Tech To Transform Used Car Business In Next Five Years
- June 21, 2019
- Posted by: John Swift
- Category: Automotive Industry
Used car retailers will see online auctions overtake physical sales, franchised dealers will take an even bigger part of the market, sales systems will have to be far more integrated and digital-only dealerships will begin to replace forecourts – all within the next five years.
These are some of the predictions from NextGear Capital, part of the Cox Automotive group, which has funded more than £2 billion of used car business since 2014. MD, Liam Quegan, and sales and marketing director, Pam Halliday, said the landscape will fundamentally change for retailers by the mid-2020s.
One development is that franchised dealers will continue their expansion into the sector to counter falling revenue and margin with new cars, devoting more resources and forecourt space and setting up more supermarkets.
“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.”
A huge shift will be the expansion of online auctions as dealers come to trust the quality of the stock they can buy. Liam said:
“The volume of stock bought via online channels will overtake that bought through physical auctions. We’re already seeing this shift of course, but the trend is set to accelerate exponentially as existingchannels mature, new services come to market and buyers generally learn to trust the quality and providence of the stock they buy. New upstream services from the OEMs and big lease companies will change the way dealers buy cars forever.”
Online-only used car retailers
Building on this, dealers will also have to use and be able to use more integrated services. Liam added:
“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.”
Finally, the power of the internet will move to its inevitable conclusion and we will see the arrival of online-only used car retailers.
“We’ve already seen this concept teased by a number of start-ups and established businesses; it’s a definite feature of our future. 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.”