Market Positioning of Used Car Superstores
Independent used car “superstores” are taking a meaningful share of the retail used car market. In a concept originally pioneered by CarMax in the US, the top 11 superstores shown below could approach 5% of the entire UK used car market by 2022 and 20% of the market for <5-year cars.
Superstores enhance the customer's buying experience by upgrading the on-line and on-forecourt presentation of:
A large selection of "in-demand" make/models
Presented in reliably good “retail” condition
At clear low-or-no haggle pricing with available finance.
While Motorpoint arguably leads the field (putting aside behemoths Arnold Clark and Evans Halshaw), the “big” news has been the introduction of virtual models like Cinch, Cazoo and Carzam. Also, recognizing the importance of used-cars in an increasingly uncertain new-car market, franchised dealer groups are joining in by acquiring or developing their own superstore concepts.
Business Model and Market Position - At heart, the superstore concept achieves profitability through scale. Success relies on the enterprise's ability to efficiently:
Attract customers and facilitate their buying journey and
Secure in-demand and in-condition stock at the "stand-in" value that facilitates an attractive offer price.
Defined by their access to individual suppliers, demand from their target market or their managements’ personal taste, each superstore stakes out a unique market position.
Two retailers in particular stake out opposite extremes:
Motorpoint focusses on fairly young mass-market cars like Ford, Vauxhall and Volkswagen.
Big Motoring World (sister company of emerging virtual concept Carzam) focusses on somewhat older luxury vehicles from Audi, BMW and Mercedes-Benz.
Make/Model Mixes - A closer look at stock mix (shown below) provides even more clarity. CarShop, Cinch and Big Motoring World tend to weight their offer more towards German luxury makers (CarShop is owned by luxury franchised dealer group Sytner). In contrast, Motorpoint, Cazoo and Car Store (owned by franchised group Pendragon) weight more toward mass-market offerings from North America, Europe and Asia.
While each present their own unique mix of
average ages and
most focus in a price range between £13,000 to £15,000 (driving a monthly payment of £250 to £300 on 60 month finance).
Conclusion - The superstore concept is still relatively new and rapidly expanding. In optimising their business model, each seeks a market position that best exploits their key resources.
From the customer's perspective, if they're looking on-line for a 12-month low mileage Ford Fiesta, they're likely to end-up at Motorpoint. Seeking a slightly older BMW? Customers will likely end-up spending time on the Cinch and Big Motoring World sites.