Used Car Stock Acquisition 101!,,, Understanding The Psychology Of The Purchase! 

This is the 2nd article in the planned series exploring used car stock acquisition best practice and principles (all to be published over the coming weeks), albeit only for the businesses outlined in the original article below. 

Used Car Stock Acquisition 101!,, But Only For A Few!,,, 

And understanding the businesses listed in the previous article and therefore the target audience for this article, is important because as used car markets continue to fragment and evolve into individual and highly specialised markets, so does the acquisitions sector, which is splitting into two very different and distinct models. One relying totally on technology in the acquisition process and one the acquisitions professionals required. 

That is not to say that the acquisitions processes have not evolved in both markets because they have, just that they have evolved in completely different directions. One becoming more reliant on technology and the associated third party businesses that have positioned themselves at the forefront of the associated acquisitions landscape; the other becoming more dependent on the proven acquisitions professionals required. 

So unfortunately, as much as it might be an interesting read, for those operating outside of premium specialist and high performance markets (those businesses outlined in the article above), the content will not be that relevant. 

But for those operating within these specialist markets (just like any other used car business) used car stock acquisition has become the priority used car business development focus. However there’s a problem, those responsible for making the decisions don’t know what’s involved, so what skills and experience to look for. So where to start? 

Well, to help those beginning to look at this very important specialism, let’s start with an overarching list of things to be considered and understood, when it comes to securing profitable used car stock holdings in these markets; before then going on to explore the psychology of the purchase in greater detail. The rest will be explored in the articles to come. 

So if I had to sum up some of the most important considerations, what would they be? Well, in brevity, please see below. 

• Do not let the relationship with the customer become unhealthy; too many are building the wrong relationship with customers looking to sell their car! 

• Too many enter the process of acquisition with the end objective of being “Liked” rather than what they should aspire to being; “Trusted!” Learn to build “Peer to Peer” relationships with those looking to sell their cars, not the overly subservient relationships involved in too many sales organisations. 

• A genuinely successful used car stock acquisitions professional understands that they are a solutions provider, offering disposal solutions that are not always about an immediate purchase price. 

• Successful used car stock acquisition campaigns in these markets are “Excellence in Execution” based, where technology is leveraged by the acquisitions professionals capable of operating within these markets, in order to generate volume of opportunity. 

• As much as the relationship with the customer is different, when it comes to acquisition, it operates at a higher professional level than during the sales process. Ergo an acquisitions professional is a completely different individual to the sales professional! 

• The successful used car stock acquisitions professional doesn’t look to acquire stock from the trade; there are no margins to made here! They will though sell stock they don’t want to retail, to the trade; those less capable than themselves! 

 • The successful used car acquisitions professional will work in harmony with the used car sales operation and be aware of the retail prices being achieved by the very best sale professionals. 

• However, there are new skills required by those possessing the core skills of acquisition (in terms of expertise in other specialisms), if they are going to secure the stock holdings required. 

• The successful used car stock acquisitions professional understands that the psychology involved in the purchasing process is totally at odds with that involved with the sales process. 

• The successful used car stock acquisition professional knows how to build the business and team they require; the highly effective data collation and marketing business that will ensure that they can generate acquisitions opportunities not enjoyed by their competitors. 

• They understand the importance of “Rinse and Repeat” strategies; those of ensuring multiple profits (over time) from a single car. 

• They appreciate that successful used car stock acquisition initiatives begin with ensuring that all the cars supplied by the business, return to the business. 

• The successful used car stock acquisitions professional understands that you lock in profit margins during an effective and professional acquisitions process; one where you never have to pay “Market Value” for used car stock! 

Now in discussing the principles contained within the heading for the article, 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. 

Consumers and “The Market” tend to set the retail price for all commodities, selling (although very 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 (in terms of profitability), but in reality very few have this this expertise and/or the social skills required. 

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. 

Successful used car stock acquisition requires a multitude of skills and personality traits, but at the foundation of everything must be the absolute determination to pay as little for used car 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. 

At the foundations of any success will be the expertise required to create the opportunities funnel, therefore ensuring that 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, scrolling through the Motorway App, relying on the trade for supply or outbidding We Buy Any Car for used car stock; in other words, what everyone else is doing. In fact, in reality successful used car stock acquisition in premium specialist high performance markets is now going to best defined by; 

 

Observing The Masses And Doing The Opposite. 

However, understanding how to leverage the psychology of the purchasing process 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. 

In reality you are a solutions provider operating in the associated higher echelons of society, so do not (as many seem to do) see yourself as an estate agent; whose job it is to get the maximum value for their client’s asset, because (and as much as you may create a perception otherwise), the reverse is true. You are the complete opposite to this; you are investing money in 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 continual basis. 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. 

So in the used car markets to come, those with used car vehicle parcs of 680,000 less vehicles per annum, (in terms of available stock), my question to everyone 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 then it is all going to be for nothing. 

Having built my first stock acquisitions business over 20 years ago, I have observed how the used car stock acquisition landscape has evolved during the last 12 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 all those relying on the initiatives and skills of the past will be left floundering. 

For these businesses, those reactionary businesses purchasing stock on a hand to mouth basis and in the moment, (what I call the “Just In Time” market), it will be a challenge to acquire used car stock at the prices (and in the volumes required) that ensure your business remains profitable. 

But there will be others, albeit very few, those who (like me) are continuously rewriting programmes of used car stock acquisition from the ground floor up, in order 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 expertise and initiatives 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. 

