CARGURUS PUBLISHES SECOND ANNUAL INDUSTRY REPORT LOOKING AT KEY ISSUES USED CAR DEALERS FACE IN 2020
- Report covers topics including profitability margins, digital retailing trends, stock location, speed of sale and lead management
- Margin retention falls in 2019, but 2020 outlook positive
- 13.6% of dealers have sold cars online in 2019
- Online finance systems top digital investment plans
- Stock location increasingly difficult for dealers
- Download the full CarGurus 2020 One Voice Report here
CarGurus, the UK’s fastest-growing automotive shopping site*, has launched a wide-ranging industry report that examines the major issues set to be key to car dealer performance in 2020.
Now in its second year, the One Voice Report looks at a host of topics including profitability, digital retailing trends, stock location, speed of sale and lead management – and is based on a survey of more than 700 used car dealers, plus interviews with influential retailers.
Addressing used car profitability, just over 50% of all dealers reported margins were down in 2019. However, franchised retailers outperformed their independent counterparts. 51.1% of independents reported a fall in margins last year compared to 44.2% of franchised businesses. At the other end of the spectrum, only 20% of independent retailers said margins were up on the previous year; for franchised operators, this figure was significantly better at 28.4%.
Blame for the downward trend in 2019 was firmly directed at Brexit and political uncertainty with almost two-thirds of retailers reporting Brexit had a negative impact on the market. Used car dealers, however, were more optimistic about 2020 – only a quarter (24.7%) said they expected margins to fall again in 2020.
Looking at the digital trends for 2020, the CarGurus One Voice Report revealed consumers were willing to buy used cars online and that retailers were investing to support this.
In 2019, 13.6% of dealers reported they had customers who had bought a car entirely online before visiting a showroom. Interestingly, paying a deposit online or gaining finance qualification and reserving a car online were less common occurrences (10%) than a full online purchase. As a result of the progress in digital sales, online finance completion and click-to-buy topped the list of digital investments retailers are planning for 2020.
Researching stock location, the report found that dealers were struggling to find the right cars for their forecourts. Retailers said they expected finding the right stock to continue to get harder but were working on counter measures, such as searching more channels and looking further afield. These measures are likely to take more time and investment which will be reflected in the bottom line.
The report also uncovered the speed with which retailers turned their stock, with the best independent retailers outperforming the best franchised retailers. However, franchised dealerships were better at controlling over-age stock.
Dealers were also quizzed about how they manage sales leads. Amazingly more than a quarter are still using a paper-based system.
However, even though the majority of retailers use lead management software, retailers are still finding it difficult to track customers’ journeys and attribute sales leads to a particular source. Recognising this issue, 38.5% of dealers said they would be upgrading their lead management software in 2020.
Wendy Harris, VP European Sales at CarGurus, said: “The CarGurus One Voice Report highlights the opportunities and threats facing used car dealers in what is a complex and ever-changing selling environment. Not only can dealers learn from perspectives shared by other dealers, but the insights surfaced in this report will also help inform CarGurus’ efforts to support our dealers in the most important areas.
“Cost control and pressure on margins are always at the core of a used car dealer’s operation and are clearly key areas of concern, but 2019 saw this focus intensify. The marked change from the first One Voice Report released in January 2019 is that Brexit and the surrounding political environment is now taking the brunt of the blame for dealers’ lack of market confidence.
“Looking beyond Brexit, the picture is encouraging, particularly for online sales and the digital tools to help guide buyers to the right car at the right price. However, with two-thirds of enquiries coming by phone or email, retailers need to have the right systems, tools and processes in place for 2020 to make sure there’s no lead leakage.”
To download the full 2020 CarGurus One Voice Report visit here.
James Drake at CarGurus – UKPR@CarGurus.com / 0208 541 3434 / +44 07809 657178
*Among its nearest competitors based on the percent change in average unique monthly visitors from Q3 2018 to Q3 2019 (source: Comscore MMX Multi-Platform®, Custom-defined list includes Cargurus.CO.UK, Motors.CO.UK, AutorTrader.CO.UK, Pistonheads.com, and Gumtree.com))
About the CarGurus One Voice Report
15 UK dealers across franchise, independents, and supermarkets gathered for the annual CarGurus Dealer Executive Council in October 2019 to explore the key challenges and opportunities facing the used car market.
Following the Dealer Council, a survey was shared with the CarGurus dealer community.
Number of retailers who responded: 717
The CarGurus One Voice report analyses the feedback from the Dealer Council meeting and the survey results.
How CarGurus Works:
CarGurus helps car shoppers search local car listings and quickly find great deals from top-rated dealers. Every day, the company analyses millions of data points on hundreds of thousands of UK car listings to calculate each car’s Instant Market Value (IMV) or fair retail price. This data is used in combination with dealership ratings from other shoppers to rank and rate available cars results based on the quality of the deal: Great, Good, Fair, High or Overpriced. The site also provides transparency on how long the car has been on the forecourt and if it’s had a price drop. Consumers can contact dealers directly.
Founded in 2006 by Langley Steinert (also a co-founder of TripAdvisor), CarGurus (Nasdaq: CARG) is a global, online automotive marketplace connecting buyers and sellers of cars. The company uses proprietary technology, search algorithms and data analytics to bring trust and transparency to the automotive search experience and help users find great deals from top-rated dealers. CarGurus is the most visited automotive shopping site in the U.S. (source: Comscore Media Metrix® Multi-Platform, Automotive – Information/Resources, Total Audience, Q3 2019, U.S. (Competitive set: CarGurus.com, Autotrader.com, Cars.com, TrueCar.com)). CarGurus launched in the UK in 2015 and is the fastest growing auto shopping site in the UK among its nearest competitors based on the percent change in average unique monthly visitors from Q3 2018 to Q3 2019 (source: Comscore MMX Multi-Platform®, Custom-defined list includes Cargurus.CO.UK, Motors.CO.UK, AutorTrader.CO.UK, Pistonheads.com, and Gumtree.com). In 2019, CarGurus acquired UK-based PistonHeads.com, which it operates as an independent brand. In addition to the United Kingdom and the United States, CarGurus operates online marketplaces in Canada, Germany, Italy and Spain.
CarGurus® is a registered trademark of CarGurus, Inc. All product names, trademarks and registered trademarks are property of their respective owners.
To learn more about CarGurus visit www.cargurus.co.uk.
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