by Garry Jones, CEO, NovaFori
THE pandemic has fuelled a boom in the second-hand car sector, pushing up prices, with the more recent development of a decline in sales of new vehicles.
The current price premiums on second-hand cars are deterring potential buyers from buying a car, especially when a new car can be cheaper when it comes to certain makes and models.
Supply chain shortages have been a consistent feature of the UK auto market this year, ravaging the market and resulting in an overall shortage of old and new cars. As a result, research by the AA suggests the price of the UK’s most popular second-hand cars have increased by as much as 57% since 2019, with three- to five-year-old Ford Fiestas being the most popular, now valued at £9,770 compared to £7,448 two years ago.
The result of this disjointed market dynamic is that motorists are not sourcing vehicles in the most cost-efficient way. However, a significant change is becoming apparent, a change that will benefit distributors, sellers and consumers. Current market pressures are driving a rapid transformation towards new digital tools for selling vehicles.
Online B2B marketplaces are driving the evolution of the second-hand car market, which is allowing for greater competition, liquidity, wider distribution networks and easier price discovery, alongside data-driven insights that benefit buyers, sellers and marketplace owners alike.
Boosting distribution, liquidity and transparency
Online marketplaces can help mitigate the impacts of shortages and market disruption. For example, NovaFori has developed an auction platform for the B2B used car sales market, allowing sellers to remain competitive across various countries and enabling 24/7 trading for thousands of concurrent bidders.
The benefits of the online marketplace extend to include access to an integrated inventory of thousands of vehicles, meaning professional buyers can browse and purchase vehicles.
The marketplace is also deeply informed by data science, allowing it to make recommendations based on historical buyer behaviour patterns. These recommendations can also be refined based on substitutions and bids won, resulting in a superior customer experience.
With this development, there is a wider range of buyers for sellers to access and trade volumes are higher, providing sellers with increased liquidity, and ultimately generating more revenue. Professional traders can bid on a wide variety of cars in multiple languages across multiple regions in Europe. As a result of the combination of auction mechanisms and cross-border trade, marketplaces can demonstrate that the highest price has been achieved across its portfolio.
The platform’s recommendation engine boosts the proportion of vehicles sold, with a significant increase found in average sale prices. These are not just powerful tools for buyers and sellers, but they help marketplace owners sharpen sales channels to foster marketplace optimisation. With such valuable user-based activity data captured, it will be possible for marketplace owners to maintain relationships with buyers and re-engage them in the future to grow the marketplace.
A digital future for second-hand car sales
The development of automotive marketplaces that benefit sellers, marketplace owners and buyers alike is a trend which will continue as digitisation and the impact of the pandemic continues to effect markets globally. The inevitability of this trend will rely on automotive businesses investing significant capital into developing their online capabilities. Those that invest, stand to reap the rewards digital transformation has to offer.
