Who’s Really Affecting The Values Of Specialist High Performance Cars?,,,,,, 

The specialist high performance used car market is already seeing prices come under pressure and I predict that from 2023 onwards this market in the UK (both new and used cars) will see prices come under pressure like never before; and for reasons many will not appreciate. 

In truth there are many negative “Drivers” battering the market at the moment, but the most important factor, in terms of successful and profitable retailing and therefore the protection of residual values, (thus the customer’s monetary investment), is the levels of experience and expertise residing within the manufacturer themselves and their franchise dealer network. This more than anything else, will dictate levels of retailing success and the cost of ownership for customers trusting these businesses with their money. 

Sadly though the trading evidence suggest that not many manufacturers and franchised dealer networks operating within (and retailing products in) the specialist high performance market, have got the professionals required to do so successfully, thus protecting residual values and therefore the investments being made by customers. 

One of the worst (and baffling in equal measure) examples is the current trading narrative surrounding the BMW M5 in the UK, and what that then means for a customer(s) looking to dispose of one today, a business trying to retail them, or a customer looking to purchase one; who (by the way) are the only winners in the current trading landscape, providing they have access to the market knowledge required. And this negative trading narrative for the BMW M5 is not new; I have already explored the trading environment for this car before, in the article below which I wrote in June for my Used Car Business Development Blog; 

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

But first some history regarding this remarkable car, and one that is being undermined by both BMW (GB) Ltd themselves and their franchise dealer network in the UK. First launched in 1985 the M5 was a ground breaking car; the world at this time had never seen a car like it, is was a genuine game changer and I can remember selling the first two incarnations whilst working within the BMW network, and then selling all of them through my stock acquisitions business. 

In truth, and opinions will no doubt be divided, I still think the BMW M5 is the best car in its class, so for me, seeing the ownership proposition undermined by the BMW network itself, is puzzling albeit not surprising; why? Well because this is what happens when you don’t invest (both as the manufacturer and as a franchised dealer) in the professionals required to sell and then reacquire to sell again, a specialist high performance car like the BMW M5. 

So let’s explore this and look at the current trading and pricing narrative surrounding the M5 in the UK; to do so, let’s imagine that you had contacted me to sell your under 12 month old example. During our subsequent discussion and the process of valuation, (before then making a formal offer) I would begin by exploring the market trading reality, when it comes to availability, because this determines desire within purchasing audiences (both end users and the trade) so therefore prices. 

Now in the UK we are lucky (or unlucky depending on your point of view) to have easy access to the market trading reality, combined with a snapshot of real time and actual trading performance, including pricing. So for the benefit of this article I can declare that the screenshots being used were taken on or around the 22nd November. 

When looking at values of new and nearly new cars (those up to 12 months old) the manufacturer and the expertise contained within the franchised dealer network, always sets prices. Their trading behaviour (which is dictated by their level of expertise in both the associated new and used car markets) creates a trading narrative that then dictates the actual new car price, which is where we must begin. And unfortunately for BMW (or any manufacturer for that matter) the trading narrative surrounding any product is only as stable and/or strong as the weakest link in their retailing network. 

The screen shot below (taken from Autotrader – what new M5’s are doing, being advertised at a discount on a platform like this, is article on its own) clearly proves that the starting point for the pricing of a new M5 is £93,797:00; the car shown was the cheapest of the 9 new BMW M5’s being advertised on Autotrader that day. 

Now this is very bad news for anyone believing the (understandable) hype surrounding the car and who paid the list price of approximately (depending on the specification) £111,365:00. The dealer below has just cost you (at least) an additional £17,568:00 in immediate short term depreciation. 

Unfortunately this situation then makes a mockery of the BMW franchised dealers trying to support the product in the used car market. A search on the BMW Approved Used Car Locator on the same day lists under 6 month old versions being advertised for as little as £94,995:00, please see the screenshot below. 

Now the car at the bottom of the screenshot (a 5 month old used car) above is actually being advertised for £1,198:00 more than the advertised price for a new car, by another BMW franchised dealer on Autotrader; and that’s before you start negotiating. I say start negotiating, because when presented with a distressed selling picture surrounding a product (one as bad as this), the asking price is the last price you should be paying. 

In truth, those skilled in acquisition should be purchasing a new M5 for no more than £90,000:00; at least £21,365:00 behind list price. So what does this mean for the values and likely retail prices of the used 5 month old examples in the screenshot above? Well ask yourself a question. 

