The brilliance would possibly have disappeared from the new automotive industry, however, brilliance is still very important in its used car counterpart. Today, car sales outperformed new cars with a margin of nearly 2:1 in the United States, Germany, the United Kingdom and France. And the main change of the game, in my opinion, is the advent of a group of new virtual retail models that have brought a spark to the used car area. They have necessarily reinvented the way used cars are bought and sold (more used car sales jokes!), while making every detail of the procedure simple, convenient, fast and transparent.
Reinvent used cars are bought and sold
Based on wonderful similarities (B2B, CRC or B2C) and their profit streams, I think those new business models can be grouped into six different segments.
The first is, of course, the fundamental C2C/B2C market that serves as a platform that connects distributors and buyers, where the two interact to complete the transaction. A typical example is the Facebook market, where my friend announced his BMW X3 before moving from the UK to Australia. He asked some prospective buyers to touch it within hours of the ad’s publication and before the end of the week he had an empty garage and a more complete bank account!
This time, the journey, from advertising the sale of the BMW X3 to its actual purchase, is free. However, there are several automotive platforms used online, such as mobil.de in Germany and Otomoto in Poland that generate solid revenue by charging a subscription payment to list or consult used cars for sale.
Then there are the classic brick click markets, which are necessarily the sales channel for classic car dealerships, car rental companies and car rental companies, which sell new and used cars.
CarNext.com is a smart example. As an auction space on its original avatar, CarNext targeted professional buyers/B2B segment. However, in 2018, it introduced its retail platform targeting the B2C segment in 24 countries. This platform has been set up as a remarketing channel to sell your inventory of used cars coming out of the first lifetime rental.
Similarly, Pappas, a Mercedes Benz dealership in Austria, has used the online channels, Pappas Click – Drive Online Store, to sell new cars and used vehicles. In the United Arab Emirates, Al-Futtaim Automall offers online purchase and sale of used vehicles, with additional and fixed services.
The attractive facet of these markets is their ability to allow a complete online address from booking to buying a used car. Given the classic nature of the business, the revenue stream in the Bricks-Clicks style comes from the margins generated in the sale of the used car. More recently, this has been reinforced through value-added offerings, such as monetary and insurance services and, in some cases, promises and logistics for car deliveries.
What I consider to be the third style is the agents market, a digital/online platform dedicated to promoting a used car on behalf of a seller. Think of it as an optimized online edition of visiting an auto dealership, seeing the main points of stock in car windows, and leaving an agent promoting the car from start to finish. Here, revenue is generated through commissions for the sale of used cars and sometimes through value-added services.
The stated purpose of the CapCar online used car racer is to allow simple and inexpensive transactions of high quality used cars. It provides in terms of collecting vehicle stories, conducting detailed vehicle inspections and assisting with vehicle delivery. In the fast-growing used car market in the Middle East, corporations such as CarSwitch and Seez have temporarily abandoned blocks, while Cars24 in India offers a vast database of used and new cars to buy and sell, for buyers, dealers and dealers.
The fourth style is that of online automotive retailers, who are still the online brothers and sisters of classic brick and click styles, but with one important difference. The point of divergence comes from its origin and its main objective as online stores, which may or may not have a brick infrastructure that accompanies it.
Aramisauto, in France, is a normal multi-brand online sales platform for used cars that benefits from its reconditioning service for used cars before reselling them. Italy Brumbrum is doing anything in the same direction. Its retail platform allows others to buy used cars and hire new ones. Like Aramisauto, he also buys used cars, keeps them and then sells them on his platform. In the Middle East, seller platforms – SellAnyCar.com, SellerAssist, Dubizzle CashAssist – acquire cars from personal owners and dealers, then on customer platforms – BuyAnyCar.com and Dubizzle Pro – to make it less difficult to buy used cars.
The 5th online store is represented by aggregators, such as Carwow, which are just that: online platforms that allow wholesalers, auction houses or distributors to list their bids in one place. Despite well-established auction houses such as BCA and Manheim, corporations such as AUTO1.com, which is a component of the AUTO1 group, are now disrupting the used car area. AUTO1.com claims that its online B2B used car market is operated through more than 60,000 component distributors in more than 30 European countries that use the platform to buy and sell used cars.
Who will succeed?
So which of these six models is likely to succeed? I am bullish about the prospects of all of them simply because each has a need and a niche, and is redefining the customer experience in its own way.
As online used car marketplaces really take off, especially post Covid, I think the key performance indicators for these digital retail models will be very similar to those in the traditional used car business. However, one vital element of success, which I cannot overemphasize, will be the ability to build trust and create transparency across every step of the customer journey.
Subscription is another concept that I think should be considered highly through market participants. The used car source of leasing companies in Europe is expected to be successful in 7.4 million cars by 2023, up from 6 million in 2019. Added to this is a primary result of our recent customer interest survey in subscription facilities: 68% of respondents who have been surveyed European indicated a preference for used car subscription offers.
These trends are a strong indicator of the fact that used car corporations want to look beyond buying and selling, but instead offer a variety of financing/use offerings, adding used car rental and subscription.
Covid and digitization have created an opportunity for industries around the world to be large, ambitious and different. And the used car industry is on track to do just that.
This article is based on an ongoing review through Frost and Sullivan’s mobility team on the evolution of the dynamics of the used car market. For more information or to participate in the exam, please contact me at: [email protected].
I am managing partner of Frost and Sullivan, regional manager of its Mid-East, African and South Asia (MEASA) operations and head of Mobili’s practice.
I am Managing Partner of Frost and Sullivan, Regional Manager of its Mid-East, Africa and South Asia (MEASA) operations and head of global practice for the Mobility, Aeroarea, Defense and Security teams. I’m also the founder of an expert group working on long-term (mega) trends. My team and I pioneered the “Macro to Micro” technique by analyzing megatrends in 2008, which has since been tested and tested with Fortune 1000 corporations in the progression of white area opportunities. I wrote “New Mega Trends”, published in 2012 with Palgrave Macmillan, which has since been sold in more than 30 countries and is recently being translated into Chinese for launch in the Chinese market in 2014. I consult Fortune 1000 corporations (customers such as PG, Ford Array Philips, BMW, Fiat Group, Nissan, Toyota and UNIDO). I am an engineer and MBA from the University of Leeds School of Business, so I am now a member of its advisory committee. I also took an executive course at the Kellogg School of Management. I am a well-known opinion leader and a charismatic futurist who combines a sense of engineering with a forged business experience. Follow me on Twitter: @Sarwant.