As mentioned briefly in my previous post; The Importance Of Your Used Car Business? Well As Sherlock Holmes Would Say, it has been interesting to observe how many manufacturers and their dealer networks are responding to the difficult and challenging new car trading conditions and what this in turn means for the long term commitment of franchised dealers to their used car businesses?
We are in conversations with many franchised dealers and the manufacturers they represent, who are now looking seriously at what their support for their used car ambitions and their position in the used car market means, in terms of securing their long term success, and it is striking that the most ambitious and positive used car development ambitions are held by the manufacturers, (and their associated franchise partners), who are not only out-performing the new car market, but those who are also growing.
And of course, it goes without saying that these conversations are confidential and not the subject for an article, but whilst delivering our used car strategic proposal documents, some interesting issues come to light that effect the ability of all manufacturers and their dealer networks to build sustainable and long term success in the used car market, and just at the time when they don’t need it!
Now, it is worth pointing out, that there are many models of used car programme being delivered by manufacturers and run by their franchised dealer networks throughout the UK and in the main, (time for some honesty), with the majority of the focus on the new car objectives, quite understandably it becomes impossible for manufacturers and their franchise partners to remain at the forefront of developments in the used car market, let alone the skills-sets of the professionals that will be required to build and sustain long term success in the used car market at franchise dealer level.
So although outwardly successful, some manufacturers have chosen, (those with the ability to leverage high levels of consumer desire for their product), to try to manage the used car business in the way they are the new car business; and look, this can and has worked, but there has been a drive under this model to employ a different style and profile of personnel, (within franchise dealers), in order to deliver on this model.
This article is not the platform to do so, so I will not comment here on how teams built with professionals delivering on this business model might or might not be capable of morphing into the used car entrepreneurs required, when markets get tough, down and dirty! But it does highlight an issue that the industry, (especially franchised dealers), has as a whole; just where is the talent, the people required to get this business, (the used car business), the one we don’t understand in the way we understand the new car business, by the scruff of the neck and make it happen?
In truth this has become the perennial problem for franchise dealer networks; so the problem gets ignored during times of buoyant new car markets but this has resulted in no long term thinking, no committed programmes of used car development, (including training and personnel development programmes), and an unwillingness to embrace the culture of used car professionals, and more importantly, what they are worth.
Now I had a career in used cars, I was at the forefront of used car development for some of the most successful franchised dealer groups, so why did I leave? Well, and this is not a reflection on my employers at the time or indeed the manufacturers involved; I felt that my skills as a used car professional were under-valued and I felt that lip service was paid to the business I was contracted to develop and make successful, therefore my chances of personal career development were going to be limited. So like many both before and after me, I left to pursue a used car career outside of franchised dealer networks, where better opportunities existed.
Sadly, in the main, (and I speak to a lot of used car professionals), the status quo has not changed for used car professionals nor indeed has there been a change in the mind-set of some franchise dealers, (in terms of the importance that they place on training and developing used car professionals), and this has led us to where we are today; a situation where when we are strategising the delivery of used car development programmes with manufacturers and their franchise partners, when questions get asked and invariably the penny drops! “Wow! There Is A Lot To Do!” and “We Don’t Even Have The Staff To Deliver On What Needs Doing!
And invariably there is a lot to do! As a rule if I had to sum up the major points that will need to be grasped, it would include the points below;
-
This is not a quick fix, so it is not a time for short term thinking!
- It is unlikely that you will have enough staff with the skills required, currently employed in your business!
- There is a strong likelihood that no one employed at your business has the experience of driving used car businesses to success!
- Sadly, you won’t be able to buy enough “Winners” either, because decades of under investment in used car programmes and in used car professionals has left the sector, as whole, woefully under resourced!
- You will need to separate your strategic thinking from that required to be successful in the new car market!
- It is highly unlikely that, (at this moment), you will have access to the training programmes required to develop the used car professionals you are going to need to be successful!
Now apologies if this sounds overly bombastic, but some of you reading this have experienced some cataclysmic year on year declines in new car registrations, and many we know, are at last looking at used programmes and what will be required in order to ensure that declines of this magnitude are avoided in the future; and our advice would be to not under-estimate the size of the task involved and the fact that the decision’s you make now regarding your support of your used car business, will have long term ramifications for your new car performance.
