23 Nov 14

Key challenges of the Remarketing industry

Several speakers at the first Remarketing Forum, last week in Hamburg, highlighted some of the challenges facing the remarketing industry, before joining each other in a wide-ranging debate on the subject, including lively interaction with the audience.

Andrew Fellows, Head of CAP Consulting kicked off the segment by tackling the increasingly relevant question of the residual values of alternative powertrains.

400,000 EVs

First, some figures on the increasing relevance: in 2011, there were only 45,000 EVs in operation throughout the world. By 2014, that figure had increased exponentially to 400,000. In all, there are now 18 EV models and 28 hybrids available across all brands. “But that success is due largely to government subsidies. Nobody is sure what the right technology will prove to be. Range anxiety remains an issue. Ultimately, the question is whether the customer will accept the new technology”.

The subsidies distorting the market obscure the level of consumer trust, ultimately making it impossible to predict residual values for alternative powertrains – at least for now.

Turn your customers into fans, was the message of Jean-Laurent Paris at the Remarketing Forum in Hamburg. According to the DEKRA Automotive MD, the Remarketing sector faces a generational challenge, requiring a shift in attitude: “We need to show our customers we love them” (more on that here).

Champions' League

Focusing on cross-border remarketing, Peter Dietrich, European Sales Director at BCA, remarked that his topic constituted “the Champions' League of our industry”: extremely tough, but potentially very rewarding: “It's not something you should do as an addendum to your national operations – but if done right... you win!”

Just to list some problems with cross-border remarketing: “28 EU member countries, 14 official languages, several member states outside the Eurozone, 157 individual valid 'commercial register extracts' and 'business registrations' with individual languages, 75 valid types of passports and ID cards”.

The rules are not just complex, but often contradictory: “German law requires copies of proof for VAT data, but German data protection law does not allow archiving of relevant data!”

Out of date

To uncertainty, add the unexpected, and you get a good sense of where cross-border remarketing is at these days: “The delay in getting your car? Add 4 to 6 weeks if the transaction crosses borders. Also: 75% of complaints come from customers who expected something else. But a Spanish Ford Focus is not the same as a German one...”

Over the last 18 months alone, Dietrich states, the amount of documentation required for cross-border remarketing has doubled. BCA asked KMPG and PWC independently for guidelines, and got two different answers. Its own 'Manual for Cross-border Remarketing' has passed through half a dozen departments, but will still need constant revision to remain relevant: “As soon as it was printed, it was out of date”.

In summary, said Dietrich: “Cross-border remarketing has great potential rewards – but it's not something you can do on the side. It needs your company's full attention”.

The future of diesel

Dean Bowkett, Technical Director and Chief Editor of EurotaxGlass's, concluded the segment by zooming in on the remarketing-relevant aspects of the tug of war between diesel versus petrol. It's very hard to say whether diesel is winning or losing, as it is doing both, in different markets, due to differences in taxation regimes and downsizing priorities: “There is no sense in diesel for small cars”.

Diesel does remain a typically European (and Indian) phenomenon: “in North America, diesel has a 3% market share”.

“Diesel remains stable at best, with a general trend towards decline”, says Bowkett. “But at least in the EU's Big 5, the fuel cost advantage of diesel remains substantial. Meaning that many buyers don't do the maths of how much running a car will actually cost them”.

Overviewing advances in technology as well as changes in taxation, Bowkett concluded that "by 2020, petrol will be as clean as diesel, but diesel vehicles will remain more durable, affecting residual values in their favour."

Authored by: Frank Jacobs