A Time Of Reckoning For Used Car Markets! 

Well they say that a picture paints a thousand words and the image above certainly tells those looking and those capable of reading “The Signs” an awful lot about the state of the Automotive Sector in the UK; both in terms of where some used car markets (and prices) are heading and the associated levels of expertise contained within the sector itself. 

In truth and to those that understand the associated used car markets, the image above is a worrying indictment of both the associated used car market, the Automotive Sector itself and the lack of prerequisite expertise in some used car markets. Be in no doubt though, images like this will cause some problems for certain used car markets in the UK, especially specialist and high performance used car markets. 

And do not think this is an isolated case, in truth I could have used one of many images from Lamborghini’s to Rolls Royce’s to make this point; it is the volume of specialist high performance used car stock appearing at BCA (including their social media feeds) that is concerning. 

So let’s cut immediately to the chase; specialist high performance used car stock (like the Porsche Taycan in the image above) should NEVER be appearing in BCA Auctions, (or any non-manufacturer closed auction for that matter), on their social media feeds or on their website. Those responsible for sending this car here may be many things (professionally), but capable of operating successfully within the used car markets catering for stock like this, they certainly are not! 

Yet, and despite all this, I understand how the Automotive Sector has got to here. “Here” being the constant elevation of BCA as an organisation. From the “Toilet” where businesses should be sending all their crap and their mistakes, to the perception of being a premium retailer/supplier of specialist high performance used car stock holdings; and all for free. Well done people, rounds of applause all round! 

So in order to help those deluded enough to think that sending specialist high performance used car stock (like this) to an auction like BCA is a good idea, let me enlighten you as to what those who operate in the associated used car markets, take from the image above. 

Firstly, the car in the image above is now the car that will never be purchased by those knowledgeable about, and operating within, the associated used car market. Word spreads very quickly in the specialist high performance used car markets and no one wants to purchase the stock that has been prostituted, and within the wrong circles. So if the dealer taking the car in part exchange or looking to dispose of the car because it is overage used car stock, was looking to achieve market value, this is now highly unlikely. In fact (in reality) all they have achieved is having to make their example the cheapest available in the country, if it is to be liquidated. 

To be fair, the car could be here because of the unhealthy adherence (unhealthy that is, for all those businesses advocating the ridiculous policy) to an “All Auction” disposal policy. Now I will not use this article to revisit the trading lunacy of “All Auction” disposal policies, I have covered this subject many times in the articles written for my Used Car Business Development Blog; the articles below being just a few of them. 

The Madness Of “All-Auction” Disposal Policies And The Cost That Will Be Paid!,,, (UK Dealer Article) 

Your All Auction Policy?,,,,, I Bet It Seemed Like A Good Idea At The Time!,,,, (UK Dealer Article) 

For context though, and in brevity; “All Auction” disposal policies were a work of genius by no one, apart that is from the Auction companies themselves. Their uptake caused the majority of genuinely successful used car professionals (those capable of handling specialist high performance used car stock like this) to leave the employ of franchised dealer networks. To such a degree that franchised dealer networks are now hooked to Auctions as an outsourced resource supplier; one doing the jobs they should be doing themselves, rather than giving a business away for free! 

So back to image and the car concerned, what does it tell me? It tells me two things; not only that the dealer/organisation/individual concerned does not possess the skills and experience required to operate within the associated used car market, it also tells me that the market for the car is overheated, over supplied and about to see some price correction; why? 

Well, the first thing a professional who is capable of operating within the used car markets involved does, (upon seeing images like this), is ask important questions. The first being why did this happen? Followed very quickly by, if I was in the market to purchase a car like this, what is the genuine availability and what does that mean for prices; that outside of all the narrative and hype peddled on prices by Autotrader, EBay Motors, Cap HPI, etc. 

Well, I will let the images below set the scene; the first from the Porsche Approved Used Car website and the second taken from the “Blind Leading The Blind” guide to used car values, and the platform that should never be used by people and/or organisations with high performance specialist cars to sell; Autotrader. 

