With greater volumes coming through its remarketing channels, AM caught up with Liam Quegan, managing director, wholesale, at Cox Automotive, to discuss the importance the business places on offering multiple options to source stock, how the current buyer landscape is shaping up and how the business is adapting to support volume.
What are the biggest pressures facing used vehicle buyers today and how have their sourcing priorities changed?
One thing that has definitely changed over the last year or two is the amount of supply. As we have exited the pandemic, more vehicles have returned to the used car parc, so there is more choice.
People can be selective about what they buy, but competition for a smaller subset of the available market is really fierce. We end up with a lot of people competing for the same stock and that can be quite a challenge.
The changing EV parc is also something people are getting used to, particularly around pricing. That applies to those selling vehicles and those buying them. People have to be on their game to find the right cars for them but the cars are there if buyers are prepared to invest the time.
Why does physical auction remain important despite the growth of digital channels?
For us, it is about choice and letting clients deal with us whichever way they want. Our physical auction business has been around for more than 100 years.
Physical auction lets people view vehicles, check their condition and be part of a community. You get to meet other versions of yourself. There is competition, but it is healthy competition, and buyers can talk about the market with their equivalents.
Other buyers want to source stock purely online, so we provide both choices. The same applies to vendors. Some want to spend time with buyers at a physical sale, while others are more digitally aligned.
Different segments also work better in different environments. Generally, older or more damaged vehicles work well in a physical sale, while digital is more weighted towards younger stock.
How do buyers behave differently in physical and online sales?
There are a lot of similarities. Whether buyers are online or in a physical auction, it is still about achieving the right price for the vehicle they want.
Online buyers bid against those in the lane and it is still probably a 30-second interaction for each vehicle. We move quickly through the stock, so whether people are in the lane or online, they have to be on their money.
Specialists can behave differently. Someone specialising in BMW or Ford may buy digitally because they know the product so well.
The really big buyers also tend to be online because they have to cover many locations. They can sit in one place with multiple screens and buy from several auctions. Online buying makes that scale possible.
How are you developing your auction and digital services?
We are trying to create better customer experiences. Expectations are not necessarily shaped by automotive, but by the Amazons of this world. It may be a cliché, but we need to learn from the best experiences people receive elsewhere.
Customers are used to good payment journeys, useful recommendations and simple digital services, so we have to get better at those things. We will never have Amazon’s scale, but we can emulate relevant best practice.
We are looking hard at payments, how we position stock online and how we move away from old-school approaches. The auction business has remained quite paper-based and that feels old. We have to make the experience mobile-ready as well as desktop-ready.
There is plenty to do, but we have made a lot of progress. Ultimately, clients should be able to work with us whichever way they choose.
How is the increase in used EV volumes changing the way vehicles are appraised and sold?
In a lot of ways, an EV is a simpler car to appraise because there are fewer mechanical items to consider. Most reaching us are also younger, so damage levels can be lower.
What we are very aware of is battery health. People want confidence in the battery, so we have focused on how we provide that assurance.
Another challenge is duplication. Tesla is a really innovative company, but it has a limited model range, a small number of colourways and not a huge amount of different specification. Large numbers of very similar vehicles can therefore hit the market together.
If you are auctioning 100 Teslas that all look the same, the first 50 may be fine, but who is buying the 100th? You have to be clear about condition and think carefully about the selling strategy and pricing model.
What impact will the arrival of more Chinese-brand EVs have on remarketing?
That will be really interesting. There have been quite a few new Chinese entrants over the last 18 months. Their vehicles have not hit the used market in volume yet, but they are coming.
Again, it will be about pricing strategy and good condition reporting. The model cycle is much faster for many Chinese manufacturers, so a product that looked really leading-edge two years ago may look older when the latest version arrives.
A lot will come down to technology being the differentiator. Until the vehicles return in volume, we will not know the answer. Our market tends to thrive when there is uncertainty and businesses have to adapt, so it is a great time to be in the industry.
What are buyers looking for before bidding on an EV and how important is battery health information?
When we started on the EV journey, the focus was on chargers, technician training and battery state-of-health testing.
The reality is that battery health is much stronger than we anticipated and most batteries are holding up well. The idea that an EV battery would degrade like a mobile phone battery has not really played out.
Even EVs that have covered more than 75,000 miles generally have healthy batteries, apart from some old vehicles with legacy technology so we are still working out what matters most in state-of-health testing.
I think it will become more about finding a genuinely damaged battery than distinguishing between one at 100% and another at 98% and that difference will matter less as vehicle ranges increase.
At some sites we have introduced underbody imagery. A vehicle drives over a camera installed in the floor and it checks for dents or other issues that could have affected the battery.
How is the business adapting its remarketing operations and EV Battery Solutions service?
The first thing we have done is train technicians who understand EVs and their different safety requirements. Apart from the body and interior, they are completely different from combustion-engined vehicles, so specialist knowledge is essential.
Through EV Battery Solutions, when vehicles return with battery damage or a recall, we can assess, repair, replace or recycle the battery where necessary.
Large-volume recalls can be very involved and we talk to manufacturers, fleets and other clients. Vehicles may not be saleable until the issue is addressed, so we want to help clients put them right and return them to market.
Our small engineering team includes people with deep experience of vehicle manufacturers and battery companies and we keep that knowledge in-house because it is such a specialist skill.
It feels as though we have been talking about EVs for decades, but the journey is really only just beginning and we have to keep our eyes open because the market will continue to change.