If as the owner or the individual responsible for the business, you want to transition your business from one that is a hostage to the fortunes of the new car market, (with no successful used car operation to support your business), to a business that is building long term new car success from the foundations of a successful used car operation, and therefore less susceptible to the socio-economic forces responsible for the current new car declines, then a continual and sustained programme of used car business development will need to be implemented; and guess what this will not be the commonly deployed in the past, throw some money at the problem and some inadequate resource for 3-6 months, then turn the other way and hope that the problem will be solved.
The decisions you make now will be critical and who you partner with to deliver your programme of used car business development will also be critical. Decades of under investment in used car professionals have left some franchised dealer networks bereft of the skills required to sustain growth in used car retailing and the final irony for the owners of franchised dealers is this; at your moment of most need, the professionals you require the most are now likely to be the highest paid individuals in the sector; so buying “Winners” can’t be the strategy and let me explain why. Those truly capable used car entrepreneurs, those capable of walking into a businesses and turning them around, of building successful used car operations, they are in short supply; they have their pick of opportunities to choose from, so to get them; well be prepared for the sharp intake of breath when it comes to salary and bonuses.
In future articles I will be exploring why these professionals are in such demand and why they can command some of the most lucrative packages in the sector; their skills are a million miles away from those required by the new car professional, the skill-set by which the majority of franchised dealer networks are built from and therefore why you are unlikely to find them residing in your business or the wider dealer network, ready to leveraged. Sadly, in the past, the traditional environment within the franchised dealer network has not encouraged the development of successful used car professionals.
So your first task, even before the major task of deploying a used car business development programme capable of developing a successful and profitable used car operation, may well be the requirement for the manufacturer you represent to provide the continual training and personnel development programmes capable of supporting your used car aspirations, via the development of the key used car personnel employed at your business.
Without this, well just where are the used car professionals of the future coming from? Those who are already successful in the used car arena have their choice of businesses to go to; so as a business just starting to develop and/or grow your used car operation, why would they choose to leave an already successful environment? Well they just don’t, so you will have to begin the process of building your own used car operation without easy access to the professionals you require.
In the trading conditions of today it is an inconvenient truth that franchise dealerships will only be able to develop strong and resilient businesses, those capable of supporting their new and used car aspirations, and free from high levels of manufacturer support and subsidies, if they invest in and promote the expansion of their used car operations. Critical to which will be access to training and personnel development plans for used car professionals; those that will be required to ensure that successful used car operations can be built.
Unfortunately though, strong and resilient used car businesses do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car business on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
Well, our last post; Developing A Successful Used Car Business; It Could Be Now Or Never, seems to have caused some debate with differing standpoints, depending on whether or not you have outperformed the new car market as a whole or not?
However the thread of our argument for European Manufacturers, as European markets continue to transition to used car markets that outperform new car markets, (in terms of volume of sales), and into a market conditions that are evolving at such a pace, that success will no longer be secured solely by your level of success in the new car market, we would maintain still stands true.
If you take the UK market as an example of trading conditions that European markets are heading towards, you only need to look at the SMMT new car registrations figures for 2018 to see how some manufacturers, those who have not invested in fit for purpose approved used car programmes, are now struggling. With as many as 10 manufacturers retailing cars in the UK market, experiencing year to date decreases in new car registrations of between 20% and 75%, the dangers of not enjoying a franchised dealer network that is successful in retailing used cars has never been more prevalent.
Of course we appreciate the importance of the new car market to the manufacturer, but catastrophic declines in new car performance such as this, put at risk everything the manufacturers concerned are trying to achieve. Regardless of your success today in the new car market, (due to many factors), you are going to experience downturns in new car performance; during model run outs, economic down turns etc. and these downturns are likely to become more frequent as the used car markets in Europe continue to evolve. But these unavoidable downturns can be dramatically reduced if you enjoy a franchised dealer network that is successful in the used car market, which will be critical as demand for used car product from the consumer continues to increase.
Looking at the figures from the SMMT for new car registrations in the UK thus far in 2018, it is no coincidence to us that the manufacturers experiencing the biggest year to date reductions in new car registrations, are those either not enjoying franchise dealer networks that are successful in the used car retailing arena and/or those not taking the measures required to develop and support used car retailing within their franchise dealer networks.
We appreciate that at times of challenging new car trading conditions, it may seem counter intuitive to be diverting your attention to a separate part of the business, but the reality is that if you want to build successful new car trading foundations that are fit for purpose in the likely trading environment of the future, an integral part of this process and your future success, will be a fit for purpose approved used car programme that is then supported by a franchise dealer network that is successful at retailing used cars.