If a new M5 can be bought for £90,000:00 (and it can on this evidence) how much of a discount on this price would the 5 month old example require, in order to make it price competitive; in relation to a new car? Well one things for sure, it can’t be more expensive than the actual price of a new car, in that moment, and if new cars are available in volume. 

In my opinion, if the actual purchase price (at the moment and in this market) for a new M5 is £90,000:00. From here the knock-on effect for the values and sales prices for the 5 – 12 month old examples is likely to be very difficult for those having them in stock, or trying to dispose of them, to stomach. 

Personally, if I was a franchised dealer with an example in stock, I would not be advertising the car anywhere (more on this strategy in articles to come), because it is only adding to the problems in the UK market for M5’s. 

I would though be aggressively offering the car within the right (socioeconomic circles) and selected target audiences, expecting to get no more than £80,000:00 but willing to take £77,500:00, depending on the market knowledge of the customer eventually buying the car. Something that looks realistic, if a little “Ballsy,” especially when you see the further screenshot taken from the BMW Approved Used Car Locator below, showing 1 year old M5’s being advertised for as little as £69,998:00. 

So where does all this leave the customer with a 6 – 12 month old version to sell, because they need to reduce their financial exposure; a common event in markets being driven by the economic trade winds battering markets at the moment? Well in a hole, that’s where. 

In truth (when it comes to valuations) the M5 market is an interesting one, because in many ways the distressed sales message doesn’t make any sense. Unlike other specialist high performance saloons (the Porsche Taycan for example, where there were over 200 for sale on the Porsche Approved Used Car Locator – far too many for the likely demand in this new and in many ways overhyped market) there are only 28 up to 1 year old M5’s available for sale on the BMW Approved Used Car Locator. So the irony is that the car is actually in short supply; so why the distressed selling message? 

Anyway let’s put all this into context, in terms of the used car market for BMW M5’s and the disposal values owners of one year old M5’s are likely to receive? Well for a car similar to the one above, it will be £60,000:00, which equates to a depreciation rate in first 12 months (if you were naive enough to pay list price – but sadly many will have) of approximately £51,365:00 or 46%. 

This is an astonishing rate of depreciation for a specialist high performance car, especially one that appears to not be available in any great volume; new cars aside. In my opinion both the manufacturer and the BMW franchised dealer network should be ashamed of themselves. Be in no doubt trading narratives like this only happen when those lacking the expertise and experience required, to start retailing and handling specialist high performance products, become responsible for the retailing strategy. Quite frankly I am astounded. 

Most disappointing of all is that this trading narrative is so easily changed and turned into a positive, both for owners, retailers and residual values, providing that is, that the used car retailing, acquisitions and business development experience and expertise required, is in the business. Sadly for those owning specialist high performance cars like the M5 (those losing the astronomical sums involved) this expertise is looking to be in short supply at both BMW (the manufacturer) and within the BMW franchised dealer network; and just at the time when it is going to be most needed. 

In truth though, this problem is not BMW’s alone, the entire specialist high performance used car market looks over supplied to the point of overheating. With stock everywhere and a noticeable lack of relevant and essential expertise, private sellers and retailers of specialist high performance used cars are about to experience “Actual” prices coming under further duress. 

Despite enjoying growth upon growth over the last decade, the specialist high performance market looks massively over provided for at the moment; we have an abundance of £100K plus SUVs, saloons and sports cars, the volume of which will make the retailing challenges substantial for sellers; as the market struggles to find enough customers. 

That said, for those looking to enter this market and with access to right expertise, these cars will never have been so cheap. As much as all commodities markets can be bruising for sellers, all markets create winners and losers, and the specialist high performance used car market is no different. In the markets conditions to come, the winners will be savvy and well informed buyers, those with access to the expertise required to ensure that they are entering the market at prices previously only dreamt about. 

Take the year old M5 in the screenshot above; now this represents tremendous value in isolation, even so I would wager (on the evidence I have seen – in terms of used car retailing expertise) that I or another experienced acquisitions professional, could acquire the car for £65,000:00. Now for the next owner, this is a year old, 625 BHP, 0-60 MPH in 3.3 seconds, class leading, supercar performance saloon for £65,000:00. Quite a bargain. 

