Going Backwards to Go Forwards

When considering the current economic crisis and its effect on the retail motor industry I cannot help but think back to what unknowingly became the birth of great used car retailing practices in the UK following the 'Winter of Discontent' in late 1973 early 1974.

To put today's crisis in perspective imagine what it was like trying to sell new cars in a showroom that was frequently without electricity, when our potential customers were only working 3 days a week and every car owner was issued with petrol rationing books.

I can recall standing in a cold dark car showroom at 4pm in the afternoon with the headlights of the new cars switched on to let passing traffic know we were open for business, we even used a new accessory called hazard warning lights to illuminate the gloom and show our determination to stay in business. O for a scrapage scheme then!

Retailing new cars was extremely difficult but used car sales offered a way forward and many people realised for the first time that if they set themselves up properly to retail used cars there was a consistent and rewarding profit stream to be had.
This pioneering development of volume used car remarketing, forced by the ebb and flow of the economy is the reason that the UK now has the most sophisticated used car market anywhere in the world.

With more used vehicles changing hands every year than France and Spain combined and at least on a par with if not slightly bigger than Germany the UK manages this huge volume of used car activity without the continental outlets (particularly eastern Europe and until the recent past Russia) that the used car markets that these mainland European used car markets can access.

The sophistication of the UK market is underlined by the a startling statistic that once a car is part exchanged by its first owner there is an average of 2.75 wholesale 'owners' (traders, auction houses, franchise dealers etc) before it is registered in the name of the second owner. With well over 7 million used cars changing owners in the UK every year the retail and wholesale motor trade has to be quick thinking, imaginative, speculative and customer focused to stay ahead of the pack.

Think back now to the UK in 1974 and apply the mentality of new car dealers at that time to many franchised car dealers in continental Europe currently, especially those in emerging markets such as the Baltic's and Balkans and Russia. In the recent past they have had tremendous success selling every new car they could get their hands on, but now suddenly that market has gone and it probably won't come back for many years either.

So whats the answer for dealers in Europe at such a difficult time? Get your used car act together; take a long hard look at the UK, adopt and adapt their tried and tested practices and let retail used cars be your salvation.

Retail Practices in the Russian Used Car Market

WHEN DEMAND OUTSTRIPS SUPPLY

A RUSSIAN PERSPECTIVE

I was delighted to be recently invited to visit a number of motor dealers in the Russian capital of Moscow. In my capacity as an automotive consultant who specialises in all aspects of used cars I was looking forward to comparing the Russian market to those I have recently experienced in the Baltics and the Balkan's where the economic miracle of 5 years ago has in some cases become a motor dealers nightmare.

Given my dispiriting used car experiences when visiting so many new and used car dealerships in continental Europe I didn't expect an awful lot from Russian motor dealers; great new car facilities maybe, but like many of their European counterparts I expected dealers to relegate used car facilities and their customers to the 'bargain basement' and boy was I right!

The used car 'display' in the photograph was outside a reasonably new and huge multi -franchise dealership on the outskirts of the city. I'm not sure this 'display' needs describing but just in case here it is! A collection of dirty, unprepared cars, with large gaps in the line up, no correlation to size or price grouping and certainly no thought for colour mixing either . The cars stood on rough gravel looking totally uncared for. In addition to this display they also had an internal used car showroom - actually it was more like a multi storey car park - which was accessed after quite a long walk past damaged vehicles waiting for repair in the bodyshop up some stairs painted in a very alluring battleship grey and into an area that had clearly been last in the queue when the electrician was fitting the lighting out.

To be fair I have experienced this attitude to retailing used cars in many parts of the world - even in mature markets such as Finland, Sweden, Spain, and Greece - but given the sheer scale of retail used vehicle profit potential in Russia I cannot understand why the motor dealers there who so clearly have the money to invest in great facilities do not grasp the opportunity before them.

Of course right now demand is virtually outstripping supply and dealers can take a trade in and with virtually no preparation easily sell it, without the need for any sort of consumer offer such as warranted mileage, service department check over, cosmetic preparation, warranty etc and they make a decent profit doing it too!

In short it appears that used car buyers expect little and get even less - poor faciliites, no consumer offer and generally damaged and dirty used cars.

The message of this blog is simple, get professional about retailing used cars in Moscow at least and you'll be on your way to your first million in the shortest time possible.

David Rathband

Director

European Used Car Consultancy Ltd - trading as motorvator