However, some manufacturers in the UK just never grasped this concept, they thought the new car business could stand alone and be successful as well as deliver growth year-in year-out, but it can’t! Imagine you represent one of the manufacturers experiencing 20% plus declines in new car registrations in your market during the first half of 2018, and then ask yourself how this can happen? What is it that makes a manufacturer experience a decline in new car registrations of this magnitude and in such a short period of time?
For sure there may be reasons at the margins of this decline, model range run outs etc. but it would be folly to blame substantial declines in new car sales on operational or economic factors that are at the margins of your under-performance. Sometimes we have to look inwards, stop blaming the outside forces and face realities that we may wish to ignore. As the famous Arthur Conan Doyle quote from his Sherlock Holmes novels goes; “Once you eliminate the impossible, whatever remains, however improbable, must be the truth!”
And the truth is that the operational disciplines and the investment in businesses required to ensure that you have a network of franchise partners that are successful at used car retailing, will then ensure that you do not suffer the declines in new car sales that some manufacturers have experienced in the UK market.
I won’t go too deeply into the reasons for this in this post, (I will be covering these issues in future articles), but it should be no coincidence to anyone reading this article that in markets where used car sales volumes outstrip new car sales volumes, the businesses that are most successful, in terms of new car sales, are also the businesses that are most successful at used car retailing. Within these evolving markets it will also be the manufacturers who support development of used car retailing strategies and have the training and initiatives in place for franchise partners to develop used car businesses, and to develop the personnel responsible for running used car operations, that will be the manufacturers securing their future long term used car and new car success.
In the UK now the inconvenient truth is that for those manufacturers who have suffered the biggest falls in new car registrations, there is years of hard work ahead and investment required, if the successful used car programmes and franchise dealer networks required are to be built, and future new car success is to be secured.
The benefits to European manufacturers of developing franchised dealer networks that are successful at retailing used cars are too numerous to mention, and were covered in my last post, so can be found by following the direct link above.
The pressures on our retailing trading model were also discussed and these threats are not going away; in a market that is both evolving and fragmenting at a dizzying pace, the time to be securing the future of your used car and new car trading model is now, before it is taken from you by the aggressive independent business models targeting the sector in Europe.
These threats will not be going away; with independent internet based new car supply businesses now both moving into European markets and now openly targeting expansion into the used car market in the UK, (the natural progression for which will be to also target European used car markets), we would caution that the sector, and the franchised dealer based trading model, has never been under such threat. The time for action is now and the main area of your business requiring your focus, will be your used car programmes and retailing model.
In the trading conditions of today it is another inconvenient truth that European manufacturers will only be able to develop strong and resilient franchise dealer networks, those capable of supporting their new and used car aspirations, and free from high levels of manufacturer support and subsidies, if they invest in and promote the expansion of approved used car business development programmes, those that will be required to ensure that a network of successful used car operations can be built.
Unfortunately though, strong and resilient used car dealer networks do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers, (both in the UK and Continental Europe). For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 0044 7796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
Well, our last post; Developing A Successful Used Car Business; It Could Be Now Or Never, seems to have caused some debate with differing standpoints, depending on whether or not you have outperformed the new car market as a whole or not?
However the thread of our argument surrounding success in the used car market and the importance it plays in terms of securing your business moving forward, and into a market that is evolving at such a pace, (something that will not be secured solely by your level of success in the new car market), we would maintain still stands true.
You only need to look at the SMMT new car registrations figures for 2018 to see how some manufacturers and their franchised dealer networks are struggling; with as many as 10 manufacturers and their associated networks experiencing year to date decreases in new car registrations of between 20% and 75%, the dangers of not running a used car operation that is successful in retailing used cars, has never been more prevalent.
Of course we appreciate the importance of the new car market to the manufacturer and therefore, by default, to the franchised dealer, but regardless of your success today in the new car market, (due to many factors), you are going to experience downturns in new car performance; during model run outs, economic down turns etc. But this unavoidable downturn can be dramatically reduced if your business includes a successful used car operation.
Looking at the figures from the SMMT for new car registrations thus far in 2018, it is no coincidence to us that the manufacturers and their associated franchised dealer networks, experiencing the biggest year to date reductions in new car registrations, are those either not enjoying franchise dealer networks that are successful in the used car retailing arena and/or not taking the measures required to develop and support used car retailing within their franchise dealer networks.
We appreciate that at times of challenging new car trading conditions, it may seem counter intuitive to be diverting your attention to a separate part of the business, but the reality is that if you want to build successful new car trading foundations that are fit for purpose, an integral part of this process and your future success, will be a successful and profitable used car operation, and being aligned to a manufacturer with a fit for purpose approved used car programme; one that is then supporting their franchise dealer network in developing used car operations that are successful at retailing used cars.