With this in mind it is my intention to work with 1 - 2 businesses, in order to deliver the used car stock acquisition expertise and initiatives required, for the businesses concerned to survive and prosper in the trading conditions 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.

Used Car Stock Acquisition 101!,, But Only For A Few!,,, 

As used car markets continue to evolve and fragment into highly specialised individual used car markets there, appears to be an ideological battle underway, in terms of how the future of retailing looks in used car markets. This in turn is creating much discussion, when it comes to stock acquisition, especially when the used car vehicle parc is down over 2 Million vehicles over the past 3 years. 

As much is there is still much to play out, personally I think any particular used car stock acquisitions model required, will be determined more by the used car market within which you are trading, than any decisions made by a particular business. For many there will now be no choice, because the sector has become over reliant on third parties to carryout essential operational disciplines within the business; especially when it comes to used car stock acquisition. 

This will inevitably lead to falling margins for the vast majority and therefore limit the calibre of professionals any business will be able to attract to working with them. So who has the advantage when it comes to used car stock acquisition and attracting the professionals required, providing they can open their minds to the thinking and decisions required? 

Well in truth very few, but if I had to summarise those capable of winning the battle for used car stock and the professionals required to secure profitable used car stock holdings on an ongoing basis, the businesses concerned would be as follows; 

1. You will be a franchised dealer, not an independent retailer or stock acquisitions business.

2. Your business and the parent manufacturer you represent will be associated with premium, specialist and high performance marques; the likes of Ferrari, Lamborghini, Maserati, Rolls Royce, Bentley, Porsche, Aston Martin etc. 

3. However, some other manufacturers, those trading in multiple used car markets, could also attract the used car stock acquisition professionals required, if they appreciate the importance of the differing approaches required, in both acquisitions and retailing. This includes manufacturers like BMW, Audi, Mercedes Benz and JLR. 

4. That’s it! The rest of you will have to think differently, in terms of how you scale your used car stock acquisition initiatives. 

I say this because if you are not a business in the categories above, you will have a different used car stock acquisitions landscape to navigate and business to build; not (alas) one to be explored in my future articles. The reality is that the socio-demographic of your likely customer base and what that then means, in terms of their thinking and behaviour, will dictate your Modus Operandi and therefore the used car stock professionals attracted to working with you. 

So a short article today (one for businesses fitting the profile above) and one reflecting on the discussions I have had recently, those linked to the disciplines, advice and “One Liners” explored during my discussions with franchised dealers and used car businesses outlined above. The discussions surrounding how the role of successful used car stock acquisition has evolved beyond all recognition, my used car stock acquisition programmes, synergies and the potential to work together. 

Invariably during these discussions exploring how the used car stock acquisition profession and landscape has evolved (leaving franchised dealers without the skills and experience now required to secure the most profitable used car stock holdings – and in volume) many gems of strategic used car stock acquisition and business development advice get mentioned and discussed; all of which will be explored in the coming weeks. 

However, before that I thought it prudent to publish a list of some of the Used Car Stock Acquisition 101 statements, disciplines and observations; little gems if you like. I refer to them as the “Humbling List” or the list of disciplines and advice your business must take on board and heed; it includes the following. 

• If you are doing the same thing as everyone else, then stop! 

• If you are doing what everyone else is doing, then it can only be about price! 

• There is no such thing as an unprofitable acquisitions opportunity, just poor acquisitions professionals. 

• If you don’t know why you are good at something, you are not good at it! 

• If you are failing, it will be because of your belief culture! 

• There’s a big difference between wanting things to get better and committing to make things better! 

• The business that controls access to used car stock, controls access to used car customers! 

• Customers do not need to “Like” your business, but they do need to “Trust” it! 

• You lock in profit margins during an effective and professional acquisitions process! 

• Your biggest and initial used car challenge is not selling the right stock, it is acquiring the right stock! 

• The successful used car stock acquisitions professional knows how to ensure that they never pay market value for used car stock! 

• Successful used car stock acquisitions professionals are not buying used car stock from auctions! 

• Used car stock acquisition is a people business, not a car business! 

• Your business must NEVER be not buying! 

• Never not buying is a financial structures and people business, one aligned to a successful used car business! 

• The right professionals will take your used car business further than good tech! 

• The “Just In Time” used car stock acquisition model is an unprofitable and broken model; leave it to others! 

• When it comes to genuine used car stock acquisitions professionals, you have only two options; learn to attract the talent you require to your business, or to develop that talent! 

• Developing the used car stock acquisition talent required is impossible if you don’t know what the process involves! 

• There is no such thing as the used car market; know your used car market, know your customers and how they both operate. 

• Successful used car retailing will involve building a highly efficient and specialised used car stock acquisition business; a completely separate business that is aligned to your current business! 

• You can have the best sales operation imaginable, manned by the highest calibre of sales professionals; if you don’t know how to secure profitable used car stock holdings it will all be for nothing! 

• Stop worrying about the competition; identify and leverage “Your” trading advantages! • Technology has a role to play; just not where you are thinking! 

• Observe the masses and do the opposite! 

So in the used car markets to come, those with used car vehicle parcs of 680,000 less vehicles per annum, (in terms of available stock), my question to everyone 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 then it is all going to be for nothing. 

Having built my first stock acquisitions business over 20 years ago, I have observed how the used car stock acquisition landscape has evolved during the last 12 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 all those relying on the initiatives and skills of the past will be left floundering. 

