DEALER BLOG: Used cars, EVs, Agency, Cazoo, Chinese brands

This year has had its own challenges, used car values increased, substantially, in many cases and a shortage of good used cars made it difficult to restock. EV values have been hit hard and we decided to reduce the number of EV stock until the market volatility has been understood more fully.

Full electric new car sales seem to be a challenge at the moment with many customers holding onto their existing ICE vehicles for longer and those who do change appear to favour Hybrid product rather than full EV. Range anxiety and depreciation seeming to be the main concern.

We are pleased that Stellantis under the leadership of newly appointed Group Managing Director Maria Grazia Davino have decided to re-engage with the dealer network and we are working closely with our long standing partners to assist, where possible, to meet their expectations for their multi brand franchise agreements and locations within our area of influence.

We are currently engaged in the Agency model with a number of our franchise partners, this radical change to motor franchising is in the embryonic stages and whilst we remain open minded its success remains with the ability of the manufacturer to reward the dealer network sufficiently to justify the investment and whether the shift generates more income for the manufacturer and also more sales.

Whilst product is in demand the Agency model, with fixed retail prices being perceived as good value in the market has legs, however non Agency competitors are able to offer more competitive prices and pre registered dealer offers when stocks are too high, whilst it is the manufacturer who sets the price, its the customer who perceives value. It will be interesting to see how it plays out over the next few years.

Another disruptor to the market has been Cazoo, who at one point had a value of £7bn and is now fighting for survival, trading for around 4 years, a loss of £18 million in the first year should have been enough to realise that something was seriously wrong with the business model and despite increasing revenues substantially had no prospect of turning a profit.

In reality their offer to the customer was nothing more than is delivered from the majority of UK dealers. Our trade is unique and with average ROS of less than 2% it requires constant monitoring, control of expenses, recruitment of great staff and excellent customer care.

We also have to adjust our business model quickly and regularly as customer expectations change and vehicle product pricing, dealer margin, finance offers also change so we can take advantage as the market changes. Stoneacre has a great relationship with the manufacturer partners and has excellent staff retention, we are reliant on both to ensure our continued success rather than having to run the business to please the shareholders.

With new Chinese EV franchises hitting the UK it will create some disruption should they continue to be perceived by customers as value for money against current manufacturer offerings. As a company we must consider which, if any, of these new franchise opportunities are a good fit for Stoneacre either this year or in the future. We remain the biggest MG dealer in the UK and the franchise continues to grow with new models due very soon.

Philip Wade is franchise and development director at Stoneacre Motor Group