Used Car Business Development

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.