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Thanks for that, Chris, that was very revealing, to say the least!

I'm not too sure about the "friendly, smiling dealer" because they (the dealers) have had it easy for too long, so you can't feel sorry for them can you? BCA are clearly being very savvy business-wise and in a highly competitive market they are 'sweeping up' ... I see this whole scenario a bit like internet shopping versus the high street. Things are changing fast and traditional car dealers are going to need to get smart sharpish, or risk going down the swanny. You can only beat clever with cleverer!

Just my humble opinion 馃槆
 

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Yes Kev surprised me too!.....
I don't ever feel sorry for the dealers, (although I have a soft spot for one) they certainly made plenty hay over the years!
Even during the Pandemic my local Perrys re-jigged all their forecourts, and the Jaguar dealer moved to another location altogether, and the place is so big it would take a day to walk around....
They aren't loosing money that's for sure! :unsure:
 
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The BCA / Cinch / WBAC model outlined in the video won't hurt new car dealers. Manufacturers need dealers to sell their cars, they will lend dealers large sums of money at low interest rates to build big showrooms projecting their corporate image.

Customers like to drive the latest model car, with the latest tech etc, and will be enticed to buy new cars by way of PCP finance schemes, keeping monthly payments affordable. At the end of 3 or 4 years there is a balloon payment to pay, but the customer can trade the old car in, and drive away in a brand new car on a PCP, paying a similar monthly payment as before.

The dealer sells a new car, and gets a retailable car in part exchange. The video argument is that the customer sells their old car to WBAC, but the reality is that the dealer holds the trump card, a loyalty discount.

Customers are often loyal to brands, and will always buy say a Ford or VW, and that is what the dealer needs, repeat business. WBAC may offer say 拢500 more for the part ex, but there may be a 拢750 loyalty discount, funded by the manufacturer, as part of the PCP finance offering. If the customer does not part ex their car, then he / she is 拢250 out of pocket.

The dealer now has a nice secondhand car to retail at a cost of 拢500 less than the same car to WBAC, and so assuming the retail selling price at the dealer is the same as Cinch, then the dealer makes 拢500 more than Cinch, thereby making back 拢500 of the 拢750 loyalty discount. Perhaps, more importantly, the dealer will be able to make say 拢2,000 on the sale of the traded in car, the opportunity for which would be lost if the car went to WBAC.

Admittedly, the BCA model means that the dealer is likely to be outbid by WBAC on the car that would traded in against the secondhand car, but given this car may be 6 or 8 years old, it is probably not main dealer retailable, in which case the dealer is offering part ex more as a service, as the car would be sent to auction anyway, so no real loss of profit for the dealer.
 

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That's fine Mark when people have money to spend on PCP's, however am not sure that is as much the case today, meaning less good used stock available for dealers.
While new reg's are up on 2020, by 1.82 million, Over the past 10 years new registrations overall are 21.8% down...That's a large lump of market to loose.
 
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That's fine Mark when people have money to spend on PCP's, however am not sure that is as much the case today, meaning less good used stock available for dealers.
While new reg's are up on 2020, by 1.82 million, Over the past 10 years new registrations overall are 21.8% down...That's a large lump of market to loose.
We have survival of the fittest - in a declining market (for any goods not just cars), the least profitable businesses will see sales drop below breakeven levels, and ultimately some of the small dealers will close. The larger dealers will inevitably be affected by declining sales in the short-term, but as the smaller dealers close, then the larger dealers will win customers who used to buy new cars from the dealers who are closed, and so in the medium term their sales will improve.

To illustrate, say 100 new cars are sold, 10 each by 8 larger dealers, and 5 each by 4 smaller dealers. The demand drops by 20%, so in the short-term there are 80 new cars sold, 8 each by the larger dealers, and 4 each by the smaller dealers, so everyone is experiencing pain. The smaller dealers need the 5th sale to make an overall profit (taking account of overhead costs etc), so are now losing money, and are forced to close. The larger dealers can still make an overall profit selling 8 cars (although not as much as selling 10 cars), but when the smaller dealers have closed, then there is demand for 80 new cars, there are only 8 dealers in the marketplace, and so each can sell 10 cars, the same as before demand declined.

The cake is smaller, but so is the number of dealers, and so each dealer has a bigger slice of a smaller cake, achieving the same profit as they were previously.

As time goes by, more and more smaller privately owned new car dealers will go out of business, or be swallowed up by large dealer groups, but the big dealer groups will be around for some years to come, still making decent profits.
 

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There is also the revenue from servicing to take into account. While the number of new cars sold may be declining, many people will take their car to a main dealer for servicing, while under manufacturers warranty, and some manufacturers are now offering 5 or 7 year warranties. As the smaller dealers go out of business, the larger dealers will gain more servicing work from former customers of the smaller dealers, so again the larger slice of a smaller cake scenario.
 
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Ultimately, the manufacturers need dealers to sell their products i.e new cars, and I suspect the manufacturers will do whatever they need to do, to ensure that dealers are around to do so, propping them up financially if necessary.

There are not many competitors for the MX5, so I might be prepared to travel to buy a new one, but say I want an SUV, a Mazda CX30 or CX5 may tick the boxes, but if the nearest Mazda dealer is say 30 miles from here, then I might prefer to look at a Ford, VW or any number of options, where the nearest dealer is no more than 5 miles from here. If Mazda want to sell new cars in my local area, then if the dealer is not making any money, I suspect that Mazda would help them out, on the basis that Mazda need sales to make money, and a reduced profit for Mazda (the manufacturer) is preferable to no sales, and no profit.

I should emphasise that I am using Mazda as an example, and I am not suggesting in any way that the local Mazda dealer to me is struggling, it could be any car dealer, and any manufacturer.
 
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Undoubtedly though, the BCA / WBAC / Cinch model will force small independent car dealers, who sell secondhand cars only, out of business, and often these are the car dealers that you would like to buy a secondhand car from, as customer service is important to them (as its their own business), and they want you to be happy with the car you are buying, so that maybe you will recommend them to friends and family, and maybe come back and buy another car from them in the future, so losing these small independent dealers will not be good for the car buying public.

Clearly there are some car salespeople at main dealers who prioritise customer service, but in my experience it can be a mixed bag, with some salespeople seemingly more interested in earning commission for their pay packet, rather than keeping the customer happy.
 
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Discussion Starter · #29 ·
Here in North Herts we have always had excellent and friendly personal service from Nortonway Mazda and from Gates, our local Ford Dealer. The Toyota and VW dealerships were very impersonal with staff working to a script in a robotic fashion but they gave us no actual reason for complaint.
 

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Here in North Herts we have always had excellent and friendly personal service from Nortonway Mazda and from Gates, our local Ford Dealer. The Toyota and VW dealerships were very impersonal with staff working to a script in a robotic fashion but they gave us no actual reason for complaint.
Have to agree Nick, the Mazda dealer I use in Southport have always gone over and above for us, rather than use the script!...And even with reduced commission on new cars!
The local Perrys has gone downhill badly, (but expanded sites) and while my car was under warranty I used them for servicing, they hadn't even the courtesy to tell me they were switching from Mazda to MG Cars, so I shan't darken their doors again....
Meantime my mate in his little garage is rushed off his feet as more people seem to be hanging onto their cars which equals more repairs!
Its an odd time in the car business....as I'd have though prices would be dropping with the pending electric revolution around the corner!
 
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