In truth it should be retailing for much more but regardless of this, with the pricing duress looming in specialist high performance used car markets, one person’s pain is another person’s gain. 

So where does the current trading narrative and the lack of expertise within the sector leave those looking to sell or purchase a specialist high performance car. Well for those needing to dispose of cars it will be a challenge; why? 

Well 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 examples; many will struggle to find any offers at all. For some owners 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 immediately though, the picture is very different; 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 probably cost you £Thousands. 

So with specialist high performance used car markets evolving at a pace, over supply leading to supply imbalances and a likely lack of purchasing liquidity within used car businesses, 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. 

For those looking to purchase though, the situation is far more beneficial, albeit just as challenging. Purchasing in market conditions such as those we are experiencing now, can be very lucrative and the right time to enter the market. Providing you have access to the expertise required to take advantage and ensure that (unlike the majority) you are not over paying in the current market. 

Offering unrivalled access to the market, I work with selected customers securing the best examples of specialist high performance cars and at the right prices, via a network and level of expertise that has been built over 25 years. 

Should you be interested in either disposing of, or purchasing a specialist high performance car, then please feel free to reach out to me directly on LinkedIn, via email at andrewb@andrewbanningsalessolutions.co.uk or on 07500 321539; so we can schedule a consultation call. 

Andrew.

The Porsche Taycan Debacle!,,,, Part 2!,,,,, 

A lot of feedback and comments following last week’s article for my Used Car Business Development Blog. 

A lot of which has involved further discussing how the situation explored in the article occurred and what the solution is now, in terms of Porsche avoiding what now looks inevitable, and what looks now impossible to achieve in the short term; Porsche trading themselves back in to a positive (pricing and availability) situation for the Taycan. Something I have no doubt will prove to be far from easy. 

Now, I don’t want to use this article to go over the content of the last article, those interested and who haven’t see the article above, please follow the link which will take you directly to the article on my Used Car Business Development Blog. 

So how did Porsche get to here; a situation where their (relatively) brand new model (the Taycan) is available in used car markets in such volumes and appearing on the social media feeds for BCA auctions; and in volume. The last place by the way, that specialist high performance used car stock should be appearing, in terms of product image, the trading narrative, increasing desirability and protecting residual values. 

In truth it will not be down to one mistake and/or trading issue, but many, all of which now appear to be causing the “Perfect Storm” to form over the market for Porsche’s new electric sports car; and no doubt, about to send prices (therefore the residual values enjoyed by customers) spiralling downwards. 

And this is a useful example to explore; despite my criticism I have no “Beef” with Porsche, I could easily write this article about a plethora of other manufacturers, all of whom have similar problems with their premium products at the moment, (and will in the coming months as used car markets and pricing begin to unravel). I was highlighting the trading reality surrounding the Taycan for no other reason other than the image came up in my social media feeds, as the car concerned was being (very unhelpfully) “Prostituted” by BCA. 

So why are we now seeing specialist high performance used car stock like the Porsche Taycan appearing at BCA, listed for sale in great volumes on Autotrader (another one of the last places you should be listing specialist high performance used car stock – but that’s another article) and in such volume on the manufacturers approved used car website? All of which is damaging the trading perception and the residual values of the associated product. 

Well in truth there will be many reasons, some of which are explored (in brevity) below; 

The New Car Market 

I’m not sure how much of the electric/alternative propulsion market is being driven by manufacturers or by genuine demand from consumers, and herein lies a major problem for all manufacturers; all of whom by the way, spend very little time (if any) with their target audiences. But I have a suspicion that this is the dream of the manufacturers, not consumers, (especially in the markets Porsche are operating within), which is dangerous because it leaves manufacturers at odds with the purchasing and ownership desires of their customers. A very dangerous trading situation that never ends well; for the manufacturer that is. 

Like many of my peers in professional acquisitions circles, I spend a lot of time with my ear to ground, listening to consumers in specialist high performance markets and talking with my fellow professionals, and I have never spoken to anyone declaring that they can’t wait to own an all-electric performance car. No doubt there are some, but not many, and herein lies a problem; oversupply in the associated market. 

The reality is that Tesla were first adopters in this market and in my opinion, too many manufacturers have been distracted by all “The Noise” surrounding the market and misreading the potential, in terms of potential sales volumes. For the few consumers aching to buy an all-electric specialist high performance car, there is now a lot of choice with competition from Audi and Tesla, to name just a few. 

