May 2022 Used Car Workshop, Brooklands, UK

The presentation (with speaking notes) shown at the workshop is available below together with a video recording.

As the smoke clears from the last two years of struggles and transformations, and as we revisit our predictions and assumptions on aftersales, networks, regulation and the direction of the automotive sector, the surprising entrant to centre stage is….. used cars.  Today certain used cars are worth more than new cars and certain used car retailers such as Cazoo and Artemis are valued far more highly than their new car equivalents.  As OEMs try to move their mindsets from a focus on transactions to a focus on ongoing relationships and contracts, is the very concept of a used car becoming outmoded?

So it it timely to take a holistic look at the used car sector, encompassing retailers and manufacturers, auction houses and car buying services, digital start-ups and franchised dealer groups, and to identify these changes and their implications.

•  The pandemic-accelerated changes in consumer buying behaviour mean that offering omni-channel retailing is now a pre-requisite for used car dealers of all sizes and formats.  For traditional dealers this requirement has changed everything from technology strategy to organisational structure to the profile and productivity of the sales executive.  For dealer groups the optimal balance between centralisation and local autonomy is now also changing.  What are the threats and opportunities from this step-change in the sector?

• The shift online has also created a wave of technology cash investing in new start-ups from pan-European retailers to car-buying marketplaces, as well as the consolidation of existing Autotech businesses.  Just as established OEMs grapple with The Tesla Effect, what is the implication of these new businesses that seem to play by different rules?  Who will be the long term winners?

• The sleeping giants of automotive consumers’ online activity are the used car listing sites, always viewed as suppliers by the dealers and of minor interest by the OEMs.  With consumers looking to continue their online engagement far beyond the initial viewing of a used car advert, how will these businesses evolve to take advantage of their prime (virtual) real estate, and what are the implications for their relationships with retailers and manufacturers, and who will win this upcoming battle of the brands?

• As the used car processes of buying and selling goes entirely digital with many decisions being taken remotely by both consumers and businesses, how will this impact the role of traditional intermediaries such as auctions and logistics?  Adding to this the increased quantity and quality of data and pricing capabilities, how will the greater ability to exploit cross-border arbitrage opportunities impact prices and vehicle flows across the continent?

As its starting point, this workshop explored the profound implications of the permanent shift in the behaviour of the used car buyer, drawing on both exclusive ICDP research and third party sources.  It examined new retail formats such as Autosphere and Cazoo, the significant evolution of marketplaces such as mobil.de and AutoTrader from listing sites to quasi retailers, and the responses of incumbents such as Emil Frey and Arnold Clark.

The workshop also addressed the underlying drivers of the used car business model, and the effect that the current retailing revolution is having on the drivers and economies of scale of vehicle reconditioning costs, of gross margin achievement and of sales productivity, among others.

 The session included case studies and best practices from across Europe and beyond.