However, some franchise owners, as well as the manufacturers they represent, just never grasp this concept, they think the new car business can stand alone and be successful in delivering growth year-in and year-out but it can’t! If you represent one of the manufacturers experiencing 20% plus declines in new car registrations during the first half of 2018, ask yourself how this can happen? What is it that makes a manufacturer and your business, (as one of the franchise partners), experience a decline in new car registrations of this magnitude and in such a short period of time?
For sure there may be reasons at the margins of this decline, model range run outs etc. but it is folly to blame substantial declines in new car sales on operational or economic factors that are at the margins of under-performance. Sometimes we have to look inwards, stop blaming the outside forces and face realities that we may wish to ignore. As the famous Arthur Conan Doyle quote from his Sherlock Holmes novels goes; “Once you eliminate the impossible, whatever remains, however improbable, must be the truth!”
And the truth is that the operational disciplines and the investment in businesses required to ensure that you have a used car operation that is successful at used car retailing, will then ensure that you do not suffer the declines in new car sales that some manufacturers, (and their associated franchised dealer networks), have experienced thus far in 2018.
I won’t go too deeply into the reasons for this in this post, (I will be covering these issues in future articles), but it should be no coincidence to anyone reading this article that the businesses that are most successful, in terms of new car sales, are also the businesses that the most successful at used car retailing. The business that is successful at used car retailing is less prone and more resilient to down turns in the new car market, and when they do come, (as they invariably do), the business with a profitable used car operation always bucks the trend; isn’t it funny how they have a knack of always succeeding in the new car market as well?
Well just take a moment to ask yourself why? Let me assure you of a couple of things; it will be nothing to do with the territory where they are based or any special preferences they get from the manufacturer. It will be how they leverage and take advantage of their successful and profitable used car operation, incorporating the associated sales and operational disciplines throughout the rest of the business, which then ensures that they are bucking any downward trends in the new car market.
And manufacturers who support this development of used car retailing strategies and have the training and initiatives in place for franchise partners to develop used car businesses, and to develop the personnel responsible for running used car operations, will be the manufacturers securing their future long term used car and new car success, both for themselves and their franchise partners.
Over the last 10 years the new car business has been in a halcyon period supported by cheap interest rates and the feeding frenzy for PCP, (as a purchasing model), with consumers. During this period the new car business has experienced some record levels of performance, but I fear that this period is now coming to an end, and what’s worse, those who didn’t keep their focus on their used car business, are going to struggle with the challenging trading conditions and inevitable down turns in new car performance coming their way.
The benefits to the franchised dealer of having a professionally run and profitable used car operation, that is successful at retailing used cars, are too numerous to mention, and were covered in my last post, so can be found by following the direct link above.
The pressures on our trading model were also discussed and these threats are not going away; in a market that is both evolving and fragmenting at a dizzying pace, the time to be securing the future of your used car and new car trading model is now, before it is taken from you, (your fellow franchise partners and the manufacturer you represent), by the aggressive independent business models targeting the sector.
These threats will not be going away, with independent internet based new car supply businesses now openly targeting expansion into the used car market, we would caution that the sector, and the franchised dealer based trading model, has never been under such threat; the time for action is now and the main area of your business requiring your focus, will be your used car operation and retailing model.
In the trading conditions prevalent today it is an inconvenient truth that franchised dealers will need to build successful and profitable used car operations, if they are to grow and remain financially resilient in the evolving market conditions coming their way; and manufacturers will only be able to develop strong and resilient franchise dealer networks, those capable of supporting the new and used car aspirations, and free from high levels of manufacturer support and subsidies, if they invest in and promote the expansion of approved used car business development programmes, those that will be required to ensure that a network of successful used car operations can be built.
Unfortunately though, strong and resilient used car operations do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car operation on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
Well, our last post; Developing A Successful Used Car Business; It Could Be Now Or Never, seems to have caused some debate with differing standpoints, depending on whether or not you have outperformed the new car market as a whole or not?
However the thread of our argument surrounding used car business success and the importance it plays in terms of securing your business moving forward, and into a market that is evolving at such a pace, (something that will not be secured solely by your level of success in the new car market), we would maintain still stands true.
You only need to look at the SMMT new car registrations figures for 2018 to see how some manufacturers are struggling; with as many as 10 manufacturers experiencing year to date decreases in new car registrations of between 20% and 75%, the dangers of not enjoying a franchised dealer network that is successful in retailing used cars has never been more prevalent.
