German car brands dominate online used car market
Published: 04 November, 2020
Motorists in the second half of 2020 are seeking German cars online in increasing numbers, which is also being reflected in used car sales, new research suggests.
Online car supermarket BuyaCar.co.uk has found that German brands grew their share among the 10 most popular cars from 52.4% in the first six months of the year to 71.7% in the months since July.
German cars also continue to dominate searches, consistently taking eight of the 10 top slots for cars that motorists have in mind when they arrive at BuyaCar.co.uk. Used car search data also reveals that German car brands are most likely to win 'conquest sales' - where customers begin looking for one make but end up choosing another So far in 2020 just four German models feature in the top 10 new car sales chart, while five appear in the BuyaCar.co.uk top 10. Since the end of June seven of BuyaCar's top 10 cars are from Mercedes-Benz, Audi, BMW and Volkswagen.
Christofer Lloyd, Editor of BuyaCar.co.uk, said: "From the trends we are seeing since the summer, it seems that second-hand customers are becoming increasingly single-minded when it comes to their car brands of choice.
"We believe that the key to this is the continuing appeal of low PCP finance monthly payments, which mean that consumers will often look past a typically higher headline price once they realise that the Mercedes, Audi, BMW or Volkswagen they always really wanted is unexpectedly affordable - thanks to high resale values at the end of the finance contract.”
Christofer added: "This combination of enduring strong image and low monthly payments is undoubtedly the reason why just four brands are able to win the lion’s share of used car sales, even when people initially arrived looking for something like a Ford Focus or a Vauxhall Astra."
- Used car sales nosedive in Q2
Even used car sales have not been immune to COVID-19, as new figures from the SMMT showed that sales in the UK’s second-hand car market fell by by 48.9% in the second quarter of 2020.
- August car sales align with “quietest month” expectations
New car sales were down by just 5.8% in August, as the market returned to something like normal post-lockdown, according to the latest figures published today (Friday 4 September) by the SMMT.
- Used car market bounces back in Q3
- Demand drives up car sales in July
The trend towards lower car sales resulting from COVID-19 lockdown restrictions seemed to go into reverse during July, with UK new car registations zooming up 11.3%, according to the latest figures from the SMMT.
- Don’t join the gold rush, sell shovels
Futurologists have predicted it for years, but now, it’s actually starting to happen. The impact of the sharing economy on the automotive industry has upended the status quo and companies are scrambling to gain first-mover advantage within a radically reconfigured marketplace.
In the US, in March 2018 alone, an Ohio dealership launched a monthly subscription package that allows customers to switch between different brands of luxury cars, and GM announced a plan to allow their customers to rent their cars directly to each other. Meanwhile, ride-hailing is rapidly taking share from traditional car rental in Certify customers’ business travel expenses.
In the UK, a Mobility as a Service (MaaS) App called Whim is in trial in the Midlands, offering unlimited public transport, hire cars and short taxi rides for a fixed monthly payment of £440. Meanwhile, personal contract purchase (PCP) deals – essentially car rental, with the option to pay off the rest of the car’s value after three years – have already become the preferred method of new vehicle purchase.
The problem is that hundreds of companies in the automotive world have set their sights on the same goal: To be the go-to choice for consumers. That’s fine if you have billions to invest in marketing, but if you’re not at the level of Ford, Uber or Google, that fight is going to get ugly. Rental agencies, dealerships, and business leasing providers – all of whom are used to owning customer relationships in the pre-mobility world – are among those who are going to be out-gunned.
The good news is that there are two clear ways for businesses to thrive in this new marketplace in a way that won’t be disrupted by technological advances. Both strategies involve selling to businesses rather than consumers, which means they can deliver sustainably higher margins without requiring a huge spend on marketing and customer acquisition.
Strategy one: Sell a service to the dominant platforms
The most obvious low-risk, high-reward model is to provide an indispensable service to enable the mobility being sold by others. This would involve contracting with whatever mobility platforms dominate, be it Ford, Uber or Waymo, Alphabet’s self-driving car unit. A business might decide to become the leading company that deliver services around.