 Autotrader 

As you can see (as much as there may be a little overlap) there are currently 185 used Taycan’s listed for sale on the Porsche Approved Used Car website and 267 on Autotrader; that’s 452 in total! 

I can also ascertain that the cheapest “Advertised” (key word; “Advertised” does not mean that the car will sell for this value – anything but) price for a Taycan in the UK is currently £82,490; please see the image above. 

So both the volume of stock available and the socio-economic profile of the buyer for cars like this, tells me that the market is massively over provided for at the moment. So, regardless of new car production delays, it is a buyer’s market for Porsche Taycan’s at the moment. And then we come to the one sitting at BCA, the one being (very unhelpfully) over exposed by BCA themselves; when (unless it is a Cinch car that is not selling – which of course it won’t) they do not even own the vehicle. This is what happens (Accountants and Senior Directors, those that have never run used car businesses) when you agree to enter “All Auction” disposal arrangements with organisations lacking in the experience and expertise required. Your car now becomes the cheapest in the country; if (that is) it can be sold at all? 

Now to add context, let me explore this argument; you ring me to buy the car, I point out all the above, and the fact that it is at BCA, so every professional possessing the experience and expertise required, now knows about the car and the fact that it hasn’t (yet, and at the time of writing this article) been sold. I would advise that the car advertised at £82,490 sets market value, which is actually far below this in reality, because there is too much stock; supply and demand will now be driving prices down. 

I respectfully point out that in a market of 452 used Taycan’s, the last thing any retail customer interested in the car has to do, is pay the asking price. If I was interested in purchasing a Porsche Taycan I would tell the dealer that I will contact every one of the 18 examples currently advertised at under £90,000 and offer 10% below the asking price, knowing full well that one of them will have no other option than to accept. 

I would probably ring the one advertised at £82,490 (the cheapest) first when the conversation would be quite simple. It would proceed along the lines of this; I will offer you £72,500 for the car (this will probably not be accepted but I will use this to flush out their best price) and advise that I will give them an hour before ringing the next cheapest example and making an offer for that. So don’t hang around, if it’s longer than an hour I will have probably moved on. 

Unfortunately, and as much as this supply and demand imbalance can occur in all used car markets, in specialist and high performance used car markets the ramifications of an over supplied market are far more damaging for real prices. There are far fewer buyers and those who are in the market, tend to be far more knowledgeable and more successful in their professional lives. 

So what does this mean for the business or the individual who was foolish enough to send the car to BCA. Well we end up here; I’m pretty confident that the car advertised at £82,490 could be purchased for £75,000 - £77,500 and in a market with 452 examples currently available for sale, if I was to invest in the car (as a retail opportunity and because I wanted to have the 453rd example available in the UK) it would have to be the cheapest. Would I bid £70,000? Absolutely not! I would guess that in this over supplied market, fear will have taken hold and most of the competition will now not be buying; therefore there will be little competition to own the car, so why should I? 

So in reality the associated used car market probably has it’s first under £70,000 (in the trade) Porsche Taycan, and no I wouldn’t buy the car for stock. I would though work with the current owners (but only after qualification) and use their money, combined with my skills and experience, in order to find a buyer for the car. But before any of this could take place, we would have to explore all of the above; and the reasons why they have reduced the desirability and therefore the value of the car in the image. 

In truth the image above and the many others that have appeared on BCA’s social media feeds recently, does nothing other than support a feeling that I have had for a while. I have suspected for a long time that there is a day of reckoning coming for prices and residual values in specialist high performance used car markets. Too many manufacturers have produced far too many cars, become overly emboldened by a market that only existed because central bankers pumped markets full of free cash during the pandemic, and whilst there was a limited supply of products to invest that money into. All of which is about to unwind and inevitably lead to the fragile (and overpriced) pricing eco-system to come tumbling down. 

There is also another driver in the market that is about to unwind; the disappearance of cheap finance. Cheap finance rates combined with the creative use of PCP finance agreements, brought specialist high performance cars into the ownership aspirations of a different socio-economic group of customers. Just the profile of customer who may now be struggling to make the payments, along with increased mortgage payments and the cost of living. 