For these businesses, those reactionary businesses purchasing stock on a hand to mouth basis and in the moment, (what I call 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 will be others, albeit very few, those who (like me) are continuously rewriting programmes of used car stock acquisition from the ground floor up, in order 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 expertise and initiatives 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. 

With this in mind it is my intention to work with 1 - 2 businesses, in order to deliver the used car stock acquisition expertise and initiatives required, for the businesses concerned 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.

Calling All Used Car Stock Acquisition Professionals! 

Let’s talk market opportunity and in doing so canvass opinion within the community! There is no doubt that awareness is finally building within the Automotive Sector (albeit years too late) that acquiring access to profitable used car vehicle parcs will the number one challenge facing all businesses operating within used car markets; and for the foreseeable future. 

Whether that be Franchised Dealers, Used Car Supermarkets, Independent Specialist Retailers or any of the what I affectionately call the “Parasite Businesses;” Auction Houses, Remarketing Companies etc. So by default, the opportunity for successful used car stock acquisitions professionals is unprecedented at the moment right? 

Well yes it is! However, with used car markets evolving at a pace we also have some previously unseen influences within used car markets, making them increasingly difficult to read, in terms of potential for those capable of targeting and disrupting used car markets; especially in the relatively new markets. 

An example (and the topic for discussion in this post) being the specialist high performance EV used car market. Now by rights (it will be interesting to open up the debate to other senior used car professionals), we should all be rushing headlong to invest in this market; but we’re not? 

So if not the specialist high performance EV used car market, where do we all think the opportunity lies for us as professionals? In terms of both the market opportunity and the business opportunity? I am genuinely interested to hear opinion(s) and build a community of “Like Minded” professionals in doing so, so let me start with my thoughts; in relation to the specialist high performance EV used car market. 

When a used car market looks and smells a bit like a “Ponzi Scheme” and a market about to collapse, I try to understand why? I do so because markets like this can sometimes be the best to enter, provided you are doing so at the right time; so let me qualify. 

The new car market feels forced by influences that aren’t natural; I refer of course to the Government’s intervention in the market, linking production to the targets for carbon emissions. Now we can argue the “Rights and Wrongs” of the policy, but I’m not interested; it 

is the effect of the policy on the market that interests me. 

In my experience Government intervention in free markets never ends well; and what it appears (to me) to have generated here is the following. A new car market with (actual and realistic) volume potential that has become difficult to read; personally I wonder what the organic size of the new car market for EV’s would be, if you remove the generous tax allowances being paid for by the tax payer? That’s you and me by the way! 

Now this, along with all the hubris surrounding EV’s from manufacturers, including many new entrants to the market, has resulted in a new car market full of choice for the consumer; the only person (by the way) not consulted in the process. Now the consumer is important because it is consumer demand that drives markets, and in this regard I think there are problems brewing. 

Problems bubbling up not just in the new car market but also in the associated used car market for specialist high performance EV’s. Lost on the majority (including some new entrants to the EV market it would appear) but never on genuinely capable used car professionals, is the symbiotic relationship that exists between successful used car retailing and new car success; including the inconvenient truth that they are inextricably linked! 

Now in the associated used car market for specialist high performance EV’s the “Trading Narrative” is what you would expect, when even the manufacturers concerned have made no investment in the used car professionals required to support successful used car retailing programmes, residual values and therefore the new car retailing model. The most guilty of which are @Tesla and @Polestar. 

Effectively they have completely left their used car retailing opportunity open to disruption, yet no one capable (including me) is jumping in yet; why? In my case it’s because it feels like gambling. I think prices have still got to fall a long way yet, before I would be seriously looking to direct funds into the associated stock holding and business opportunity! But am I right? 

I can only share my rationale which (albeit in brevity and bullet point form) is below; 

1. The new car market in the UK for specialist high performance EV’s is massively over supplied; leading to a far more damaging over supply situation in the associated used car market. 

2. Manufacturers themselves (in the case of @Polestar and @Tesla) refuse to support their own product; both actively state that they DO NOT purchase cars back from customers for used car retailing. Now this may change but, if they don’t want their cars? 

3. Not one manufacturer has invested in the “Excellence in Execution” consultative selling retailing model required for both the new and used car markets. Instead they are trying to sell cars like mobile phones, via a tech lead retailing model. The problem with this is that when you are doing the same thing as everyone else, it can only be about price; thus the recent discounting seen from Tesla which will not be the last in the market. 

4. All of which has resulted in the most negative “Trading Narrative” surrounding the market, leading to investment confidence evaporating, removing investment liquidity from the market and to actual prices collapsing. At the moment I wonder whether you could find a buyer for a used specialist high performance EV! Maybe we should run a campaign to find out? 

5. I think the bottom of the market for prices is far lower than anyone currently thinks. In order for the “Bottom” for prices to be identified, the market needs to reach that point where both the trade and consumers think a used specialist high performance EV is too cheap, and therefore must be purchased. But this will be in relation to other models (in terms of propulsion), not just other EV’s. The consumer has this annoying habit of looking for value and I predict that value will be set by what the consumer knows; so in relation to the prices for ICE models. 

6. Personally I think the time to enter this market will be when sensible mileage (under 60,000 miles) examples are available to purchase and retail (at a good margin) for up to £15,000. This may seem far off but anyone looking for a cheap to run premium family car can today purchase a BMW 520 D M Sport Automatic with under 50,000 miles for under this budget. A very, very powerful counter argument to owning an EV, without all the genuine practical day to day disadvantages. 