My gut feeling (we must wait and see if I am right) is that this sector of new car market is already over-supplied, in terms of product, and this will inevitably lead to heavy discounting, when far too many cars are chasing too few customers. 

The Used Car Market 

The associated used car market for the product is still very much at an embryonic stage, and just when the product needs careful nurturing and a narrative of exclusivity and limited supply to be forming, the opposite is actually happening. In reality, I suspect that finding funds within the trade for a Porsche Taycan could be verging on impossible at the moment. 

In the last article (link above) I advised of the 453 used Porsche Taycans being advertised for sale on the Porsche Approved Used Car Website and on Autotrader alone; in my opinion this is far more than the market can handle. 

And this will lead to a confusing picture for consumers; there might be new car delays and extended lead times, but this will be due to component and raw material shortages, not excessive demand and sales success. This will be confusing for consumers because on one hand they may have to wait for a new car, but they are spoilt for immediately available choice, when it comes to the used car market. Even Porsche had 186 used examples on their used car locator last week, a figure that had risen (from 186 previously) to 193 by the day I wrote this article; far too many for the likely demand. 

And these are not cheap cars; let’s assume that with only 49 of the cars on the Porsche website being advertised for sale at £100,000 or less, that the average SIV for the UK stock holding of Porsche Taycans, is £110,000. That means that currently the Porsche network in the UK has £21,230,000 invested in Taycans, with that figure likely to rise, bearing in mind the stock level is increasing, not decreasing; which tends to be the case when expensive and highly specialised products are being handled by networks lacking in the expertise and experience required. 

When sales slow, stock holdings increase and unfortunately, eventually everyone trading in commodities markets (even the Porsche network) runs out of money; causing real problems for trading liquidity to materialise. From here businesses stop buying (therefore stop supporting their own product) and from there owners and professionals looking to sell a Taycan, will find it increasingly difficult to impossible, to dispose of their vehicle. 

When this trading environment takes hold and you are a business (Porsche franchise or independent specialist) still purchasing Taycans for stock, so therefore about to own the 194th example currently available for sale (in the case of the Porsche franchised dealer network), you will no doubt only be purchasing because it is the cheapest example available. This situation only has to occur twice for (real time) prices to begin to go down substantially. 

Economic Headwinds and Finance 

Like many other countries, the UK has some challenges, when it comes to specialist high performance markets and the prevailing economic environment, that then drives demand; firstly, the market dynamic during the pandemic. During the pandemic central bankers and governments decided it was good a good idea to pump free money in to markets; markets where there weren’t enough products for that money to then purchase. 

This drove up prices and caused asset price inflation; including in the Automotive Sector. This, along with easy to access cheap finance, created a once in a lifetime market where “Professional Selling” was no longer required, but now the party is over. Cheap finance and the uptake of PCP as a purchase mechanism drove Automotive markets and this in turn brought ownership of specialist high performance cars into the aspirations of a different customer, in terms of their socio-economic profile. 

Just though (unfortunately) the profile of customer now being hit by the cost of rising finance costs, along with their cost of living (mortgages etc.), and therefore likely to be looking to unwind financial exposure to the assets concerned. The evidence is already there, that this is affecting the specialist high performance car market (along with other commodities markets), with high (and increasing) levels of supply. 

With sales also slowing, both liquidity and the appetite to invest in this profile of used car stock will be running out within trade markets. Meaning that those needing to dispose of assets in a hurry will find it increasingly difficult to find the funds, and almost impossible to meet the settlement figure required for terminating their PCP agreement in advance of the full term. 

These sellers, when faced with this market dynamic and needing to sell, can then only do so by driving prices down to the level required to gain investment interest. I have worked in these markets before and as much as they are very lucrative for those skilled in acquisition, they can be brutal for those who aren’t. And that’s all sellers; both those customers owning but needing to dispose of assets, and the associated franchise dealer networks. 

Lack of Used Car Retailing Expertise 

This may sound overly harsh, and I have no direct insight into the Porsche retailing network, but the current trading picture invariably only materialises when there is a lack of used car retailing, acquisitions and business development expertise within the associated network, and within the parent manufacturer. 