Of course we appreciate the importance of the new car market to the manufacturer but regardless of your success today in the new car market, (due to many factors), you are going to experience downturns in new car performance; during model run outs, economic down turns etc. But this unavoidable downturn can be dramatically reduced if you enjoy a franchised dealer network that is successful in the used car market.
Looking at the figures from the SMMT for new car registrations thus far in 2018, it is no coincidence to us that the manufacturers experiencing the biggest year to date reductions in new car registrations, are those either not enjoying franchise dealer networks that are successful in the used car retailing arena and/or those not taking the measures required to develop and support used car retailing within their franchise dealer networks.
We appreciate that at times of challenging new car trading conditions, it may seem counter intuitive to be diverting your attention to a separate part of the business, but the reality is that if you want to build successful new car trading foundations that are fit for purpose, an integral part of this process and your future success, will be a fit for purpose approved used car programme that is then supported by a franchise dealer network that is successful at retailing used cars.
However, some just never grasp this concept, they think the new car business can stand alone and be successful as well as deliver growth year-in year-out, but it can’t! If you represent one of the manufacturers experiencing 20% plus declines in new car registrations during the first half of 2018, ask yourself how this can happen? What is it that makes a manufacturer experience a decline in new car registrations of this magnitude and in such a short period of time?
For sure there may be reasons at the margins of this decline, model range run outs etc. but it is folly to blame substantial declines in new car sales on operational or economic factors that are at the margins of your performance. Sometimes we have to look inwards, stop blaming the outside forces and face realities that we may wish to ignore. As the famous Arthur Conan Doyle quote from his Sherlock Holmes novels goes; “Once you eliminate the impossible, whatever remains, however improbable, must be the truth!”
And the truth is that the operational disciplines and the investment in businesses required to ensure that you have a network of franchise partners that are successful at used car retailing, will then ensure that you do not suffer the declines in new car sales that some manufacturers have experienced.
I won’t go too deeply into the reasons for this in this post, (I will be covering these issues in future articles), but it should be no coincidence to anyone reading this article that the businesses that are most successful, in terms of new car sales, are also the businesses that the most successful at used car retailing. The manufacturers who support this development of used car retailing strategies and have the training and initiatives in place for franchise partners to develop used car businesses, and to develop the personnel responsible for running used car operations, will be the manufacturers securing their future long term used car and new car success.
Over the last 10 years the new car business has been in a halcyon period supported by cheap interest rates and the feeding frenzy for PCP, (as a purchasing model), with consumers. During this time the new car business has experienced some record levels of performance, but I fear that this period is now coming to an end, and what’s worse, those who didn’t keep their focus on the used car business, are going to struggle with the down turns in new car performance coming their way.
For many I think the issue may be the employment/contract model being deployed and short term thinking processes; the truth is that for many who have suffered the biggest falls in new car registrations, there is years of hard work ahead and investment required, if the successful used car programmes and franchise dealer networks required are to be built, and future new car success is to be secured. Sadly though people are all too often looking for the quick fix, invariably price driven, which only compounds the problems for new car retailing in the future, not resolve them.
The benefits to manufacturers of having a franchised dealer network that is successful at retailing used cars are too numerous to mention, and were covered in my last post, so can be found by following the direct link above. The pressures on our trading model were also discussed and these threats are not going away; in a market that is both evolving and fragmenting at a dizzying pace, the time to be securing the future of your used car and new car trading model is now, before it is taken from you by the aggressive independent business models targeting the sector.
These threats will not be going away, with independent internet based new car supply businesses now openly targeting expansion into the used car market, we would caution that the sector, and the franchised dealer based trading model, has never been under such threat. The time for action is now and the main area of your business requiring your focus, will be your used car programmes and retailing model.
In the trading conditions of today it is an inconvenient truth that manufacturers will only be able to develop strong and resilient franchise dealer networks, those capable of supporting their new and used car aspirations, and free from high levels of manufacturer support and subsidies, if they invest in and promote the expansion of approved used car business development programmes, those that will be required to ensure that a network of successful used car operations can be built.
Unfortunately though, strong and resilient used car dealer networks do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
As automotive professionals and the sector as a whole, continues to come to terms with the evolving new car retailing landscape, we would argue that the importance of having a network of successful used car operations has rarely been so important, in terms of your long term success and in protecting your business model.
We can debate forever on where we all think the new car sector is heading and the changes we are likely to see, in terms of how the franchise dealer network model remains financially viable, but that is for another post. This post is all about returning to the business that will be at the foundations of your future success; the used car business.