Although we are only just entering the period of time when all the financial largesse of the pandemic has to be paid for, in the past this profile of customer has tended to bail out of unaffordable assets very quickly, then distressing the associated asset markets. Specialist high performance cars are no different and we must wait and see how many specialist high performance cars fall into this bracket. 

My read of the market is that it will be a lot. If Autotrader is anything to go by (again though, the LAST place that specialist high performance cars should be advertised, but a useful barometer of the desperate) where there are currently 297 McLaren’s, 201 Bentley Bentayga’s and 135 Lamborghini Urus’s being advertised for sale! This is a very distressed sales and marketing message for the associated manufacturers and the used car markets concerned. 

In reality any private individual or non-automotive specialist businesses looking to sell one of these cars will not be able to do so; unless it is the cheapest available, and by £Thousands. If you do not possess the specialised expertise and experience required in order to operate successfully within the market you are entering, (whether you are an automotive specialist retailer or not) the only advantage you have is the ability to attract purchasers via price. All of which will be trade buyers though; other private buyers/organisations do not tend to purchase “Big Ticket” specialist high performance cars from peoples driveways, as explored in the article below. 

The Last Place You Will Sell Your High Performance Specialist Car?,,,, Look Above!,,,, 

Now I might be wrong; the vendor may get very lucky and sell the car via BCA. It would be interesting to get the story and the full facts, including the actual price and the profile of buyer; trade or private individual. Personally I doubt it and in any evet, this information will not be forthcoming, it is not in BCA’s interest to shine the “Light of Truth” on this matter. 

So where does all this leave those looking to sell a specialist high performance car? Well, in a very challenging market and trading landscape, that’s where. High levels of used car stock in specialist high performance markets, is normally the first sign that consumer confidence is evaporating, which in turn slows the rate of sales, leading to liquidity issues. 

When you enter a market with little stock investment liquidity and low consumer confidence, (as we are now), only the finest most unique examples tend to find competition for purchase, thus sensible offers. For the rest the onus is on you to convince those with cash to spend that yours is the car they should be buying, which is possible, but you only have one thing to offer; a car at a price! 

In market conditions like this (just those I predicted were coming, in my articles below in March and April) prices don’t correct by small margins, they correct by 10 – 20% from their previous high; and that is for the best stock, many will struggle to find offers at all. For many reading this article, those not needing to sell their car, they can afford to gamble and look to return to the market when it has stabilised at it’s new level; probably in 18 - 24 months’ time. 

Wave Goodbye To Top Prices For Specialist High Performance Cars!,,,,, 

So You’ve Got A Porsche To Sell?,,,, Get Over Yourself!,,,,, 

For those needing to sell the picture is very different and my advice is to get ahead of both the depreciation curve and market sentiment whilst (and if) you still can. This will not be palatable and/or enjoyable but if you need the money, take it now; the first offer will always be the best offer and with the market evolving as it is, procrastination will cost you £Thousands. 

So with specialist high performance used car markets evolving at a pace, over supply leading to supply imbalances and 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 go on to 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.

How To Build Your Used Car Stock Acquisition Business!,,,,, 

After last week’s article, The Used Car Business Laws Of Attraction I have received lots of enquiries regarding the advice I would give used car businesses, those with whom I will be offering consultancy but not used car stock acquisition strategic alliances and/or commercial arrangements. 

Now, and as explored in the article above, this is difficult (in generic terms) as used car businesses operate in differing markets; so firstly some qualification as to the profile of used car business this article is being aimed at? Any used car business operating with an average net margin of up to £1,500 per unit. 

Now this is an important distinction because (and although there are some caveats) as explored in the article above, this will in all likelihood dictate the long term profit opportunity of your business (on a per unit basis – not in the whole), therefore the professionals you will be able to attract to your business. Whether that be as an employee or under the terms of a commercial strategic alliance. 

