By Ian Carlisle, CEO, Paragon
Automotive manufacturers and fleet operators are in uncharted territory: four years of record new registrations have created unprecedented volumes of used vehicles. These volumes are already creating stress throughout the supply chain, from logistics to storage and refurbishment to remarketing.
A fresh approach is required. Long-term planning and investment is needed to ensure there is enough capacity in the system to allow for flexibility. The industry needs to move from a transactional relationship to a partnership approach that builds in shared goals. This will unlock investment and fuel innovation. The volumes of vehicles at defleet mean that traditional remarketing channels cannot cope without distressing values and increasing days in stock. Our own advice to customers is that auction should account for no more than 30% of volume.
Digital and alternative direct channels have evolved to accommodate larger volumes and allow for vehicles to be targeted to the areas of highest demand. Working on a gain share basis, in partnership with the original equipment manufacturer (OEM), allows for a truly independent outsourced remarketing service that protects residual values, and can take time out of the used vehicle cycle. By engaging the retail network and fully leveraging all digital channels speed to market can be improved, eliminating book drops and so minimising depreciation.
Innovation and flexibility to scale a programme at speed are key factors for any OEM or fleet operator. Technology should be driving the pace of innovation. We expect to see more of this as the industry faces ‘burning platforms’.
The technology is now available to image a vehicle at the inspection stage and remarket it into the retail network. This will not only vastly reduce days in stock but also ensure that refurbishment costs are kept to the minimum as each vehicle can be prepared to the dealer’s required standard.
Data can allow dealers to flag the models they require and to be alerted as they hit defleet stage.
Challenging times have always driven the pace of change. The opportunities are there to be taken.