I could go on but I won’t; besides the point of this article is ask others (those qualified though and working in the acquisitions and alternative investment sectors – let’s not rehash the green agenda) for their input and expertise. Normally I be would now be hard at work, planning how to target a used car market performing like this (from an acquisitions perspective), starting with the campaigns that are going to be required (both data collation and marketing) and securing access to the funding partners required; yet I am not. 

In truth I wonder whether this is the market to be targeting at all, despite the obvious opportunity that will exist when the price of acquisition investment drops to the levels required, in relation to the potential retail opportunity. Therefore in the next articles let’s explore alternative used car markets, those where opportunity also exists. 

In the meantime, I look forward to hearing from anyone with their thoughts. Eventually a tremendous opportunity may arise for a single business and/or group of used car professionals to become known as “The Expert(s)” in the acquisition and retailing of used specialist high performance EV’s, but only for the business prepared to make the investment in the professionals required in order to drive success. 

Anyone wishing to add to the debate or wanting to discuss taking advantage of any opportunity to disrupt this market, can feel free to contact me directly to explore synergies and the potential to collaborate. 

I look forward to hearing from you all. 

Andrew.

Is Your Used Car Business The Wheat Or The Chaff? 

Well it has been a fascinating start to 2023 for used car markets in the UK, with endless amounts of associated articles surrounding trading conditions appearing on LinkedIn, and for me one thread keeps coming up again and again, although strangely it is not mentioned directly; the lack of the professionals and expertise required! 

And it this, more than anything else, that is going to sort the “Wheat from the Chaff” in 2023; regardless of the used car market you are trading in. However there are problems ahead for many and this (I Predict) will lead to two trading models appearing within used car markets; one will inevitably be a “Tech Lead,” race to the bottom on price, used car trading model. The other will be an “Excellence in Execution” consultative selling sales professional lead, used car trading model. 

Only a well-run version of the former will be able to attract the acquisitions, sales and used car business development professionals required to their used car businesses; and they will need to because the majority of manufacturers and their franchise partners haven’t been developing these professionals for over a decade. 

The main reason why the latter business model will struggle to do so is simple; they don’t (and never will) make enough money to attract and remunerate the professionals required. For them I’m afraid it is the dispiriting future of relying on technology to drive sales into your business and the inevitable race to the bottom on price. Unfortunately (as it is important to remember) if you are doing the same thing as everyone else (which you will be doing – it will be unavoidable), then it can only be about price. 

So a “Haves and Have-Nots” trading landscape will materialise; whether any particular business falls into the “Wheat or the Chaff” category though, will not necessarily be dictated by the product you are retailing, or the market within which you are trading. Rather how the used car stock holding is acquired and how it is then retailed. 

Take a premium, specialist or high performance product; pay too much at the point of acquisition and then retail that stock through the “Tech Lead” retailing model outlined above, and you will fail. The product can only take you so far; in the trading conditions forming over used car markets at the moment, the product alone is not going to guarantee success and profits. A fact more than adequately demonstrated by the associated used car market performance and “Trading Narrative” surrounding the Porsche Taycan and Tesla. 

I have written many articles and commented many times on the “Trading Narrative” surrounding both these products in their associated used car market; both of which can only be best described as an abject disaster. A disaster caused at inception by a lack of investment in the successful used car stock acquisition, retailing and the business development professionals required to deliver a successful outcome. 

Unfortunately though, by appearing to rely solely on technology to drive sales in their used car market, all Porsche and Tesla have achieved is to leave their used car business open to disruption by those capable, and in doing so created another problem; one of attracting the talent capable of successfully acquiring and retailing used examples, to their business, rather than the professionals required deciding to build their own. 

To add some context to my thoughts, let’s look at the scope of the opportunity that as occurred in the specialist high performance EV market? Well my synopsis would be as follows; in the main the trading narrative in this used car market is about as bad as it can be, but herein lies the opportunity. 

This situation and associated “Trading Narrative” has been created by the complete lack of expertise being shown by the manufacturers and their franchise/retailing partners; further accelerated by some very negative (if albeit inaccurate) market commentary on values and the state of the market. The most recent being an article posted on LinkedIn by Automotive Management; the headline for which was “Retailers Impose Used EV Stocking Ban As Values Slump!” 

I read the article and it was an interesting one, mainly in terms of reading and understanding current market sentiment; key in driving the prices (therefore the associated market opportunity) of any commodity, not just used EV's. Now the accuracy of the comments made are irrelevant (personally I very much doubt the accuracy of the comments made by Derren Martin at Cap-HPI), but my thoughts are irrelevant. All that matters is the perception of those it affects because perception is reality! 

Why is this important? Well it affects both sentiment and confidence which are the most important drivers affecting the price of any commodity; and at the moment confidence and investment sentiment in the used car market for specialist high performance EV’s are non-existent. 

So what we really have here is a tale of what happens in used car markets when they are devoid of the professionals and the expertise required to operate within them successfully at inception, combined with high levels of over supply, both in new car markets and then eventually the associated used car market. All of which culminates in a once in a generation opportunity to disrupt this market and clean up; but only for those who are highly capable. 

With the associated manufacturers and their retail partners so obviously devoid of the expertise required (if they were capable they would be taking advantage themselves and the trading picture would be very different), articles like this begin to dictate the "Trading Narrative" surrounding a market and the associated products. 

