Five future predictions for the used car sector
Continuing with our #NextGear5 celebrations, we asked MD Liam Quegan and sales and marketing director, Pam Halliday, to share five thoughts on what the next five years will likely have in store for the used car sector.
1. Digital channels will overtake physical auction in terms of volume
"The volume of stock bought via online channels will overtake that bought through physical auctions," predicts Liam. "We’re already seeing this shift of course, but the trend is set to accelerate exponentially as existing channels mature, new services come to market and buyers generally learn to trust the quality and providence of the stock they buy. The new Dealer Auction will be a game changer in this respect when it launches later this year, but new upstream services from the OEMs and big lease companies will also change the way dealers buy cars forever."
2. Franchise dealers selling more used vehicles
"Over the next five years, I’m confident we’ll see used cars receive a greater share of the average franchise dealer’s attention, budget and physical footprint," predicts Pam. "The used car market is heating up at the same time dealers’ ability to turn a decent profit from new cars is receding so we’ll see franchise dealers sharpen their focus on their used offer both in terms of an increased and diversified used car stock holding and online showrooms, but also the rollout of more car supermarket-style dealerships from established names."
3. Greater emphasis on integrated services
Liam also predicts used car dealers will place a greater value on integrated services over the next few years. "We’re increasingly reliant on services that link together seamlessly in many aspects of our lives, and the wholesale market should be no different. The ability to view a car in detail and interrogate its provenance digitally, buy it, move it via an Uber-style transportation service, publish it to your own retail website and trigger marketing actions, all via a few taps and swipes on your smartphone is around the corner. Combining that with AI that finds the most time or cost-effective option for each stage automatically will offer significant gains for dealers. Most notably this will be in terms of accelerating the process and reducing days to sell but also through simplified admin and better-informed decisions."
4. Increased demand from dealers for flexible funding
As dealers become increasingly resourceful in terms of how they find the right stock for their business, their requirement for flexible capital will come to the fore according to Pam. "The days of dealers repeatedly returning to the same handful of sources time after time are quickly disappearing and this requires a more thoughtful and flexible approach to funding. By this I mean one that allows the dealer to pay for stock via a single source regardless of the payee, only paying for what they need, when they need it, no tie ins to reciprocal business, and have credit lines appropriate to their specific business requirements. Believe it or not, that’s not the norm with most lenders today."
5. The advent of online-only used car dealers
And finally, a prediction that might send a shiver down the spine of many a used car dealer but something we’re likely to see within the next five years: the advent of the online-only used car dealer. "We’ve already seen this concept teased by a number of start-ups and established businesses. It’s a definite feature of our future," says Liam. "Online shopping is now the norm in most aspects of our lives and it’s logical this will apply to used cars too. The argument against is cars are a big ticket and emotive purchase, and in the used market, a physical inspection is necessary to be sure everything is as described. But with improved photography and digital evidence, user reviews that provide reassurance, and water-tight return and refund processes, it’s entirely feasible we’ll see used car dealers without a physical retail presence make their mark."