With the new car market fragmenting and being attacked by entrepreneurial and aggressive internet based businesses who are looking to manipulate consumer behavior, as well as control and hold to ransom vast amounts of consumer data, we would argue that the new car market may never be the same again. Not because manufacturers can’t compete head on with these threats, but because the purchasing behaviour of consumers is being changed and the traditional franchised dealership model within the sector, (in the main), is in danger of being caught out by the speed at which the new car trading conditions have been evolving, let alone how they are likely to keep evolving.
As much as some manufacturers have performed above the challenging new car market conditions during the first half of 2018, there is no doubt that there will still be many challenges to be faced by all manufacturers in the new car market. But the foundations of your long term success in the new car market and the answers to how you face the many challenges mentioned above, are in your own hands as they will lie directly in your success in the used car market.
With national used car markets in Europe beginning to outperform new car markets the potential of the used car market is huge and we have no doubt that European used car markets will follow the growth path of the used car market in the UK where it is still over 3 times the size of the new car market.
This growth in the used car market changes forever the dynamic of the market as a whole and how manufacturers and their franchised dealer networks must set up their business model. It will be no coincidence that within UK based franchise dealer networks, the businesses that are most successful at retailing new cars are also the ones that are most successful at retailing used cars.
As the dynamic of the market has changed they have become the businesses achieving all of the KPI’s set by the manufacturer, adhering to all the standards required, they are model businesses that work with and support everything that the manufacturer is trying to achieve. Unfortunately though as the shift in market dynamic towards higher volumes of used car sales then becoming the governing factor to new car success, those dealers within franchise dealer networks not enjoying the platforms and skills to ensure success in the used car market, begin to struggle on all fronts, both used car and new car sales, because at the core of their success is the business that the manufacturer can’t control, in the way that you can control the new car business.
Although manufacturers can aid success, unfortunately the used car business is not one that can be leveraged and controlled so much by manufacturer initiatives. It is the tertiary and potentially most profitable part of all the businesses making up your franchise dealer network, but it is also the business where there is no agreed level for volumes of stock, to any specific model mix and, of course, all the stock acquired for this business will need varying levels of preparation in order to meet the stipulations set by the underwriters of the manufacturer’s warranty.
But once the transformation of the market is under way the benefits to the manufacturer of a strong dealer network that is successful in the retailing of used cars are numerous, everything from:
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Increased new car profitability for both the manufacturer and their franchise dealer network.
- Increased overall profitability of the dealer network, resulting in a financially stronger and more resilient dealer network.
- The ability to increase levels of part exchanges, therefore more new car business.
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The maintaining of core standards set by the manufacturer.
- Larger customer bases therefore the opportunity to take more customers on the journey from used car to new car ownership.
- Increased opportunities for repeat sales and increased levels of margin retention.
- Increased levels of customer loyalty to the brand.
-
The control and protection of residual values.
- More competitive financial packages and reducing costs of ownership for customers.
- More control over the new car and used car vehicle parks.
- Protection of the brand.
- A business model that is then not vulnerable to the aggressive business models attacking the established new and used car retailing model.
However, to get to here and enjoy these benefits your dealer network will need to embrace and take responsibility for the challenges presented by the used car market place and making this task more challenging, will be the inconvenient truth that every dealer in your network will be at different stages in their used car development.
And on top of this for many of your franchise partners, in order to grow their used car businesses, they will need to meet “Head On” the challenges posed by independent third party used car businesses operating in their locality. The growth of independent third party used car operations has been substantial over the last 10 years and this is unlikely to stop; the owners of these businesses will be targeting further growth and their business model is unhindered by the terms of franchise agreements.
To add to the challenge; well with the 3rd party internet based new car businesses that are now obtaining a strong foothold in the new car market, also now beginning their expansion into the used car market, we will no doubt begin to see the fragmenting of the used car market, as we have the new car market, including all the market evolutionary challenges that this will involve. So the importance to the manufacturer and their franchise partners of planning and building a successful used car franchise network, has never been more pressing.
However in order to remain successful in the market trading conditions of near future it is an inconvenient truth that manufacturers will only be able to develop strong and resilient franchise dealer networks, those capable of supporting their new and used car aspirations, and free from high levels of manufacturer support and subsidies, if they invest in and promote the expansion of approved used car business development programmes, those that will be required to ensure that a network of successful used car operations can be built.
