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Used car dealers likely to lead online motor retailing in 2018

Dec 05, 2017

At iVendi, we’re making a key forecast about 2018. We believe that used car dealers are likely to lead the way in online motor retailing as manufacturers struggle with the direct new car sales web sites they have established over the last year.

Why? The key reason for this trend is simply that used car retailers enjoy a much higher degree of flexibility over factors such as price and can offer a broader and more effective range of part exchange solutions.

The reports that we hear from official and unofficial channels are that the online direct sales sites established by manufacturers have only generated a trickle of new car sales so far. They all suffer from one key problem – in a market where virtually every new car is available at a substantial discount from a dealer or broker, new cars sold online by manufacturers are offered at list price. Unlike any other online retail model you could think of, it is more expensive to buy a new car online direct from the manufacturer than to pop out to your local retailer. Until this issue is resolved, these enterprises are severely compromised.

To an extent, even franchise dealers selling new cars online suffer the same issue – they have to advertise at a discount to appear competitive – and this often doesn’t sit well with their manufacturer. Instead, used car retailers – whether car supermarkets, independents or the used operations of franchise dealers – are already establishing themselves as the leaders in generating significant numbers of sales online.

The fact is that used car operations do not suffer from this structural pricing problem and are not caught up in the politics of manufacturer-dealer relationships. For them, the issues surrounding adopting a complete online motor retailing model are all about practical issues, such as their preferred method of handling part-exchanges, which lenders to include within their offering, and the sale of value added products. While some of these are tricky, they are managerial choices.

We deal with a wide range of types of dealer and, really, it is the used operations that are gearing up to take online motor retail to the next level. They are often simply more digitally aware and have a more pragmatic attitude about how to deliver sales.

Early in 2018, iVendi will launch the next release of its platform, providing what we believe to be a world first off-the-shelf complete online motor retailing platform for dealers. It will allow businesses ranging from major groups to small independents to simply plug in the solution to their existing web sites and start retailing online. A trial version of the platform has been in operation with up to 500 dealers since Spring and is currently handling sales in excess of £2m per month.

To anyone who still says that online motor finance doesn’t have a role to play, we can point at this very substantial figure, one which is growing month-on-month. This is a genuine market satisfying genuine customers. However, it is also significant that nearly all of these are used car sales. While we expect that the new car market will resolve its issues – it simply has to – it could potentially lag some years behind used in adopting this technology.

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