In reality, this is the majority of used car businesses attached to franchised dealer operations and independent used car specialists. Businesses that are going to struggle to attract the most capable and successful used car stock acquisition professionals, purely because they are not making the margin to afford these professionals. That said, there is still a job to be done, if these used car businesses are going to be able to thrive in the trading conditions to come, and take advantage of the once in a generation opportunity that exists. 

So (in practice) I can’t outline an entire bespoke blueprint for building an individual used car stock acquisition business in one article, but what I can do is outline below my general advice, to all those interested in the development journey that must be undertaken. 

So let’s begin by looking (in brevity – I have written in depth about this before) at the challenge, because it is an almighty one. 2023 will be the first year of used car vehicle parks of in excess of 680,000 less used cars; but also one with the same level of competition for these stock holdings. 

The inconvenient truth is that the numbers just don’t add up any more; there are just too many businesses relying on these depleted used car stock holdings for their trading survival. And with further years of depleted used car vehicle parks to come, you can tweak your sales and operational procedures, and go back to basics, as much as you like; if you can’t secure used car stock in the volumes required (and at the prices required to remain profitable) then it is all going to be for nothing. 

I will not use this article to rehash these discussion points; those interested can follow the links to the articles below on my Used Car Business Development Blog, where they were explored in greater detail. 

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

Not Listening Will Ensure That Franchise Dealers Fail!,,,,, 

However, at inception I think we should explore and discuss the fact that all used car businesses have two choices moving forward, once they have grasped the magnitude of the challenge that is in front of them. They can either choose to continue to do what they have always done or they can choose change; a change that will require that they learn to observe the masses and do the opposite. 

So what does doing the same look like? Well this is determined by what your business is currently doing; the majority of whom (in terms of franchise dealer based used car operations) are retailers of part exchanges and ex demonstration vehicles, not used car cars. And I say “Not” used cars, because I have not visited many franchised dealers with a successful used car stock acquisition business and/or professional already in place. Well, not one that will be fit for purpose in the looming used car stock acquisitions landscape. 

At best they employ a buyer who will (in all likelihood) have received no training in successful acquisition techniques and initiatives (the automotive sector has never developed these skills), so when they are purchasing used car stock, the vast majority will be from the same old “Watering Holes.” The Parent Manufacturer, Auctions, Remarketing Companies, etc. In other words, the most expensive used car stock it is possible to purchase! 

So the majority of used car businesses aligned with franchise dealers are stuck in a dystopian trading nightmare of their own making; one of purchasing the most expensive used car stock imaginable (on any given day) and then (again in all likelihood) entering the national “Race To The Bottom” for used car prices, national used car market place; that run by Autotrader. 

Now I am the first to agree that this is (of course) an individual business choice and that it can be many things, but I would also countenance that profitable, will not be one of them! To those indignant at this statement, please follow the link to the article below where this matter is explored in more detail. 

Used Car Stock Acquisition 101!,,,,, Successful Used Car Stock Acquisition Professionals Are Not Buying Used Car Stock From Auctions! 

But to those who have come to realise that this will not be the path to a successful used car retailing future, I would countenance that there is much to be done, minds need to be open, because whilst businesses have morphed into a certain trading structure, that structure and the professionals involved, may no longer be fit for purpose. I would also reassure those listening that there is a tremendous opportunity available but caution that statement with the famous quote by Anne Landers; 

“Opportunities Are Usually Disguised As Hard Work, So Most People Don’t Recognise Them!”

So where to start? 

Firstly, you must be comfortable with change, with de-coupling from the ineffective procedures of the past. Learn to; 

Observe The Masses And Do The Opposite! 

You must understand the environment you are operating within and be comfortable with what that will entail. Make a decision to succeed but understand what that will mean in practice; targeting the customers of your fellow franchise holders. 

But first, look within the four walls of your current business and learn how to continually lock both the new and used cars you are retailing, into returning to your used car business. This is important because, as you are looking to disrupt the supply of used car stock holdings of your fellow franchise holders they, in order to survive themselves, will have to do the same to you; so think on that for a moment. 