This comes as no surprise to me, manufacturers and franchise dealer networks have failed to develop used car professionals (and sales professionals for that matter) for over a decade; choosing instead to over rely on technology and polo shirt wearing “Product Geniuses” to handle incoming sales enquiries and drive sales. This lack of foresight and investment in personnel, is about to come back and haunt the sector as a whole; including the Porsche network. 

Every used car network/business I have worked with bar none, has set its sales operation up to be “Liked” rather than “Trusted” with subservient staff (not successful sales professionals) waiting to handle incoming sales enquiries. This may have been fine for the markets leading up to now, but now? Not a chance! 

If there had been a genuinely successful and grown up used car professional within the Porsche network, this situation would never have occurred, because they have would have foreseen the dangers of the trading conditions and handled the current situation very differently. It is not my job to give Porsche all the answers for free, but if I was responsible for used car retailing the within the Porsche network, the last thing that I would allow to happen is for 193 to Taycan’s be available for sale on the Approved Used Car Locator on their website. Even if that is the case! If you want to create desire within premium product target audiences, you must first understand your market and the profile customer you are trying to attract. 

If you want to create desire to own, you have to create the narrative and perception of exclusivity. The profile of customer in specialist high performance markets is an ABC1 demographically grouped professional; a professional where both their perception of availability and the actual trading narrative is important. 

A Google search advises that there are 45 Porsche franchise dealers in the UK, which means that on average they have between 4 and 5 used Taycan’s in stock each. This is not a picture of product in short supply, therefore in great demand. So I would immediately ban all Porsche dealerships from having more than 1 used Taycan listed on the Approved Used Car Locator, regardless of how many are in stock. 

The amount of used car professionals who can’t understand why this should be the case and requiring further explanation on the benefits this policy would immediately bring, to levels of sales and profitability, would tell me immediately about the lack of used car expertise in the associated network! 

Invariably, the situation we are exploring happens when a manufacturer F#cks Up, misreads a market (in terms of volume potential) and creates a problem of its own making. When it also coincides with a period of market evolution and challenging trading conditions, frank and to the point conversations are required, with professionals possessing the expertise and experience required, if the situation is to be handled to everyone’s benefit. 

That fact that this article is being written, (exploring all of the above), tells me that there is not the used car market expertise required within Porsche, or their franchise dealer network. All Auction Disposal Policies One thing not grasped by 95% of the Automotive sector, is the role that “All Auction” disposal policies are playing in the downfall of their own business. I will not expand upon this here, those wishing to challenge their thinking on this issue, can follow the links below to some of the articles exploring this argument on my Used Car Business Development Blog. 

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) 

But rest assured, if the Porsche network did not adhere to policies like this and more importantly, it had used car stock acquisitions expertise and professionals within their network, the used car retailing world (including customers) would not be seeing Porsche Taycan’s being undermined as product, by appearing in the social media feeds of auction companies. 

I will say no more, other than until the sector grasps the folly of listening to the childish arguments for a little trade profit, and therefore continuing to build the business of others, (the auction companies) rather than investing in their own business, then the current trading “Status Quo” will remain. 

The Taycan Itself 

Dare I say it, the car may just not be that good, enjoyable or practical to own! There are stories abound of reliability problems (I cannot quote my sources directly) some of them very serious. This will not be a “Good Look” with the profile of customer purchasing this car. 

Conclusion 

In truth, and this in important for customers and those businesses operating within specialist high performance markets, the situation explored in this (and the last article) leaves everyone involved now operating in a very challenging market and trading landscape. 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 have market conditions involving little stock investment liquidity and low consumer confidence, (as we have now), only the finest most unique (in terms of specification) examples tend to find competition to be purchased, thus sensible offers. For the remainder of those needing to dispose of a specialist high performance car, 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 examples, many will struggle to find offers at all. For some 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 though the picture is very different; 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 probably cost you £Thousands. 

So with specialist high performance used car markets evolving at a pace, over supply leading to supply imbalances and a likely lack of liquidity, 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. 

For those looking to purchase though, the situation is far more beneficial, albeit just as challenging. Purchasing in market conditions such as those we are experiencing now, can be very lucrative and the right time to enter the market. Providing you have access to the expertise required to take advantage and ensure that unlike the majority, you are not over paying in the current market. 

Offering unrivalled access to the market, I work with selected customers securing the best examples of specialist high performance cars and at the right prices, via a network and level of expertise that has been built over 30 years. 

Should you be interested in either disposing of, or purchasing a specialist high performance car, then 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.