the secondhand vehicles’ market challenges and opportunities at european level bucharest, 21...

The Secondhand Vehicles’ MarketChallenges and Opportunities at

European Level

Bucharest, 21 November 2013

Rob HenneveldGlobal Automotive Consultancy

2ALB-Leasing conference 2013

Today

1. Present dynamics and developments in both Europe and Romania. Some trends and figures of the new and used car market, including mileage fraud.

2. Back to the drawing board for a SWOT!Determining Strength & Weakness & Opportuni-ties & Threats in present day used car sector

3. Adding Value to Used Car Supply Chain. While creating a permanent stream of revenue from Inspections


Present dynamic used car sector

2. Mediteranea countries:• Strong drop in sales new cars• No (local) market for buy-backs & ex-demo’s• Volume- & price pressure on existing used car market

4. Consumer:….from possessing to use…….…Not to Buy is the New Buying…..

1. New cars: (1) Traditional & alternative distribution, (2) Zero-mileage registration

Online, Independents, Supermercado’s, etc.

3. Drivetrains: Auto ≠ Auto• Traditional drivetrain disappears (slowly)• Hybrid & micro-hybrid• Electrical (Full/Plugin/Range Extend.

4x major trends 2013


373

524

491

Car density:Number of cars per 1.000 inhabitants

EU average: 478

213

Flow West => East• Young & high mileage cars• Older used cars

Flow South => North• Young & smaller cars• Low mileage cars

See printed version for car density per country in detail


Trends Registered Car Park ‘07-’12

2007 20120%

10%20%30%40%50%60%70%80%90%

100%

22.7%3.3%

14.2%

12.1%

18.1%

31.2%

11.0% 21.7%

13.1% 14.5%

20.8% 17.1%

>0 - ≤2 >3 - ≤5 >6 - ≤10 >11 - ≤15 >16 - ≤20 >20

Consumers accept the “older car”:• Quality of cars in general increases….• He/she purchases and older one…..

• Functionalities are as good• Too high mileage is not an issue…..or is it?

2007 20120%

10%20%30%40%50%60%70%80%90%

100%

75.2% 67.0%

24.8% 33.0%

Benzin Diesel

Diesel share Europe: 35,9%


Import on the increase (again)

Importing fairly easy Used cars plentiful available

* Estimation, **Extrapolated2008 2009 2010* 2011 2012 2013**

0

50000

100000

150000

200000

250000

300000Passenger cars

Import used car Sales new carsSource: APIA

Pollution tax cut of 30%

Highest ratio new sales vs import!

Need for mobility ≠ # used car supply

Influence of Government(s)

Non-transparency can result in:Disappointment / High Cost/Bad perception of sector…………

Eco-fiscal regimes: Too much, Unexpected, Disrupting markets

Threat used car sector: Mileage fraud


Mileage fraud used cars

“Transaction Pusher #1”

Best target cars:• High mileage• Young cars

Crossing the border legitimize the new mileage

Barrier to do business across Europe:• 1.000 cars/Fte (mileage verification)• Financial risk & cost• Bad for image

Both the sector & consumer pay the price for it!

The Future for Quality Approved Used Cars looks good!

Low mileage cars are not trusted


(SWOT) Used Car Sector

Positive NegativeInternal

Strength Weakness

ExternalOpportunity Threat

Opportunity Threat

SWOT

See printed version for extended SWOT

1. Stable product (volume sales fluctuations)

2. Product differentiation (price/age/quality)

3. Plentiful used car retail outlets

4. Accessibility is high through Internet

1. Lack of transparency

2. Low competence & retail skillset

3. Stock funding by banks

4. Old fashion-based daily practice

1. Stock - & Management Information

2. Development Pan-European market

3. Cross-selling opportunities

4. Internet differentiates on quality/price

1. Low entrée barrier & low sector imago

2. New car sales volumes & pricing

3. Eco-fiscal regime governments

4. Fraud (fiscal, mileage, etc.)


Some conclusions SWOT

How can we make the real differencePrice is NOT enough anymore

We need to “lock-in-the-client” with services

Closing the gap of a-synchronic information between seller and buyer

Action #1: by “Adding Value”Start with transparent supply of information

Are we supplying a used car & maybe services,

orare we just moving dead metal?

NO supply shortage used cars* &

NO slack in demand!

We need to manage the perception of high

mileage cars

* In actual volumes


Revenue from End-of-Contract Inspections

• Small cost => high return• Strategic reasons lead to: (win-win)

– Additional source of revenue– Commercial sales strategic leverage………– Awareness among Fleetowner & drivers– Increase better driver behavior

From “disposal” to permanent source of revenue

Leading to lower operational vehicle cost!


Average split Passenger Car & LCV

0 - ≤12 >12k - ≤24 >24 - ≤36 >36 - ≤48 >48 - ≤60 >600

500

1000

1500

2000

201398

799

12421395

1675

264

731

18021987

1776

2210

Passenger cars LCV's

(Eur

o)

Based on +39.000 EU Inspections

In month’s =>Source: Macadam Europe

Best-practice method:• Audatex based• Brut repair cost (Q-new!)• -/- 30% = actual loss-of value

Part of determining:• Risk management• Insurance premiums• Correct franchise per incident

See printed version for more details

17,4% no cost

Above “Normal Wear & Tear” cost per vehicle


Main requirements implementing

Some conditions for implementing:• Transparency on method & outcome• Consistency in: “Normal Wear & Tear”

– Norm inspection • Consistency in loss-of-value calculation• Processing insurance (claim) file• Educating fleetowner & driver (over time)• Monitor and apply benchmark key-figures

Sample of norm:

Latest development: “in-between-inspections”


Conclusions

1. 2. 3. Europe is divided in 3-marketsMileage fraud is disaster for image of sectorManaging perception high mileage cars

No shortage supply, no lack in demandNeed to “lock-in-clients” with recurring servicesMore transparency is required

Steady and permanent stream of revenueSmall investment – high revenueLeads to lower Total Cost of Ownership TCO)


Rob M. HenneveldGlobal Automotive Consultancy

+31 6 54 921 409www.globaucon.com

[email protected]/#!/RobHenneveldwww.linkedin.com/in/robmhenneveld1

http://www.globaucon.com/

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