“Significant opportunity” for remarketers

While the increase in new car sales is good news for both automotive as a whole and remarketing in particular, the recovery is far from solid. In the long run, it’s also uncertain. 

So what are the threats – and opportunities – of the current situation?

By 2035, all new cars and LCVs in the EU must be zero-emission. In practice, nearly all new vehicles by then will be electric (although there are a few alternatives, with hydrogen accumulating a limited following).

Specific pressures

The switch to EVs adds specific pressures to the automotive supply chain. These are: 

• Materials sourcing

As Renault CEO Luca De Meo recently remarked, only 5% of the raw materials for battery production will be sourced in Europe by 2030. 
That is why OEMs including VW, Ford, GM and Stellantis, Toyota and Hyundai, are investing and forming strategic partnerships to secure access to these raw materials. 

• Battery manufacture

At present, the entire global top 10 of lithium-ion battery manufacturers are headquartered in East Asia. Chinese companies have 56% of the global market. Europe is building ‘gigafactories’ for EV battery production and will see its share of global manufacturing grow from 11% (in 2021) to 22% by 2027. This is still not enough to achieve ‘battery independence’. 

• Semiconductor supply

Semiconductors are an increasingly common ingredient of modern vehicles, especially EVs. Manufacture is concentrated in Taiwan, and has suffered from disruptions following the pandemic. Moreover, increased geopolitical tensions with China could restrict the flow of product, putting a damper on production. 

Good news on the horizon

There is, however, some good news – notably that OEMs have learned from the bad news of the recent past, says Philip Nothard (Cox Automotive): 

“Despite these supply chain challenges, many OEMs have increased their production of EVs. The pandemic forced many to diversify and rethink their supply chain strategies, in order to reduce reliance on a single supplier or region. This is already helping to mitigate future disruption and improve the resilience of the automotive supply chain.” 

Remarketing opportunities

Similarly, market changes – from digitisation to the agency model – generate both threats and opportunities for the remarketing industry:

• Rising demand

Continued long waiting times for new vehicles, plus pressure on consumer finances means car buyers increasingly switch from new to used cars. This will keep demand – and prices – strong. 

• Strong competition

However, “competition for the best used car stock is fierce”, says Mr Nothard. “Shortages and delays have led to many rental operators snapping up used stock for the first time.” 

• New-entrant OEMS

A line up of OEMs that are new to Europe, many of them Chinese, are looking to establish themselves in the region, but lack the traditional infrastructure around parts exchange and, notably, remarketing. 

• Digital remarketing

The use of data and analytics to target specific customers creates opportunities for the remarketing sector to support OEMs and retailers. 

If you add all that up, Cox’s Nothard concludes that it’s a significant opportunity for the remarketing sector to provide vehicle services solutions, for example refurbishment. By leveraging their expertise, remarketers can capture additional revenue and increase profitability.

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