So… Just What Are We Talking About Here?
"CARS…. And lots of them! The latest figures (from 2021) show there being over 32.5 million cars registered in the UK. And they change hands lots of times!"
"In 2021, and even with the restrictions of the Covid pandemic, over 7.5 million vehicles changed hands in the UK used car market (an increase of 11.5% on 2020) - which equates to well over 20,000 vehicles being bought and sold every single day. And that is a lot of cars! This just helps to confirm the potential out there for your Car Broking business!"
But what's happening right now... in 2022?
The UK used car market has fallen some 18.8% in Q2 2022 with 1,759,684 cars changing hands. First half transactions are down -8.3% on last year and market now -12.8% year to date behind pre-pandemic 2019. Battery electric vehicles (BEVs) however see a boost of 57.1%…
This poor performance was again driven largely by the global supply chain shortages that continue to hamper new purchases and the fulfilment of existing orders, despite manufacturers’ best efforts to ensure as many new vehicles as possible hit showrooms.
To continue - well, let's start by looking at the facts - and see what's selling according to the latest figures released in August 2022 by the Society of Motor Manufacturers and Traders (SMMT)..
SMMT revises 2022 outlook down from 1.89m units to 1.72m as parts shortages continue to impact supply.
Plug-in cars anticipated to account for more than a quarter of market in 2022 but additional assurance needed for more customers to make the switch.
Supply chain issues continue to dampen new car registrations over the last quarter with the same pandemic-related headwinds continuing to restrict a recovery in the new passenger car and light commercial vehicle markets. Ongoing supply chain issues – most notably the global shortage of semiconductors – still constrains deliveries.
Manufacturers continue to do everything they can to fulfil orders as quickly as possible and demand is currently robust, but with mounting geopolitical issues, rising energy costs and inflation squeezing household and business incomes, the coming months will still be no less challenging.
Given where we are now, and after nearly 3 years of COVID turmoil, the used car sector has still held up extremely well given the difficulties that the market has had to contend with. It could so easily have been much worse.
Top Fuel Types in 2021
The latest sales figures for 'Used Cars' by fuel type in 2021 show some interesting changes - as follows:
- Petrol - (Up 10.7%)
- Diesel - (Up 9.8%)
- Hybrid - (Up 50.6%)
- Plug-in Hybrid - (Up 77.1%)
- Electric - (Up 119.1%)
So, it's very easy to see where the market is going!
Q2 2022 Results - as at August 2022
The latest sales figures for Q2 2022 overall show that the top selling 'Used Cars' were:
- Ford Fiesta
- Vauxhall Corsa
- Volkswagen Golf
- Ford Focus
- Vauxhall Astra
- BMW 3 Series
- Volkswagen Polo
- Aud A3
- BMW 1 Series
What remains interesting here is that the top 5 sellers have hardly changed position over the last three years - since 2019. Indeed, over the last 6 months, the above list has hardly changed at all.
So, what does this tell you? That people's buying habits haven't really changed that much - that's what.
And in the car broking business, it's about knowing what's in demand, what's selling well, and identifying where and what the best opportunities are going to be.
It's called... having your 'finger on the pulse'.
And something else you always need to consider is... colours! What's popular and what's not. Remember when white used to be the 'kiss of death'! Not any more - indeed on SUV's in particular, white in the 'new black'!
Always know what's moving and what isn't. For example, for the 2nd quarter of 2022, the 10 most popular colours stayed pretty much the same - as follows:
- Silver / Aluminium
- Beige / Buff
Now... whilst all the above doesn’t necessarily reflect what’s moving in the used car sector, it does help to demonstrate patterns of supply and demand – and that’s important when you’re looking to decide what marques you want to broker in – particularly in the volume sector.
The good news for brokers is that the used car market continues to be very resilient - ensuring that there is a constant demand for used quality vehicles, both in the prestige and volume sectors.
If you are running your own business in the used car sector, you need to know what’s moving and what’s not. What are people buying? And most importantly... how this reflects what’s going to be in demand in the used car sector?
