“challenges & opportunities in the used car industry”. how to develop a healthy and...

“Challenges & opportunities in the used car industry”.

How to develop a healthy and sustainable remarketing

policy in present times as a leasing company”.

Managing Remarketing in a Changing Market

Bucharest, 12 November 2009

Rob M. Henneveld

Global Automotive ConsultancyThinking Global, Performing Local!

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Agenda for today

1. Introduction2. What drives the car manufacturer?3. Managing remarketing in an unstable new car

market4. Pricing pressure, sales barriers & -channels 5. Optimizing & managing the sales channels6. Conclusions

2© 2009 Global Automotive Consultancy, the Netherlands/Romania

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1. Introduction

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In a variety of capacities: as an Independent International Business Consultant, Trainer, Coach, Interim- and Project manager, writer of articles and white-papers.

Mostly applied during strategic- & product development, in-depth market research and direct consultancy in areas such as, the (Financial) Service Industry, Aftermarket, Remarketing and IT.

More recently, co-founder and chairman of the Dutch Remarketing Council, objectives: promote Dutch cars throughout Europe, lower trade-barriers among car traders, create a knowledge-center used cars.

Background:Before founding Global Automotive Consultancy, an international in-depth knowledge and diversified automotive experience was acquired.

This developed into a well-balanced vision in a wide range of issues, covering: Car Leasing, Rental, Remarketing, Aftersales, Fleet Management and Insurance – involving a clientele in the wholesale, retail and end-user segments of the supplier-chain.

Active in several countries: the Netherlands, Germany, Belgium, France, Italy, Israel, Turkey, Poland, South-Africa, Spain, Poland and Romania.

© 2009 Global Automotive Consultancy, the Netherlands/Romania

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2. What drives the Car Manufacturer?


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Commercial life-cycle shortens:

7-10 yr . => 5-7 yr. =>3-5 yr.

Additional 2x main threats: 1.single production platform & 2.(low) budget cars

Business model determines:

- Every 0,6 sec one car!

China produces mainly for its own use…. but for how long

Overproduction: +15-30%)

Scales of Economics drives production, not market

demand!

Source: AUTOFACTS Global Light Vehicle Assembly Outlook


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Per 1.000 inhabitants

In saturated markets: Change in purchase behavior:

Big car = OutSmall/Green car

= InEU /Governments car & cost: from fixed to variable

Low density: Need for mobility potential drives (1) used car market (2) production to CEE-countries

Consumers are in an “ownership-motivation” crisis


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3. Managing remarketing in an unstable (new) car market


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Managing remarketing in an unstable (new) car market

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A new car market needs a strong used car market and vice versa A new car market needs a strong used car market and vice versa


Present new car market issues:

European market in general, sales demand dropped dramatically, sales down 20-50+%

Business model of car manufacturer “works” against our interest(!)

Overproduction, under-utilization and huge (dead) stock shall remain

Demand shift from medium & small to “budget-car” & “low-budget-car” to hybrid

Consumers are still in an “Ownership-Motivation” crisis

Corporate community, big & small, is reviewing its car- & mobility polices

However, the biggest competitor for the used car is the new

car……………!!

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Used car transaction volumes in Europe


Some conclusions:

Volume changes car producing countries

Bigger-volume-countries: value-determining

Romania: no influence on EU-pricing used car

Focus on quality & transparancy is key-factor

As a product, used cars are more stable than the new car…………

Mainland Europe:

Increasingly becomes one market with a pan-European pricing…….

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2008-2009: Pricing pressure & power shift

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A new used car segment!

• Putting extra pressure on the used car value• Usually supplied by the brand-dealer• But also through independent car-traders

Developments:Shift in consumer’s behavior: “ownership- motivation crisis” and more TCO-awareness

Market power shifted from sellers to the buyers

Stigmatizing the new car buyer (private-consumer)

Used car requirements changed during ’08/’09:

• More price orientated, from 10-11k => 5k

• Brand/model less important

• Trustable source (history) (Internet?)

