It's all about the right price

It's all about the right price

Motor vehicle economy: Is the used car business becoming more important in view of falling margins in new car sales?
Martin Novak: The GW segment has become significantly more important over the past ten years. And is becoming more and more important. However, the challenge is also greater, especially as the business is becoming increasingly dynamic. It is pleasing that a number of dealers are making excellent use of this segment, which has a positive effect on the car dealership's overall income.

Are traders aware of the importance?
Roland Strilka: I think, yes. The dealers are well aware of how important this segment is for the overall margin situation in the company. However, I think that some traders still have to go one step further in order to adapt to the current market conditions. Due to the increased transparency on the one hand and the associated more mature and complex market on the other.

Keyword: the right price. This decides between profit and loss. How does Eurotax support in this context?
Martin Novak: We offer a variety of assistance. On the one hand, there is the vehicle valuation, with which a trade-in can be calculated based on recent sales proceeds. In addition, a trade-in value developed according to a sample cost calculation. This can be checked again using the trade-in check. This is an internal calculation that you can use to compare your individual costs to the vehicle. Apart from that, you can use the market radar to analyze the market situation. This leads to more security and shows, for example, how the vehicle in question is traded in my region, whether there are any abnormalities, etc. All of this eases the challenge of finding the right price. Our latest product in this context is the PriceAnalyser (see box).  

According to Statistics Austria, 0.4% more used vehicles were registered in April 2016 than in April 2015. Surprising?
Roland Strilka: There was an increase of 4.5% in the GW segment in the first quarter of 2016. The level basically rose slightly from 2014 to 2015. It doesn't surprise me that the trend is basically continuing.

According to the current Eurotax index, the average service life of the vehicles sold is 63 days. When does the pain threshold begin?
Martin Novak: We carried out sample cost calculations. Accordingly, from 63 days - i.e. two months - the limit begins where the used car no longer generates any profit or tends to become negative. On average you can tell the dealer: Watch these two months and try to stay below them. 

Roland Strilka: Examples from dealers - also from other countries - show that the faster the vehicles can be turned around, the more they can ultimately sell. Any space that becomes available can be refilled. This fact obviously increases the chance of a good margin, because if I were to shoot in 30 days, I have twice as much chance of a good margin as in 60 days. The downtime should be as low as possible.

When a dealer contacts Eurotax with the request “I want to reduce my downtime”. How do you support?
Martin Novak: First of all, we analyze the situation at the dealer. What are the priorities and what exactly does he want to change? It's about the trader defining where he wants to go and what his goals are. When it comes to minimizing downtime, we would ask how he handles his trade-in. With the help of the trade-in check, we will try to calculate the trade-in value more critically in order to gain more flexibility with the registration price. It’s also about how you manage your portfolio. Regarding downtimes, the question also arises: Which dynamic pricing model would be adequate? 

Will there be new products soon?
Martin Novak: Yes, we will be launching a new product in the next few weeks. With MarketInsight it is possible to identify attractive goods on the market. This is, so to speak, a list that can be screened online and with which you can use filters to define which market segments you are primarily interested in. Our new product then lists the 20 to 30 most interesting vehicles that meet the criteria. 

Is a further increase in short-term registrations to be expected, or has the peak already been reached?
Roland Strilka: If you compare the Austrian market with the German one, where the topic of 'short-term registrations' plays an even greater role, then you can say that things could probably go up for us. But not infinite. The ceiling is then reached. Short-term registrations essentially stagnated in 2014 and 2015. And so I don't assume that there will be a big jump down or up. However, the individual brands are constantly changing their marketing measures - and I also include short-term registrations - and so it is difficult to predict how the numbers will develop.

Will the classic car dealership, including personal advice, test drives, etc., still exist in ten or 15 years?
Martin Novak: A lot will change, but there will definitely still be a buyer segment for whom personal advice and test drives are important.

It will primarily be up to the dealer himself whether he is still needed?
Roland Strilka: The dealer will definitely have his rights in the future. Of course, there is a shift in how goods are purchased. But that doesn't mean that 100 percent of buyers will change their mind overnight. We have different buyer typologies. However, I am convinced that from now on the dealer will have fewer opportunities for contact than today. This means that the opportunities that arise must also be used. To do this, the dealer must have optimal knowledge of the market in both the new car and GW sectors. Ergo: The car dealership must know the market better than the customer who comes to the car dealership. And he already knows the market extremely well these days. Ultimately, it's about transparency. And we deliver this to the dealer with our tools. 

According to a current study by meinauto.de, new car buyers visited the car dealership four times before purchasing in 2009. In 2004 there were only 1.25 visits. This means that you undoubtedly have to convince the customer online beforehand.
Roland Strilka: Yes. On the one hand, the website is essential. On the other hand, the quality of presentation on the stock exchanges is important in the GW sector. This will become even more important in the future. By the way, I don't think it's necessary to always be the cheapest. It's about using your offer to credibly signal that you are a premium provider. 

“Everything from a single source” will also become more relevant?
Roland Strilka: It is essential for the car dealership to create a consistent process for the customer. The end user will have less and less understanding of the fact that he has to deal with 15 employees. The customer journey must be thought through from start to finish. The experience on offer will be crucial.