I’ve been supplying call tracking services to the automotive sector for nearly twenty years, and have seen the roller coaster ride from boom to bust (2008/9 anyone?).
However, I’ve never seen a used car market quite like the one we’re seeing now. There’s a shortage of decent stock and prices are rising month on month. Stock is being squeezed as the used data on Autotrader is showing:
Headline Autotrader figures
- 2021 stock: MoM 29.0% increase, YoY 30.0% increase
- 2020 stock: MoM 4.9% decrease, YoY 48.8% decrease
- Total market: MoM 2.6% decrease, YoY 6.4% decrease
Top 5 brands by market share of 2021 stock
- VW 12.8%
- Audi 11.0%
- Mercedes 8.9%
- BMW 5.8%
- Nissan 5.2%
The strong market is being driven by the following macro factors:
- The shortage of new stock due to the chip crisis, combined with a shortage of nearly new stock due to a significant slowdown in car production during the various lockdowns
- Lack of liquidity within the auction houses and traditional remarketing routes due to dealers and rental companies holding onto their stock
- The rise of cash-rich new entrants who are prepared to lose significant sums trying to prove dubious business models to their gullible investors.
Our call index shows that the Autotrader calls are holding up well. There’s no sign that these ‘boom’ times are going away any time soon. So what will cause a change?
There’s no sign that these ‘boom’ times are going away any time soon.
The elephant in the room is inflation. The Bank of England quotes that this will be a short term issue. I’m not so sure, and the inflation genie is out of the bottle. Firms are struggling to recruit causing wage inflation, and goods across all sectors are rising in price. People have saved over £120 billion during the Covid-19 pandemic, driving up asset prices as well.
Although the sun is shining, don’t let it distract you from focusing on the basics. When you’re busy, it’s easy to stop providing rockstar customer service. Make sure that all your marketing measurement processes are up to date and keep listening to those calls. The market will change and customers have a long memory if you treat them poorly.
We monitor the used car locator for a number of manufacturers, and their graphs are remarkably similar to what we’re seeing with Autotrader. However, we would anticipate things to quieten down when schools break up and we move into the holiday season. In the meantime, make hay while the sun shines.