It’s not my number 1 target market for disruption, but a genuinely capable and successful used car acquisitions professional looking to target this market, will be salivating at the opportunity; why? Well with stories aplenty of stocking bans and prices collapsing, this is "Manna From Heaven" for those who are liquid, possessing the acquisitions expertise required (few do) and capable of retailing successfully. 

Not because the stories are inaccurate (they are; the actual trading narrative is far worse and the values “Actually” being achieved are far lower than those intimated), but because of the perception of the market and what that means for anyone needing to sell one of these cars; whether that be a private individual or a business. 

So, and as much as there is much to do from a consultative retailing perspective, the key to success (in terms of disrupting this market – a market ripe for disruption), will lie in acquisitions expertise and knowing how to leverage your trading advantage. But a warning, this will not be achieved via tech, valuations logarythms and/or by being lazy and going to auctions. 

We are entering an acquisitions market driven by financial duress and oversupply, especially in the specialist high performance EV market, and at a time when premiums (in terms of values) over equivalent ICE models is being questioned by consumers. 

Personally I think it’s a case of “All Bets Are Off” when it comes to the values of some cars being traded in this market, so those capable of targeting, finding and dealing with current owners and/or businesses under financial pressure to liquidate, will be able to acquire stock £Thousands under the current perception of market value. 

But a word of caution; successful used car stock acquisition in premium and/or specialist high performance markets is a “People Business” first and not a car business. To be successful you will be dealing with customers and businesses losing £Thousands, if you are going to be acquiring stock at the prices required in order to be profitable. 

This is a highly skilled process, way beyond the ability of the majority and tech based valuations logarythms. This ability, aligned with the “Excellence in Execution” consultative selling sales professionals required to drive results, will reset market values in the associated used car market, and only increase the losses for those already holding stock at yesterday’s values; therefore adding to the financial misery for those businesses. 

So a tremendous opportunity exists for a single business and/or group of used car professionals to become known as “The Expert(s)” in the retailing of used specialist high performance EV’s, but only for the business prepared to make the investment in the professionals required in order to drive success. 

Anyone wishing to explore how this can be achieved can feel free to contact me directly to explore synergies and the potential to collaborate. 

Andrew.

Polestar, INEOS or Mercedes, Who’s Right? 

A lot of talk at the moment about Agency Models and Retailing Models in general, as the automotive sector continues to adapt to evolving new and used car markets. 

Now as much as every manufacturer has to build its own retailing model around the trading demands of the new and used car markets it is operating within, I think two things are going to be important to everyone moving forward; access to the professionals required in order to deliver on the objectives and never losing sight of the symbiotic relationship that exists between successful used car retailing and new car success. 

Now I want to quickly further expand upon the professionals required because this is important, and an issue I covered in last week’s article written for my Used Car Business Development Blog; 

The Major Flaw In UK Used Car Markets? 

Anyone wishing to read the article can follow the link above but in brevity; identifying the skills required, and the professionals needing to be employed in order to deliver on your new and used car sales objectives, will be paramount to your success; why? Well because this is inextricably linked to the retailing model manufacturers and their franchise partners choose to operate under moving forward. 

With this in mind let’s first look at Mercedes Benz in the UK, who are currently rolling out their Agency Model for new car sales in the UK. By all accounts it is going well but I fear there will be a problems looming in the near future, and one shared with others (BMW and Audi to name just a few); those associated with operating in many different new and used car markets (all operating very differently from each other) with a “One Size Fits All” retailing model. 

The differences (in retailing, staffing, operational and delivery terms) between retailing a bottom of the range A Class and a specialist high performance AMG model, could not be starker. One can be sold via a retail model where tech and digital campaigns are doing the heavy lifting and via a monthly rental payment basis, and one can’t; why? The expectations of the customers involved; and this may be difficult to cater for under a “One Size Fits All” Agency Retailing Model. 

One can operate via (relatively inexpensive) polo shirt wearing “Product Geniuses” who complete demonstrations and go on to hand over the car, but one can’t; and this may present Mercedes Benz with some challenges when it comes to the purchasing experience enjoyed (and expected) by customers; and therefore the professionals required in order to deliver. Why? Money; namely the costs associated with the consultative selling sales professionals that will be required! 

In the main manufacturers don’t understand the art of professional selling, the skills and the professionals required. Unfortunately the professionals required to deliver on both these models are poles apart, in terms of their expertise and therefore what they expect to earn. I wish Mercedes Benz well with these changes; I have a suspicion though that they may need to split their retailing models, in order to ensure that they have the right shaped professionals in the right shaped roles. Especially when it comes to used car retailing. 

A relatively new entrant to the market though (Polestar) appear to be operating under a totally different new car retailing model and personally (having picked apart their retailing model in the UK) I’m not convinced this will work long term. 

Those new to my articles may wonder why I carry out this in depth analysis of the new and used car retailing models of manufacturers and their franchise partners. Well as an independent sales and used car business development professional, I continually look for opportunity to disrupt markets and/or align myself with the retailing models of manufacturers, their networks and independent specialist businesses. Aiming to work with a select group of businesses during the year, on a success based basis. So this process is paramount, in terms of identifying opportunity within the automotive sector. 

And Polestar has left me baffled! Whilst I fully respect the right of Polestar to run the business they want (bearing in mind the ownership of the company), I am surprised at their retailing model in the UK. Far removed from traditional automotive retailing models and more akin to selling smart phones than specialist high performance EVs. 

They are relatively new to the market in the UK and I appreciate that some further retail partners are coming on board, but currently the foundations appear at odds with successful new and used car retailing. 

