Following in our Positives Post-Pandemic series (we love a P and a bit of alliteration here at Paycast), we’re next going to explore potential (see another P) that’s been unlocked in the automotive marketplace sector.
It’s a sector that is very present in the market at the moment, with a huge amount of ad spend putting the key players in the automotive marketplace space front and centre on our TV screens, sports branding and social platforms which as a marketer stood out to me. That is a big clue that the automotive industry moving to online marketplaces is very prevalent and going exceptionally well.
What’s driving this change?
Over the past couple of years, lockdowns and Covid restrictions have changed our travel habits, steering us from public transport usage to private transport for social distancing purposes and greater safety. This is combined with the movement of people away from cities into the country (and further from transport hubs) if only for a brief time – helped drive demand for personal vehicle ownership. Speaking from experience, while life in the countryside can be idyllic with beautiful views, a quieter pace of life – from a practical perspective getting around can be particularly challenging without the ability to drive and access to a car.
Add to that the limitation of overseas travel and holiday budgets over the recent period. There has been significant spend invested into personal vehicles, presumably as the big-ticket splurge of choice when foreign holidays are off the cards. Continuing this year, the UK used car market grew 5.1% in Q1 2022 with 1,774,351 cars changing hands. Could that be people continuing to spend on vehicles rather than overseas travel? Or simply reassessing their vehicle needs in the new year as we come out of lockdown and into the light. Good news either way for those automotive marketplaces, benefiting from increased demand.
Used cars holding their value
Along with the limited production of new vehicles over lockdown and the above trends driving the demand for vehicles, it comes as no surprise that used car values have increased. UK used car prices at the start of this year are still 33.2% higher than back in May 2021 when prices started to dramatically rise. For anyone selling their vehicle, that could mean a tidy profit, or at least slower depreciation on their current vehicle. But on the reverse the higher prices I’m sure are frustrating for buyers. Personally, knowing that I could re-coup a lot of the value that I paid for my car when I come to sell is reassuring, but I find myself delaying that decision as I know I will need to fork out a lot more than I would have previously to get the car that I want.
Also, with more and more buyers, sustainability is a key factor in buying decisions. Now I know that cars are not the most sustainable vehicle, even if they are becoming more sustainable with the growth of EVs (electric vehicles). But if you don’t live close to public transport networks and have a family or a lot of luggage in tow that you can’t quite fit on top of your bicycle or walker’s backpack; a car might be the only option for your needs. Buying a used vehicle rather than brand new might be the sustainable choice in this scenario.
And in my view, better to buy a used vehicle with the budget you have available rather than falling for the temptation of taking on significant loans or financing options to afford a brand-new car. A trend I think will benefit many bank balances. Not to mention avoiding those huge new car depreciations (tens of thousands of pounds in some cases)!
What does all this mean?
There is a clear benefit here for automotive marketplaces profiting from this higher rate of used car demand and value – but there’s also benefit for vehicle buyers and sellers too. For both sellers and buyers there’s more flexibility in the channels available for trading vehicles, with more options online providing broader reach and audiences/vehicles to choose from.
For sellers specifically, they may be able to achieve higher prices for their vehicles, making a more significant profit on the sale of their vehicle, as well as quicker turnaround (less down time and storage costs).
For the buyers, benefiting from the increase in online marketplaces providing more choice, and with more choice and competition often comes increased industry standards and experience overall. Which is the exciting development.
Marketplaces will be asking themselves how they can attract the best buyers and sellers in the market – which means they will need to up their game. Yes, in generating awareness and reach in the market (hello marketing teams), but also following through with a wonderful experience and ensuring added value at each stage of the process.
At Paycast we’ve identified payments as a key stage of the buying process with the potential to be completely revolutionised; in the automotive market as well as many other industries with more business models moving online. It’s our mission to make online the safest place to trade.
We’ve gone on to consider in more depth why the future of the automotive marketplace lies heavily in its payment capabilities in our latest report:
Have a read here: The future of the automotive marketplace