A car broker builds and develops their own network, working closely with buyers and dealers and feeds off them. The trade will define what's moving - so that's the demand. It's up to the broker to then provide the supply!
Where do people sell their cars?
Online is the place to be these days. If it's a particularly specialist vehicle, then the seller may also choose to advertise in some specialist magazines. And many people do still advertise in newspapers and various car magazines - so don't ignore these!
The Internet is literally awash with websites advertising cars for sale – and today there are a dozen or so 'Quick Sale' websites offering to take a seller's car off their hands - but for an absolute ‘rock-bottom’ price of course!
Typically though, just because a seller has advertised their car for sale on one or (more likely) several of the many websites around, this doesn't mean that they will find a buyer any quicker, or any more easily come to that. Indeed, the reverse can often be true as their advert gets 'lost' amongst many other or similar cars also being advertised.
What about the 'Electric' revolution?
Ahead of the phase out of new pure petrol and diesel car and van sales in 2030, manufacturers have invested billions in new technology, with plug-ins now accounting for one in four of new car models available – with one in 10 powered purely by electricity.
However, what's interesting is that:
- Fresh analysis reveals just 4.6% of car registrations by private buyers in 2021 were for battery electric vehicles (BEVs), compared to 8.7% for fleets and businesses.
- As of March 2022, there were a total of 483 available models of all car types in the UK. Of these, there are 119 battery electric and plug-in hybrid car models, of which 44 are battery electric.
When a vehicle is available in a range of powertrains, each one is considered as a separate model.
- The motor industry itself has already sounded a warning over the 2030 target (as being too ambitious) as retail incentives are slashed - and that 700 electric charge points would need to be installed daily to support the market.
What this means is that businesses are twice as likely as consumers to make the switch from petrol or diesel.
Why? Well consumer acceptance still remains low because of concerns over affordability, charge point availability and infrastructure reliability. Around one in three households have no dedicated off-street parking, leaving them disproportionately dependent on public charging points – of which around one in 10 are out of order at any given time.
Given present projections suggesting the majority of drivers will choose to charge their vehicle at home if they can, SMMT also estimates that there would need to be around 2.3 million public charge points in service by 2030 to provide adequate coverage and tackle range anxiety – meaning more than 700 new charge points would have to be installed every day until the end of the decade. By comparison, the installation rate is approximately 42 a day presently.
So we have a problem!
As the SMMT have said… “Whilst 2021’s bumper uptake of electric vehicles is welcomed, it remains clear this has been an electric revolution primarily for business fleets and NOT the general consumer. Manufacturers are committed to the consumer - but to deliver an electric revolution that is affordable, achievable and accessible to all by 2030 - government and other stakeholders MUST put ordinary consumers (and drivers) at the heart of policy and planning.
There will need to be:
- incentives that tempt consumers,
- a UK wide infrastructure that is robust and
- working charging points that provide reassurance.
Only then will the general consumer truly embrace the electric revolution, that combines zero-emission mobility with the opportunities these represent being possible and achievable for everyone, regardless of income or location".
How Can You Can Earn From The £128.5 Billion UK Car Market?
It’s simple really. The secret of success in any business can be broken down into 3 straight-forward steps:
- Find a market that NEEDS a certain product or service..
- Give them exactly what they want.. professionally, quickly and efficiently..
- See why these satisfied buyers will pay you good money for providing your services
This market we're talking about here is dealers in the motor trade. And they will utilise the services of a Car Broker to help them source the vehicles they're looking for, particularly when they cannot find what they need through their other channels of supply.
Equally, if you are able to offer them a really good vehicle that you've identified, and that the dealer knows can be easily 'moved on', then you're potentially in business to negotiate a deal.
As the dealer gets to know you, and realise how you can help them, they will soon start to use you as one of their regular supply channels, whilst also potentially referring you to other dealers. And this just shows how your network can quickly grow!
For you as a broker - it's all about establishing and building your network of contacts across these dealers and there are few markets and business models that are as straightforward to run and make a good income from than Car Broking.
But first... a little background information on the car broking business, and why it represents such a great opportunity for you in the months to come…