TÜV SÜD: Internet offers enormous opportunities to the used-car industry, but potential is still underused
TÜV SÜD: Internet offers enormous opportunities to the used-car industry, but potential is still underused
In mid-January the average price of the used estate car was EUR 17,500; two weeks later it had risen to EUR 19,400. Adjusting prices to reflect the market is a key to success in Internet-based used-car trading. To maximize the revenue potential of each used vehicle, the experts at TÜV SÜD Auto Plus have developed a tool enabling dealers to keep market developments in view at all times. The future of car dealerships is one of TÜV SÜD's key themes at the IAA, held in Frankfurt am Main from 15 to 25 September.
TÜV SÜD's used-car expert Christof Gerhard | The Internet is now the most important source of information for car buyers searching for the perfect used vehicle. The used-car industry has adjusted to reflect the growing importance of the medium, as a survey of over 400 car dealerships throughout Germany conducted in the spring of 2011 by TÜV SÜD shows. The survey reveals that over 90 per cent use the Web as a sales platform, with over 50 per cent selling their second-hand vehicles in their own online stores. Christof Gerhard, Head of Used Car Strategies at TÜV SÜD Auto Plus, sees enormous potential in the opportunity of expanding used-car trading to join new car sales as a major pillar of operations. "If dealers have a highly professional website and ensure they are among the first hits turned up by search engines, they have excellent prospects of expanding used-car dealing into a flourishing sector of their business – particularly in the current climate where prices are stable." |
However, TÜV SÜD's figures show that this potential source of revenue is still underused. At 30 to 35 per cent, the proportion of used cars in branded car sales is still low, and the gross revenue averages out at only just six per cent – often failing to even cover costs. "The Internet offers enormous opportunities if dealers make targeted efforts to optimize their ranking with search engines, and thus improve their visibility. Adjusting prices promptly to reflect rapidly changing price listings will also improve revenues", advises Gerhard.
Comparison of prices and used-car stocks
Google, Mobile, Autoscout – if dealers want to ensure their most interesting offers are always at the top of Web searches, they have to closely monitor market developments for the vehicles they have in stock and use this as a basis to make rapid price adjustments. In Gerhard's view this is an area where many companies must step on the gas to exploit their earnings potential: "Today's used-car prices behave more like share prices. The only winners in the end will be professionals that have recognized this trend." This means that to achieve higher prices, dealers must continually adjust the prices of their stock -–after 30 days at the latest. By way of comparison, not long ago a period of 90 to 120 days between price adjustments was common. "It's now become part of daily routine for dealers to monitor their prices and increase them where necessary if the market status of a particular model has improved", notes Gerhard. The speed at which prices can fluctuate can be seen in the example of a 2006 BMW 530d Touring with typical business extras. This business estate car cost an average of EUR 17,500 in January 2011; however, in early February it was offered for prices averaging EUR 24,000 before falling back one month later to EUR 20,000. "Smart dealers with quick reactions can generate higher profits, optimize their vehicles' time on the lot and increase the value of their used-car stocks over the long term", confirms Gerhard.
This is the point where the Web-based pricing tool of the TÜV SÜD Auto Plus used car specialists kicks in. The tool, custom-developed for the used car industry, determines current market selling and purchasing prices in minutes and uses daily comparison data from a wide range of used-car exchanges to calculate micromarket-adjusted prices for used cars. "The benefits are self-evident. No human can ever check prices as fast as this software; the standardized search process ensures uniform pricing and thus improves transparency", explains Gerhard. "Keeping all the factors in view at once is the bedrock of enhancing success in the used-car trade." The used-car professionals provide support for companies by determining daily prices for a company's entire stock of vehicles, based on their time on the lot. As a primary benefit, dealers gain an overview of whether their prices are keeping pace with market developments.
The experts from TÜV SÜD Auto Plus will be available throughout the IAA at the TÜV SÜD stand in Hall 8, Stand A19, to answer all questions related to used-car strategies.
Note: The photo of Christof Gerhard is available for download in printable resolution at www.tuev-sued.de/pressefotos under the "Current Press Photos" category.
| TÜV SÜD has adopted the heading "Use our know-how. Shape your future." for its presence at the 2011 International Motor Show (IAA), held from 15 to 25 September in Frankfurt am Main. The company's stand A 19 in Hall 8 will focus on innovative services for the automotive industry and electromobility. Visit us at the IAA. Further information on TÜV SÜD's IAA presence is available at www.tuev-sued.de/iaa2011 |
Contact: Frank Volk