Used Car Business Development

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.