• Fuel type

• etc.

During 2008 sellers’ power shifted to the buyers…

This means that the sellers have to revise their strategy!


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The (large) leasing companies

For the car leasing industry:

A shockwave went through the used car market

Shift of power in ‘08 was big surprise for the leasing industry, who were the first ones to start bleeding,

Consumer wanted a different car (cheaper!) Encountering very confrontational issues, such

as: No solid used car policy in place (afterall: “disposals”) Single sales channel orientated & mainly wholesale Strong process orientation (“allocating cars”) Not sales driven (not adding value) Lack of sales competence among staff Too short internal lead-times Wrong mix of fuel (95-diesel/5% petrol) AND NO CONTINGENCY PLAN


Selling the cars within short lead-times, accelerates the drop in car value, making things worse…………

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4. Pricing pressure, sales barriers & -channels


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Changing sales channels


On the Internet: what is a good or a bad car?

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Optimizing & Basic Remarketing Requirements

Basics: Develop a strategy, with a plan and objectives (core-business??)Create a flexible and Collaborative Platform (Internet) => Apply Virtual

RemarketingIntegrated processing, preferably with back-office systemAll-interaction with stakeholders (service suppliers, buyers, etc.)Lead-time management (incl. transaction benchmarking approach)Drive for uniformity, creates reliability and trustIntake process: Fair, Consistent & Transparent

Some additional objectives:Utilize pre-remarketing period & collect Internet-search behavior ransparent description & uniform presentation of the carPrevent uncertainties of the car’s external & internal conditionEvaluate the “brand-value” of the Internet portalsCreate a Lease Car Standard => Quality-standard of the Car Lease IndustryIssue a “Lease-Voucher” => new owner receives aftersales

discount/service, etc.

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Optimizing

Remarketing

transactions

has become

crucial!


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Multi-channel sales strategy


It is about optimizing transaction result and spreading the risk

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Required: purchase barriers


Purchase barriers pan-European & local market:

Correct and complete description of the car Insight in the technical state of the car:

Optical, outside & inside Repair/Maintenance history, Inspection: MOT Body repair history Tyre condition, in mm’s, sparewheel? Number of owners (private/company)

Knowledge navigation system (import/export) Countries & language settings

VAT-number buyer & seller Local taxations by import Administration by im- & export

Missing the Certificate of Conformity (CoC)

These barriers are alike for the private-consumer and the professional car trader

By taking them away, you add value to the used car proposition.

Make sure the prospect buyer recognises the good points of your car………..

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5. Optimizing & Managing the sales channels


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5. Managing the Sales Channels

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•Logistics! •Intake process•Channel allocation!

Pre-Remarketing period & Asset-evaluation

Multi-Channel Remarketing Approach

Wholesales Export Retail Direct

• Auction method: Online & Physical

• Tenders: Open & Closed

• Independent car traders

• Drivers &

• Relatives

• Private sales

•Franchised network

•Dealers

• Independent used car outlets

• Car Supermarkets

• Auctions: Online & Physical

• Independent traders

•Re-lease….•Pre-runner…•Short-rental…• ???

Time


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6. Some conclusions

Business model of car manufacturer “works” against our interest!

Huge stock & under-utilization shall remain Shift from medium & small to “budget-car” & “low-

budget-car” Biggest competitor for the used car is the new car Consumers are entering an “Ownership-Motivation”

crisis Sales management approach is needed Multi-channel strategy is justified, to spread the risk Introduction of “Virtual Remarketing” (Smart-Internet) Reducing traditional purchase barriers is vital to

optimize sales transaction


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Thank You!

Rob M. Henneveld

+31 654921409 or +40 751254551

www.globaucon.com

[email protected]


“challenges & opportunities in the used car industry”. how to develop a healthy and...

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