Learn to adopt the “Rinse and Repeat” mind-set of continually making ongoing profit opportunities from used car stock. Never see any acquisition and sale as a “One Off” opportunity for profit; retail and/or trade. 

You are going to have to build your own used car stock acquisition business which is also a highly efficient data collation and marketing business. And I say “Business” because this is exactly what it will need to be; a full time business that ensures your business can secure used car stock holdings in the volumes required (and at the prices required) to remain profitable, and on a continual basis. 

People will not engage with and/or contact your business if they don’t know that it purchases cars! So just like any other business, first and foremost, this will have to be a highly efficient and successful marketing business. Never lose sight of this fact; your target customers need to know the problems you solve and the services you offer. Having a “Sell Your Car” page on your website (a website they will never find BTW) is a million miles away from what will be required, and you will need the expertise required to take this continual messaging campaign out to target audiences. 

To succeed you will need the expertise to find your target audience on a geographical, professional and socio-economical basis, (the customers of your fellow franchise holders), and then build highly targeted customer databases of commercial value; those that include the personal contact details for these target customers. From here your marketing and messaging campaigns will need to be delivered on their platforms of engagement, in order to build audiences and trust in your business. 

Contrary to popular belief, this does not require a big marketing budget, in fact it can be constructed and delivered for free, but only on the basis that you have invested in the professional required; the one who possesses the expertise to construct and deliver these campaigns. 

Do not design your marketing and messaging campaigns to go “Toe to Toe” with the digital offerings. If you make it all about price, it can only be about price. You will have to change the acquisitions narrative and take it away from the digital purchasers; We Buy Any Car, Motorway etc. 

Always remember that a successful used car stock acquisition business/professional is a people business/professional (not a car business/professional) aligned with a highly efficient data collation and marketing business. To succeed in successful execution you will need the professional(s) who can operate within the associated socio-economic circles of your target audiences, and then provide the solutions required. 

Invariably, successful used car stock acquisition is never about price, so the “Raison D’etre” of your used car stock acquisitions business must be to pay the lowest prices possible for used car stock. However, in order to operate in these circles, deliver on the objectives and enjoy the financial rewards, you will need to successfully execute on all of the above. 

Thereafter, your used car stock acquisitions business must never NOT be buying, so an understanding of the utilisation of funds employed to used car stock holdings argument, along with the use of creative acquisitions and trading solutions, is an imperative. 

So in finishing, you are going to need the professional(s) who know(s) how to build the team and business outlined above, the team and business required in order to secure access to used car stock holdings and therefore control access to used car markets.  

Oh and to be successful, you will also need the used car retailing operation to support these endeavours and the associated increases in used car stock volumes. So yes; there is much to do! 

One last important point; forget the notion that your business will be sending all part exchanges and overage used car stock to auctions. They are one of the businesses in competition for the reduced used car vehicle parks, so do not support these businesses for free. Learn to use this stock holding to build strategic alliances with other used car businesses; those that will then also be a source of supply for your used car business. 

So there you have it; the successful used car stock acquisition business blue print from 2023 and beyond. In truth, if you are reading this and wanting to change, sadly you are already behind the curve, in terms of timing and getting the process of change to successful used car stock acquisition underway during 2023. 

The business above will require many skills, skills that will no doubt, not already be residing in your business. So your first decision is to invest in the professionals required to build this business for you. 

Now, and in finishing, I appreciate that for 95% of those reading this, the used car stock acquisition business and the initiatives outlined above will be bewildering and fanciful; I experience this a lot, and sadly I can’t (so don’t) work with hostages. 

However, for the remaining 5%, those identifying that something needs to change in their used car retailing operation and those curious about how the used car stock acquisition business outlined above can be built and success achieved? Those who are ambitious, capable of opening their minds and taking their strategic used car business development thinking on the journey required, I would say this. 

In terms of consultancy services, at the moment I am working with two businesses, consulting in the building and delivery of 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 consultancy, expertise and initiatives required, for that business to survive and prosper in the used car markets of 2023 and beyond. 

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.