Unfortunately though, strong and resilient used car dealer networks do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers in both the UK and in Europe. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 0044 7796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
As automotive professionals and the sector as a whole, continues to come to terms with the evolving new car retailing landscape, we would argue that for the franchised dealer, the importance of having a successful used car operations has rarely been so important, in terms of your long term success and protecting your business model.
We can debate forever on where we all think the new car sector is heading and the changes we are likely to see, in terms of how the model remains financially viable, but that is for another post. This post is all about returning to the business that will be at the foundations of your future success; the used car business.
With the new car market fragmenting and being attacked by entrepreneurial and aggressive internet based businesses who are looking to manipulate consumer behavior, as well as control and hold to ransom vast amounts of consumer data, we would argue that the new car market may never be the same again. Not because manufacturers and their franchise partners can’t compete head on with these threats, but because the purchasing behaviour of consumers has been changed and the traditional franchised dealership model within the sector, (in the main), is in danger of being caught out by the speed at which the new car trading conditions have been evolving, let alone how they are likely to keep evolving.
As much as some manufacturers and their franchise partners have performed above the challenging new car market conditions during the first half of 2018, there is no doubt that there will still be many challenges to be faced by all manufacturers and their franchise partners in the new car market. But the foundations of your long term success in the new car market and the answers to how you face the many challenges mentioned above, are in your own hands as they lie directly in your success in the used car market.
The used car market in the UK is still over 3 times the size of the new car market and although manufacturers can aid success, unfortunately the used car business is not one that can be leveraged and controlled so much by manufacturer initiatives. It is the tertiary and potentially most profitable part of your business, but it is also the business where there is no agreed level for volumes of stock, to any specific model mix and, of course, all the stock acquired for this business will need varying levels of preparation in order to meet the stipulations set by the underwriters of the manufacturer’s warranty.
New car allocations are invariably agreed before the calendar year begins, so as the dealer concerned you enter a trading environment with a set allocation, directly in competition with your fellow franchise partners and the new breed of internet based independent new car businesses; this is not the case for the successful used car operation.
There is no restriction on the volumes or profits that can be achieved from the successful used car operation, only those that you, (as the franchise owner/managing director), put on the business and this makes the used car operation unlimited in terms of profit, which will then automatically increase the profitability of every department within your dealership from the aftersales, finance and new car departments.
On top of this, used car stock holdings are more unique in terms of age mileage and specification, so the hard work required to ensure the used car operation has the right profile of used car stock, the less choice the consumer has, the less pressure there is on margins and the less vulnerable to outside forces your business is.
In fact the benefits to the dealer that is successful in the retailing of used cars are numerous, everything from:
-
Increased new car profitability.
- Increased overall profitability, resulting in a financially stronger and more resilient business.
- The ability to increase levels of part exchanges, therefore more new car business.
-
The maintaining of core standards set by the manufacturer.
- Larger customer bases therefore the opportunity to take more customers on the journey from used car to new car ownership.
- Increased opportunities for repeat sales and increased levels of margin retention.
- Increased levels of customer loyalty to the business.
-
The control and protection of residual values.
- More competitive financial packages and reducing costs of ownership for customers.
- More control over the new and used car vehicle park.
- Protection of the brand.
- A business that is then not vulnerable to the aggressive business models attacking the established new and used car retailing model.
However, to get to here and enjoy these benefits your business will need to embrace, and take responsibility for, the challenges presented by the used car market place and for many of you reading this post, in order to grow your used car businesses, you will need to meet “Head On” the challenges posed by independent third party used car businesses that may be operating in your locality. The growth of independent third party used car operations has been substantial over the last 10 years and this is unlikely to stop; the owners of these businesses will be targeting further growth and their business model is unhindered by the terms of franchise agreements.
They employ consummate and experienced used car professionals who have a single focus, in terms of driving their businesses forward. As a consequence the performance “Bar” has been set very high by these businesses resulting in a situation where many franchised dealers are working in a trading landscape where some of the best performing retailers of their brand of used cars are now independent businesses, not their business or those of their fellow franchise partners.
To add to the challenges; well with the 3rd party internet based new car businesses that have now got such a strong foothold in the new car market, also now beginning their expansion into the used car market, we will no doubt begin to see the fragmenting of the used car market, as we have the new car market, including all the market evolutionary challenges that has involved. So the importance to the manufacturer and their franchise partners of building a successful used car operations and franchise networks, has never been more pressing.
Unfortunately though, strong and resilient used car operations do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car operation on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
As automotive professionals and the sector as a whole, continues to come to terms with the evolving new car retailing landscape, we would argue that the importance of having a network of successful used car operations has rarely been so important, in terms of your long term success and in protecting your business model.