Now having registered 7,345 cars in the UK last year (SMMT figures) Polestar could understandably say that their retailing model is a work genius, and that they are achieving and/or overachieving on the retail objectives; I have no sight on what they are and they could well be right. 

So why do I worry for Polestar moving forward? And in worrying also see the trading flaws that mean there could also be a tremendous opportunity for those with the experience and expertise required in used car acquisitions, retailing and business development, to totally disrupt their entire used car retailing model? In the process excluding Polestar themselves (the manufacturer remember), from the most lucrative market and profit opportunity of all. 

Well, as much as I cannot be privy to the future plans of the company (an important point to remember – in all fairness to Polestar), at the moment they don’t appear to have a used car retailing model, or what looks like a plan. I have mystery shopped both their retail outlet at Battersea Power Station and the Customer help Centre three times and each time I have been advised by their representatives of the following. 

• Polestar don’t sell used cars. 

• Polestar don’t purchase customers cars back for their used car retailing programme, therefore supporting customers and residual values. 

• Resale values (and I quote) are so high that it is recommended that I try to sell my Polestar privately, should I have found (like many of those trying an EV for the first time) that it is not practical and/or suitable. 

When I went on to query the twenty something used Polestars on their website there was confusion as to what they were and where they came from; although I was advised that they were probably cars returning from fleet and leasing companies/partners? 

And it didn’t get any better when I picked apart the new car retailing proposition. During which I was advised that I could not part exchange any car when purchasing my Polestar? Aghast, I queried this but the person I spoke to confirmed this point; stating that company policy was to advise those interested in purchasing a Polestar to sell their current vehicle themselves! 

Now this is a “Ballsy” retailing model, that’s for sure and part of me respects them for trying to be different, but I think it’s doomed to fail; why? Well the point of this article is not to give Polestar all the answers for free, but in brevity. 

The market within which Polestar are operating in the UK will bring them into contact with a certain socio-demographic of customer; a cash rich – time poor customer. As much as they are obviously targeting the fleet market at the moment (although they appear to be undermining their own position within this market – more on this in a second), when this market runs dry and you are dealing with customers spending their own money? 

Sorry but telling this profile of customer (or any customer for that matter) that they have no ability to part exchange and must therefore retail any existing car they own privately; really people? Then there is the sales staff I spoke to; again I fear for Polestar in this regard because in my opinion (although only from my experience) they have done things on the cheap, and when it comes to the challenging trading conditions of 2023 and beyond? 

I’m sorry (and again from my experience) Polestar appear to be going into battle with the wrong people. At no time did I feel like I was dealing with the sales professional required of purchasing an expensive car in a relatively new market segment. 

Lastly and most worryingly there appears to be a lack of genuine used car retailing expertise within the business in the UK. If there was any (I could find no such professionals listed on the company LinkedIn page) they would understand the symbiotic relationship that exists between successful used car retailing and success in the new car market; and that they are inextricably linked. 

By having (at the moment – there may be plans afoot) no fit for purpose used car operation and/or acquisitions, retailing and business development focus and/or expertise, Polestar will find it impossible to control the market trading and pricing narrative; effectively leaving the profits to be made and future residual values in the hands of “The Market!” As Tesla (who’s trading model Polestar appear to be copying) are finding out, this never ends well. 

With prices of specialist high performance EV’s collapsing in their associated used car market in the UK, this brings costs of ownership under threat, therefore the competitive position enjoyed by the manufacturer in the new car market. In effect, Polestar are in danger of being the “Architects of their own Downfall” in terms of their new car business! 

Other new entrants to the market though appear to have complete clarity on the retailing model required and how to set that up for success; INEOS Automotive. For a company with little prior experience of specialist vehicle manufacturing, what they achieved is remarkable. 

They appear to have complete clarity on what will be required to sell the yearly production allocation, along with the experience and service required of their target customer base, so therefore the professional retailing partnerships required. 

As much as they are yet to start deliveries in the UK the omens are very good. I am genuinely interested in purchasing one and (on a professional level) very interested in disrupting and aligning my business with the associated used car market opportunity. So with this in mind I decided to “Deep Dive” into their retailing model, the results of which left me very impressed. In fact (and as much as I only spoke to one of their designated retail partners) I would say it was the most impressive and professional sales experience I have experienced in a long time. 

Why does this matter? Well the benefits are endless; firstly the customer experience is excellent, I was dealing with a well-trained and fully up to speed consultative selling sales professional. One that knew their target audience and how to operate within the associated socio-demographic. By building partnerships with existing automotive businesses INEOS have also ensured that the full range of required facilities are available; they appear to be serious about running a professional sales operation staffed with the right calibre of professionals. 

And this changes the trading narrative from how much money will this cost me, to how much money will it NOT cost me? This important as it directly effects future residuals and what we have here is one manufacturer doing everything possible (on the face of it) to undermine them (Polestar) and one doing everything to protect them, and the financial investment of their customers; INEOS. 

Now this doesn’t change the opportunity for professionals like me running businesses like mine. But it changes how products are viewed within the industry, and thus with Polestar there can be no confidence. If Polestar don’t invest in their own product for used car retailing then why should I? At the moment! 

As it has with Tesla, this will (no doubt) lead to oversupply in the associated used car market, a lack of investment liquidity for used Polestar stock and collapsing prices. In reality, what then happens is that the independent (investing for profit) element of the automotive sector will cause a run on the product (akin to the shorting of share prices or commodities), in order to test the market and see where prices bottom out. Only returning to the market when prices have collapsed to a level where it encourages independent investment for used car retailing. So yes, like the rest of the sector, I will be watching Polestar in the used car market, but for all the wrong (and negative) reasons. 

