Private equity firm bought BCA who own wbac a couple of years ago who also own cinch. Not sure who owns cazoo.
Yup. It's effectively a venture capital firm that has a socially acceptable racketeering operation underway. They control the mass market by owning BCA, WBAC and Cinch. So they can fix their margins in the trade, trade in and used car markets to suit their needs. If they want to control supply and power up demand, they just phase the sale listings to suit themselves. If they want to flood the market and drive down margins for competitors, they can do that too.
As I've said before, lockdown can be compared to what happened in the 2008 credit crunch.
1 - Panic ensues and those in precarious positions dump cars that are heavily financed causing a clut of some models
2 - Savvy buyers pick them up for a good price with cash as a long term position
3 - There's now less stock circulating.
4 - Good stock is at a premium and dealers pay more just to have sufficient volume. They are also encouraged to be silly by thinking they can't lose as prices are on the up.
5 - New money enters the market and premium products increase in value and become scarce. Top brands overpay to buy customer cars to satisfy the new money.
6 - Folk in the middle ground hold station and don't change their vehicle when in other times they might have.
7 - In this case, the pandemic, transport costs and microchip issues cause the manufacturers to reduce output
8 - There's now less new stock and so less volume of attractive finance deals than "peacetime"
9 - We're also in a transition and buyers aren't sure if buying a new car should be petrol, diesel or electric so they're also waiting longer
10 - Leads again to people seeking used which again leads to less stock around
11 - To offset some of the pandemic revenue losses, APR is higher to ownership via finance is more expensive, again cause some to wait.
12 - The whole things relies on people changing as often as possible and that's not happening for many of these reasons.
13 - As a group, we're mainly an exception to these rules as enthusiasts that value cars and their costs as a higher priority than most "normal" people.
It will all change again of course, and the excuses for main dealers not to hit targets are now running out as normality comes back so we will likely see the 0% deals and cheap leases re-appear before too long.
It's basically a spread bet model that like all gambling contains winners and losers. But the venture capital guys understand that type of spread and so they have picked assets from each core area so they can manipulate and mold as required to show their promised returns to their limited partners. It used to be that they would need to own dealerships from Ford to Ferrari to cover the market, now it's the online element as it is with many other things. Lockdown fuelled the move online, I think we'll see a period of consoldation for those with forecourts and that several will disappear.
Small specialists are well placed to ride the changes and capitalise, provided they can access good stock without overpaying. Large dealerships are going to have to spread their offering and modernise.
I've made it more simple than it is to demonstrate my point, but you get the jist!