From the margins to the mainstream
While writing the Boost Auto Top 10 Predictions for 2021 a couple of weeks ago I realised that there were some emerging trends, that will become increasingly important as the year progresses. From the margins to the mainstream. These trends will affect used car values, the way we appraise vehicles, the speed of vehicle preparation, the margin we are able to achieve for these used vehicles, and a range of interconnected business issues.
I hope you have been able to read Boost Auto’s Top 10 Predictions for 2021
Here is the Boost Auto Top 4 trends that are likely to influence your business in the year ahead.
Electric Vehicle Charging Infrastructure Takes Off
NZ already has a charging infrastructure that is significantly advanced relative to its new BEV vehicle fleet – the Electric Highway initiative and EECA funding, as well as the vision of ChargeNet saw to that – aided by our appetite for used Nissan Leaf ex-Japan. But some charging infrastructure is manufacturer driven. New PHEV and BEV models need infrastructure at dealerships, and this focus and activity brings more charging infrastructure at large fleet HQ’s and destinations. For an example look at what The Warehouse Group have already done, installing EV chargers are nearly every one of their stores.
2. Goodbye cars, hello SUVs
Customers tastes are changing – and manufacturers are introducing models to satisfy their demand, mainly SUVs. That means that more cars will disappear as brands focus their efforts on models with the most volume opportunity. Expect Ford Focus, Honda Jazz and a few others to slip away like Passat, Mondeo, Leon, Ibiza, Prius V, and Prius C, Clio, and Fiesta did in 2020. The big question is when will Camry disappear? Will it be 2021?
3. Rent don’t buy
Car share might be the buzzword, but the real change will be PCPs (Private Contract Purchase) or GFV (Guaranteed Future Value) products. We are used to owning our phones on a two or three-year plan, but we aren’t yet used to a plan for our car. Yet. In the UK and US PCPs are the default way to purchase a private car. In Australia, South Africa and much of Europe PCPs have much wider acceptance than here. Even five years ago in the UK, nearly 60% of all private cars were bought using a PCP. Quietly more brands are offering a GFV product locally; the combination will mean that customers will learn more about this way of funding vehicles, and their confidence in it, and acceptance of it will grow.
4. The Rise of the Used Car Supermarket
We are on the cusp of a new way of buying used cars. Turners have refocussed over recent years to become a retail car yard-based retailer; they now have a large national retail footprint. Eagers Automotive have launched Easy Auto 123, and 2 Cheap Cars have 12 branches nationally. With this scale, we are close to one of these players offering a low frills, no haggle pricing policy with a clear point of difference (Easy Auto 123 already offers this, yet they have just one site). This will shake up the used car market, as increasingly the smaller independents are struggling with the increased price of used stock ex-overseas, and an increased vehicle parc of NZ new vehicles, becoming available as used stock. The squeeze is on; the import market is getting harder and margins tighter. The supermarkets are coming.
I trust you find these thought starters and insights useful. Happy New Year to you.
About Boost Auto:
Boost Auto publishes a regular Boost Blog and a new monthly Market Report and round-up. Our Market Report is available on an annual or monthly subscription and is an essential tool to assist in planning and reviewing your automotive related business. Each report will be around 800-1000 words, and include tables and commentary as well as insights. To request a free sample report and find out more please visit BoostAuto.co.nz