As for INEOS and the Grenadier? Well despite being a similar sized new entrant to the UK market (in terms of volume aspirations) the trading narrative could not be more different. The retailing model is perfectly aligned to the job in hand and I have no doubt that this product will be selling for a premium at inception; even in the challenging market conditions we are likely to see this year. 

So I also have my eye on the INEOS Grenadier, but for totally different and more positive reasons. In reality the retailing foundations put in place by INEOS Automotive will control the trading narrative, protect residual values and keep the cost of ownership for customers very competitive; this is how you keep retention levels and demand for the product high. 

So there you have it! Challenging times ahead in all new and used car markets in the UK (especially specialist and high performance used car markets), and a time when the professionals you invest in and/or have access to, will be pivotal in determining outcomes. As ever, some will get it right and some won’t; either way it will be a fascinating period to be operating within the associated used car markets. 

The next 5 years will be a fascinating trading period, a period where genuinely successful used car professionals will have their pick of opportunities. Anyone sensing synergy and the potential to collaborate (and/or wishing to explore how to become part this journey), can feel free to contact me directly to arrange an exploratory discussion. 

Whether you are an owner of a business looking for the right expertise or a successful used car professional looking for the right opportunity in the coming market conditions. 

Andrew.

The Major Flaw In UK Used Car Markets? 

As we all move into 2023 and begin to tackle head-on the opportunities and challenges that exist in used car markets, one major flaw is coming to light (as we head into challenging trading conditions – but market conditions with tremendous opportunity); one that will mean that few are going to be successful, in terms of being able to take advantage’ 

A lack of the professionals required! 

The last 3 years have been a fascinating time in all used car markets, involving trading conditions never seen before, and coming at a time when I have never seen such a lack of understanding as to why used car markets have performed as they have. That said there is little point raking over the past; after all history is for reference not residence. 

So in this article (the first of 2023) I wanted to look at an example of how the complete lack of investment in the professionals required, can come back to haunt your entire trading model and leave you with some big mountain’s to climb. 

Now in truth I could’ve chosen a number of business calamities/failures in used car markets; Cazoo (I have written more than enough on this subject), the used car retailing debacle surrounding the Porsche Taycan (two articles and numerous comments during the last 2 months); so no, let’s look at one of the hot topics of our times; one of the manufacturers retailing in the specialist high performance EV market; namely Tesla. 

Now I have chosen Tesla (I could have chosen many – Polestar for example who appear to be following blindly into the same trap - only a couple of years behind Tesla) for no other reason than they are the perfect example of trading and manufacturing excellence in some areas, but also in why refusing to accept that a market operates in a certain way, can lead to completely undermining your entire retailing eco-system; as indeed it is now doing with Tesla in the UK. 

So if Tesla is going to be the case study, let’s talk about the current perception surrounding the company; something that looked (to the untrained observer) very rosy before the recent announcements regarding the reductions in new car pricing. After all new car registrations are up at record levels but behind the headlines there’s a problem; “Rome is Burning!” 

Although new car registrations reached record levels on a global scale they were behind the stated objectives (spooking investors and driving down the share price) and only achieved via a December of heavy discounting; welcome to the dark side on new car retailing Elon. 

Unfortunately though, as much as this is troubling in itself, there is a far greater problem looming where too few within Tesla appear to be looking; the associated used car market. Now as much as I don’t want to spend too long in this article dissecting the associated used car market, there are some important things to consider, because they are directly associated with the previous lack of investment in the right professionals. 

So how is the health of the Tesla used car proposition in the specialist high performance used car market looking? Well it’s not looking very good. Tesla themselves (in the UK) do not actively support their product so speculative investment sentiment has evaporated; leading to a trading environment where investment liquidity is running out. Prices are now collapsing and uneducated sections of the motoring press are now controlling the trading narrative. 

This means that the setting of residual values (key to supporting new car costs of ownership) is now in the hands of “The Market” and those speculating for investment opportunity, as well as uneducated sections of the automotive press; those run by people lacking the experience to be commenting. This never ends well for the manufacturer as Tesla are about to find out. 

With residual values collapsing, customers, Tesla and their strategic funding partners will begin to endure heavy losses which will bleed straight through to the new car retailing model; with costs of ownership rising, eventually affecting pricing competitiveness in the coming new car market and therefore reducing new car sales volumes. All of which can be very difficult to unwind, even with the right people on board. 

Now there are many reasons for this “Perfect Storm” forming over Tesla as well as many other manufacturers; their tech heavy retailing model will never be fit for purpose and the actual size of their market is yet to be defined. Tesla may hope that their market is the entire market, but I don’t know many (whose experience and expertise I would listen to), including myself, who think that EV’s will ever constitute the entire market. 

There is no doubt that there is a market for EV’s but the size of the market will be dependent on the day to day requirements of customers, and then their perception of value! And if we are still unaware of the size of the new car market, the size of the used car market is even less well known. One thing though is irrefutable in UK markets; there is far too much stock and the vital “Supply and Demand” ratio is now driving down prices and undermining the new and used car trading narrative. 

Anyway, enough of the trading realities in Tesla’s associated markets (they are an article in themselves), and as much as they are important to grasp, be in no doubt all of these negative trading drivers and challenges facing Tesla all have one thing in common; a lack of investment in the professionals required, especially genuinely successful used car professionals. 