We can debate forever on where we all think the new car sector is heading and the changes we are likely to see, in terms of how the franchise dealer network model remains financially viable, but that is for another post. This post is all about returning to the business that will be at the foundations of your future success; the used car business.
With the new car market fragmenting and being attacked by entrepreneurial and aggressive internet based businesses who are looking to manipulate consumer behavior, as well as control and hold to ransom vast amounts of consumer data, we would argue that the new car market may never be the same again. Not because manufacturers can’t compete head on with these threats, but because the purchasing behaviour of consumers has been changed and the traditional franchised dealership model within the sector, (in the main), is in danger of being caught out by the speed at which the new car trading conditions have been evolving, let alone how they are likely to keep evolving.
As much as some manufacturers have performed above the challenging new car market conditions during the first half of 2018, there is no doubt that there will still be many challenges to be faced by all manufacturers in the new car market. But the foundations of your long term success in the new car market and the answers to how you face the many challenges mentioned above, are in your own hands as they lie directly in your success in the used car market.
The used car market in the UK is still over 3 times the size of the new car market and it will be no coincidence that within franchise dealer networks, the businesses that are most successful at retailing new cars are also the ones that are most successful at retailing used cars. They will be achieving all of the KPI’s set by the manufacturer, adhering to all the standards required, they are model businesses that work with you and support everything that the manufacturer is trying to achieve. In reality though, all the dealers in your network want to aspire to this model, they did not invest in the franchise to not succeed, it’s just that at the core of their success is the business that the manufacturer can’t control, in the way that you can control the new car business.
Although manufacturers can aid success, unfortunately the used car business is not one that can be leveraged and controlled so much by manufacturer initiatives. It is the tertiary and potentially most profitable part of all the businesses making up your franchise dealer network, but it is also the business where there is no agreed level for volumes of stock, to any specific model mix and, of course, all the stock acquired for this business will need varying levels of preparation in order to meet the stipulations set by the underwriters of the manufacturer’s warranty.
But the benefits to the manufacturer of a strong dealer network that is successful in the retailing of used cars are numerous, everything from:
-
Increased new car profitability for both the manufacturer and their franchise dealer network.
- Increased overall profitability of the dealer network, resulting in a financially stronger and more resilient dealer network.
- The ability to increase levels of part exchanges, therefore more new car business.
-
The maintaining of core standards set by the manufacturer.
- Larger customer bases therefore the opportunity to take more customers on the journey from used car to new car ownership.
- Increased opportunities for repeat sales and increased levels of margin retention.
- Increased levels of customer loyalty to the brand.
-
The control and protection of residual values.
- More competitive financial packages and reducing costs of ownership for customers.
- More control over the new car and used car vehicle parks.
- Protection of the brand.
- A business model that is then not vulnerable to the aggressive business models attacking the established new and used car retailing model.
However, to get to here and enjoy these benefits your dealer network will need to embrace and take responsibility for the challenges presented by the used car market place and making this task more challenging, will be the inconvenient truth that every dealer in your network will be at different stages in their used car development.
And on top of this for many of your franchise partners, in order to grow their used car businesses, they will need to meet “Head On” the challenges posed by independent third party used car businesses operating in their locality. The growth of independent third party used car operations has been substantial over the last 10 years and this is unlikely to stop; the owners of these businesses will be targeting further growth and their business model is unhindered by the terms of franchise agreements.
They employ consummate and experienced used car professionals who have a single focus, in terms of driving their businesses forward. As a consequence the performance “Bar” has been set very high by these businesses resulting in a situation where many manufacturers are working in a trading landscape where some of the best performing retailers of their brand of used cars are now independent businesses, not the businesses forming their franchised dealer network.
To add to the challenge; well with the 3rd party internet based new car businesses that have now got such a strong foothold in the new car market, also now beginning their expansion into the used car market, we will no doubt begin to see the fragmenting of the used car market, as we have the new car market, including all the market evolutionary challenges that has involved. So the importance to the manufacturer and their franchise partners of building a successful used car franchise network, has never been more pressing.
In the trading conditions of today it is an inconvenient truth that manufacturers will only be able to develop strong and resilient franchise dealer networks, those capable of supporting your new and used car aspirations, and free from high levels of manufacturer support and subsidies, if they invest in and promote the expansion of approved used car business development programmes, those that will be required to ensure that a network of successful used car operations can be built.
Unfortunately though, strong and resilient used car dealer networks do not happen by accident, but luckily help is at hand. If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
