How a dedicated used car strategy can maximize the vehicle lifetime value

By Jan-Philipp Hasenberg

Today, most aspects of an OEM’s strategy, sales operations and business objectives are entirely focused on the objective of achieving high volume of new car sales and selling new vehicles at a seemingly attractive spot margin. We analyzed how a mindset shift towards maximizing the vehicle lifetime value can boost overall business performance.

Few OEMs deviate from the tradition of selling new cars and service first and foremost. These manufacturers have undergone a mindset shift from vehicle volume and spot margin to an integrated view on profit across an entire vehicle's lifetime. For such OEMs, a business and strategy area often neglected has become the new centerpiece: used car strategy.

This long-view approach to selling vehicles has a measurable impact on profitability. In fact, OEMs and dealers that have already implemented a dedicated used car strategy have seen the EBITDA across sales levels increase by 3-4%-points.

The financial impact of a dedicated used car strategy will gain in significance in the years to come as volumes of and prices for young used cars are steadily increasing for those OEMs with a professionalized strategy and operating model. Furthermore, the used car business has proven to be more crisis-resilient than any other key business area of automotive OEMs and dealers .

However, the definition of used car strategies and operating models are complex and need to be carried out with great care. Both must be highly specific to individual OEMs and their overall sales model and setup. What’s more, successful used car strategies must consider the specifics and preferences of the market they operate in to maximize their market relevance.

Based on our comprehensive market insights and participation in industry lighthouse projects, we are a proven expert in used car strategies and rollout preparation. We understand how to incorporate this important pillar into your sales operations, and how to conduct the mindset shift to maximization of lifetime value. To learn more, please download our latest publication.

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