Now to be fair to Tesla many other manufacturers have made the same mistakes over the last decade (compounded during the pandemic – when some wildly inaccurate predictions were being made regarding the future behaviour of consumers), the biggest being expecting technology to do too much of the heavy lifting during the sales process. Expecting it to drive sales into the waiting arms of polo shirt wearing “Product Geniuses” rather than successful sales professionals. Now as much as Tesla manufacture cars I think it is important to view their thinking as different; more akin to a tech company. 

Now thinking like a tech company is one thing, but running what is affectively an Apple Store retail model will never work (long term) in new car markets, let alone in used car markets. For those not grasping this point, the proof is provided via the trading environment generated by this retailing model for today, including all the trading challenges outlined (albeit in brevity) above. Now unfortunately for Tesla they decided that they didn’t need to speak to (or have access to) the best Automotive minds and experience! No, just like Cazoo, it appears that they thought they knew better and were going to disrupt an established market their way; well I would just ask how they think that it is all working out for them? Now, I have my thoughts about where the current situation will lead for Tesla in the UK; these are not important, but what is important is that the current (very negative for the brand) trading narrative could’ve so easily have been avoided, if Tesla had done things differently. What was missing was the lack of expertise in trading in established automotive markets, markets that have a dynamic of their own and that can’t be changed via a trading model. 

Because Tesla wasn’t an automotive business at inception, they wouldn’t appreciate and understand the symbiotic relationship that exists between successful new car retailing and successful used car retailing. That successful used car retailing is at the bedrock of your new car retailing success. 

The time to start planning and building your used car acquisitions, marketing, retailing and business development programmes is before you start retailing new cars, not when the problems start mounting up; when you are distressed selling, missing your retailing objectives and the share price is collapsing. In truth, fixing the problems being faced by Tesla in the UK will take years to repair and will not be achieved by those currently there and in charge of shaping the strategy today. If they were capable of doing it, Tesla would not be where they are today. 

In truth my surprise is that they are not alone in their one dimensional short term (new car only) thinking. The problems associated with the Porsche Taycan, explored in greater detail in the article below for my Used Car Business Development Blog, are down to the same problem; no investment in the professionals required. 

A Time Of Reckoning For Used Car Markets! 

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

In many ways I am more surprised by Porsche (after all they are the more established car manufacturer), because the current trading narrative surrounding the Taycan is a disaster, in terms of the product itself and in professional used car retailing terms. This should come as no surprise though; having looked on the LinkedIn page for Porsche Cars GB Ltd (the parent company) there is no professional listed with the responsibility for used car retailing strategy and/or who has run a successful used car business.

It is also interesting to see another new entrant to the market making the same mistakes; Polestar. Another company completely bereft (according to their company LinkedIn page) of successful used car professionals and it is already beginning to show. Like Tesla they actively state (when you enquire in person) that they don’t purchase the cars they have supplied back into their own used car retailing programme?! 

When I queried this I was advised by the Customer Help Centre that if I want to sell my Polestar (because as many people are finding, an EV is not the right car for me on a day to day basis) to ring We Buy Any Car! Not for me to say, it is their business, but just refer above if you want to know where this will eventually lead. 

Not investing in (therefore supporting their own customers) their own product, along with their used car retailing proposition in the associated used car market(s), is making exactly the same basic mistake as Tesla; meaning that very soon they will have the same problems to deal with. This is a shame because having worked very hard to get customers in the first place, they are cutting these customers adrift and increasing the cost of ownership. A terminal state of new car retailing affairs to any genuine automotive professional; of which there appears to be very few of at the company. 

The next 1-3 years will be a fascinating time in Automotive markets in the UK and many are not prepared, in terms of having the team(s) required, and with many looking to also implement Agency Retailing Models during this period (again with no thought to how this impacts on their used car retailing model), I am fascinated to see how this all plays out. 

I get a sense though that many are betting too much on digital retailing initiatives, in order to drive sales, just as Tesla and Polestar are. Although now very important (in terms of the customer journey and information gathering process) there are new and used car markets where customer expectations dictate that this will just not be fit for purpose, in terms of driving enquiries to successful sales. 

The retailing problems being experienced by Tesla (even Cazoo and Cinch) should be a warning to everyone; a warning that when you are doing the same thing as everyone else, it can only be about price! Not the retailing model to be relying on when we are moving into challenging and highly complex trading conditions; market conditions that will dictate that there are difficult conversations to be had with customers during the enquiry and successful sales process. 

Used car markets are highly specialised and complex in their behaviour; therefore involving investment and retailing strategies, and decisions that cannot then be driven by a “One Trick Pony” tech based retailing solution. Personally I doubt many have the professionals required to compete or the awareness even to understand the skills (therefore the professionals) required in order to succeed. 

Those though that do have clarity on the skills that will be required, will face some sizeable challenges, in terms of attracting the professionals required to their business. With used car markets completely open to disruption by those possessing the skills required to be successful, levels of remuneration for the capable (those prepared to operate in success based strategic alliances), have increased to the point where most will baulk at the costs involved; refusing to see the bigger picture. 

The next 5 years will be a fascinating trading period, a period where genuinely successful used car professionals will have their pick of opportunities. Anyone sensing synergy and the potential to collaborate (and wishing to explore how to become part this journey), can feel free to contact me directly to arrange an exploratory discussion; whether you are an owner of a business looking for the right expertise or a successful used car professional looking for the right opportunity in the coming market conditions. 

Andrew.