Used Vehicles: A Core Pillar for Dealerships

The automotive sector is undergoing the greatest industrial and distribution transformation in its history. Manufacturers are entering into strategic alliances, unthinkable just a few years ago, that enable them to take on the multi-million-dollar investments in new technologies and clean energy sources.

On the commercial front, the European Union has initiated the reform process for the only two regulations governing the vehicle distribution and after-sales market: Regulations 330/2010 and 461/2010.

In light of the changes ahead, manufacturers and dealers hold differing views, particularly regarding control over and rights to Online Sales.

Growing digitalisation, the arrival of major technology operators and the abuse of direct sales by manufacturers pose a real threat to dealers, whose share in the distribution chain is being eroded.

The Spanish political landscape, together with the economic storm clouds on the horizon, as well as the demonisation of diesel, the choice of engine type (diesel, petrol, electric, hybrid, etc.), environmental regulations, restrictions on access to city centres, mobility, car sharing — in short, a maelstrom of regulations, options and possibilities that confuse buyers and slow down purchasing decisions.

“…they will have to reinvent themselves and offer other types of services to users linked to mobility platforms.”

This situation is having a negative impact on the increase in the average age of the vehicle fleet, placing it at 12.4 years in 2018, compared with 8 years in 2007. In the absence of plans to encourage renewal, the Spanish fleet is gradually ageing with no signs of revitalisation.

… and in the midst of all this, what are we dealers doing?

It seems that general opinion is leaning towards strengthening the two business areas in which we have the greatest “freedom” of movement: Used Vehicles and After-Sales.

Customer opinion of the second-hand market has changed radically in recent years, mainly due to product quality, and fundamentally because of the seriousness, commitment and warranty that sellers offer.

This perception is particularly relevant among the purchasing options of younger customers, whose mobility needs and tastes differ from those of more traditional buyers accustomed to “driving a brand-new car”.

The trend towards usage over ownership has less of an impact on second-hand markets, mainly in areas outside the big cities.

Dealers have a business opportunity before them that can guarantee their future viability. It therefore seems absolutely necessary to prepare for it, with dedicated departments, trained sales teams, suitable facilities (physical and virtual) and sufficient financial resources to market vehicles from traditional channels, as well as those we may not be able to sell as new vehicles (direct sales, large fleets, technology operators, etc.).

The role that dealers decide to play in the new mobility models will be decisive for the future; they will have to reinvent themselves and offer other types of services to users linked to mobility platforms.

This new view of used vehicles on the part of customers should make us reflect on our own opinion, set aside the old theories of the “necessary evil” and think about turning it into a cornerstone of dealerships.

Millán de Juan

Consulting Area