The French winning formula for used cars
France is beginning to change its mindset to online selling, says Autorola France country manager Pierre Emmanuel Beau.
Autorola France has seen a change of approach by some OEM vendors in 2017 with them looking at new ways of reaching used buyers, particularly through online channels. The EAuction was new to the French market when it was launched in early summer with vehicles being offered for sale on the Autorola portal at a pre-advertised time, with online offers being made by remote buyers across France and beyond. The auction is all over in around two hours and the vendor is on hand to make quick decisions on vehicles during the auction.
One of the first brands to sign up to the EAuction concept was Mercedes-Benz Vans. The brand is now on its third sale and not only is it reporting great conversion rates but it is beginning to build a reputation and buyer base all over Europe.
The benefits of innovation
Like so many countries the French used industry is quite fixed in the way the market sells used vehicles to buyers but we have seen more vendors keen to look at new ways of selling their used stock in 2017. They are being more innovative and adventurous, which as an online remarketing provider excites us. We are working with some great vendor partners who now understand the power of online selling. I like to think of it as a change of mindset.
Mercedes-Benz is seeing two out of every three used vans sold at EAuction. The stock ranges from 12-24 months old with 20-100,000km on the clock. In the last EAuction 60% of bidders were in France, which included most of the country’s Mercedes-Benz dealer network, while 40% of non-Mercedes dealers were from outside France. Buyers from 15 countries bid on the used vans that were remotely stored in two compounds in Paris and Marseille with cataloguing and images taken and then uploaded online prior to the sale being marketed to buyers.
Making life easier
Mercedes-Benz is rightfully very proud of being an innovator in the market and has been a little surprised that its stock has generated such a wide geographic interest. Mercedes-Benz dealers and independent buyers have been competing side by side for the used vans, and our administration has been set up so that if a Mercedes dealer buys a van then it is automatically invoiced to them from head office and it counts towards their annual sales target. They also receive access to wholesale stocking finance for 60 days. The energy and can-do attitude of the vendor has certainly helped us sell more used vans faster to our Europe-wide buyer base.
Citroën sells around 200,000 used cars into the French market each year and it has been piloting EAuction, selling ex-daily rental cars from five compounds all over France directly to the online buyer. Stock varies from 50-70,000km and is up to two years of age, which is considered as good quality used stock by buyers. Citroën leaves it to Autorola to fix the reserve for each car using its Indicata real time used car online pricing tool.
Used car confidence
We use our expertise in the market to set reserves, which is a big responsibility for us but one we enjoy. We are working in the market every day and Citroën has the confidence to leave us to get the best price for each car. We have to set realistic reserves for the used cars to ensure they sell, and so far each sale has seen an 80%+ conversion rate. The online sale is more cost effective than physical auction as there are no transport costs prior to the car being sold. With a country as big as France that also means stock is being offered for sale more quickly. The rare unsold cars can move to another channel quickly and at no cost.
Autorola France sells used cars online for a number of different vendors, but the next one to sign up to EAuction is a German car brand. They have seen how successful the formula has become by offering stock in the open market. Competition improves prices, and the dealer network gets the same chance to buy stock from the OEM but just in a slightly different way.
The French remarketing industry is beginning to modernise and try different things. Just like the new car sector, the used market is changing, and change is usually good to move forward.
France’s economy is expected to accelerate this year and next on the back of strong domestic demand and growth in exports. A clear political panorama at home has generated optimism and is fuelling robust growth in fixed investment, while low inflation and reduced unemployment should provide a boost to private consumption. Panelists participating in the FocusEconomics Consensus Forecast expect GDP growth to accelerate mildly to 1.6% this year. For 2018, the panel also foresees growth of 1.6%, which is unchanged from last month’s forecast.
The consumer confidence indicator produced by the National Institute of Statistics and Economic Studies (INSEE) dropped from 103 points in August to 101 points in September. The undershooting market expectations of 103 points, marks the third consecutive monthly decline from the multi-year high observed in June. Despite the drop, the indicator remains slightly above its long-term average of 100 points, where it has been since January. The indicator crossed the threshold in January for the first time since September 2007.
September’s decline marks a more pessimistic assessment of both, personal finances and the country’s economic outlook. The personal financial situation in the upcoming and past 12 months declined substantially in the surveyed month. Expected and current savings capacity also declined in September even though both subcomponents are still resting above their respective long-term average. The decline in future savings capacity partly reflects growing expectations of higher inflation in the upcoming year. French consumers also viewed the country’s economic outlook in a more negative light with future standards of living declining and approaching its long-term average. Lastly, unemployment fears rose sharply and reached its April 2017 pre-presidential election reading.
The FocusEconomics panelists also expect private consumption to increase 1.4% in 2017, which is unchanged from last month’s forecast. The panel expects private consumption to grow 1.5% in 2018, which is unchanged from last month’s forecast.
Looking at the wider French picture, President Macron scored an important victory on 22 September when he signed his flagship labour reform bill into law in spite of protests and criticism over his use of executive powers.
The reforms, passed by presidential decrees, will cap severance payments and make it easier for firms to lay off and hire workers to improve competitiveness, among other measures. These policies should rekindle faster growth in the medium term and provide further impetus to the economy if current dynamics persist. GDP growth for Q2 was confirmed at the 0.5% quarter-on-quarter increase reported previously, reflecting higher corporate investment, stronger growth in residential construction and healthy consumer demand supported by a strengthening labour market. The latest survey-based data from the third quarter and beginning of the fourth quarter is positive and suggests that the growth momentum will carry through the second half of the year.