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.
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.
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.
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