 

Acquiring assets for stock and then retailing for profit, (any asset not just used cars), is a fast-paced, cutthroat and dirty business; and that’s just the customers. I promise everyone reading this that when you involve cars and money, (especially other peoples’ money), you will see the worst of people and behaviour. So think on that before making any decisions on who to employ or who to partner with, (in the delivery of your used car stock acquisition objectives), because this is the world they have got to survive and thrive within, on your behalf. In reality very few can “Cut The Mustard!” 

Successful used car stock acquisition requires many skills and a multitude of initiatives, but at the foundation of everything must be the absolute determination to pay as little for stock as possible; in fact it should be the “Raison D’etre” of every used car stock acquisitions professional. From here success then hinges on the experience and expertise required to be able to deliver on this, and on scale; success here though, will not happen by accident. 

It is the professional ability to create the opportunities funnel required to ensure your business doesn’t have to operate in what I call the “Just In Time” acquisitions market; invariably best summed up by going to auction houses or outbidding We Buy Any Car for used car stock. In reality success in the stock acquisitions world is best defined by; 

Observing The Masses And Doing The Opposite. 

And by never resting on your laurels, working hard and continually evolving, because any success this year, will not be guaranteed for next year; not unless you are continually at the leading edge of the stock acquisition community. 

However, this absolute determination to pay the least amount of money for every car, should not mean that you operate in an unprofessional manner; absolutely not. At its core the business of acquiring used car stock is a people business, not a car business; it is a business of building relationships based on trust and respect. So if you are incapable of moving within the social circles required and of building relationships of this ilk, in order to acquire used car stock at below market value, then unfortunately you will never be a successful used car stock acquisitions professional. 

Do not (as many seem to do) see yourself as an estate agent either; whose job it is to get the maximum value for their client’s asset, because the reverse is true. You are the complete opposite to this; you are investing money into an asset on the basis of a financial return, and where the risk and the reward is all yours. Your absolute goal should be to pay as little for used car stock as possible! 

Profit is not (nor should it be) a dirty word; if you are stock acquisitions professional you should be remunerated and rewarded for your ability to acquire used car stock at both below market value and on a continuous basis. If you are currently working in an environment where this is not the case then my advice would be to move on; this will not be the business to be working for/or with in the future. 

Now I understand that for many of you reading this article, it will present an ethical dilemma; and I understand why for many franchised dealers this will cause unease. To which I say you have a choice; carry on doing the same, which will lock in terminal decline, or look to open your mind to doing things differently. 

But I can promise everyone one thing; if your used car stock acquisitions initiatives consist of you running around on a daily basis, looking for used car stock to purchase on a “Hand to Mouth” basis and buying in the “Just In Time” used car market; then you are going to have to pay more money than anyone else for stock in order to purchase it. Now this will be many things; profitable will not be one of them! 

And just this scenario, is what many inexperienced used car businesses have been doing during the last 12 months. Those pumped up and full of hubris, all the hubris peddled by those with no experience of purchasing used car stock for retail profit; auction houses, CAP HPI, Autotrader etc. It should come as no surprise that you are still gazing upon this (now) loss making used car stock holding, in some cases 6-8 months after it was purchased; along with the loss making grind of retailing this stock holding and releasing the capital employed. 

And it all could’ve (and should’ve) been so different! Sadly though for many this has been unavoidable; some franchised dealers have morphed into non standalone businesses now. They are businesses bereft of the talent required and incapable of building their own successful used car business model. Overly reliant on 3rd party businesses to help them and/or tell them what to do; with a list of shame that is endless but includes BCA Auctions, Cinch, Carwow, Independent Leasing Companies, We Buy Any Car, Autotrader and many others. 

Now as I stated at the start of this article, I have no doubt that the vast majority of you reading this will probably ridicule these ambitions. That will be because you are not a successful used car stock acquisition and used business development professional; in the same way as I am not an accounts professional or a Michelin starred chef. But it can be and is being delivered upon; I should know because, not only do I deliver on this for my own business, I am also taking these initiatives to a few select used car businesses right now. 

For those 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), my question 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 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.