The Big Move to Transaction. Key Insights from AutosBuzz 2023
I am excited to share valuable insights learned from the AutosBuzz conference held in Lisbon this May. The event was expertly organized by AIM Group, a leading provider of consulting services for online classifieds and marketplaces, and brought together a diverse assembly of professionals from across the global automotive market. I was fortunate to have engaging conversations with representatives from industry leaders including Auto Trader UK, carwow, Cox Automotive Inc., iovox, Adevinta, Stellantis, AutoScout24, Schibsted, Apax, trustshare, mobile.de, among others.
A panel discussion entitled “The Big Move to Transaction” commanded significant attention from conference attendees. Speakers from leading European online automotive companies shared their perspectives and insights on a global trend — the potential of online services to add value and increase profit in C2C, B2C, and B2B business models through a shift towards transactions.
Jonathan Turpin of the AIM Group offered his perspective on market segmentation, identifying four types of transactional business models based on the product’s role in car sales deals. ‘Classifieds +’ models help dealers become more efficient in car sales by providing a broad audience of buyers and tools to support transactional models such as delivery and quality control (e.g., Auto Trader). ‘Classifieds + Strong QA’ products support the process with in-house or partner technical inspection services (e.g., Carsales). Direct-to-Customer products like Mobile.de handle the purchase process while maintaining a lean asset model by offering their partners the opportunity to invest in car stock on their digital platform. Lastly, ‘Direct-to-Customer Strong QA’ (e.g., AS24 Smyle, Carvana, OLX Autos) is the most comprehensive model, addressing all transactional journey issues and mitigating the risks associated with overall car condition.
Auto Trader Product Director Ben Smith emphasized that dealer needs remain at the heart of his team’s focus. Concurrently, Auto Trader is open to partnerships with C2B2C companies, such as Cazoo in the UK, because the C2B model is a vital part of car sourcing for dealers, though not the sole source.
David Hoffmann, Head of Strategy Mobility Vertical at Schibsted, revealed that they actively employ two distinct C2B models: one focused on newer cars, the other on cars with higher mileage. He noted that C2B is a valuable enhancement for their C2C car sales model, including trade-ins. Also, for Schibsted, the B2B model is a crucial component in assisting their customers to be more efficient and profitable, particularly in the realm of stock utilization.
All panel participants concurred that from a buyer’s perspective, the C2B model is an attractive option when considering a car change. Many buyers already own a car, and the challenge lies in proposing an appealing offer and providing a service that makes changing cars easy, secure, and less labour-intensive. The market encompasses every car in the country, and by teaching dealers to focus on quality, digital companies can elevate the standards and thereby improve overall market quality.
These discussions were well complemented by a presentation from Ben Smith of Auto Trader. He described Auto Trader’s experiences and learnings through three phases of Digital Retailing: pre-pandemic (before 2019), pandemic (2019–2022), and post-pandemic (present). COVID-19 significantly altered the behaviours of car buyers and sellers, with online car sales in the UK escalating from roughly 18% to nearly 40% between 2020 and 2021. Many well-funded companies seized this as an opportunity for rapid growth, although some expanded more quickly than was sustainable.
In the current post-pandemic landscape, the situation is more nuanced. Market research indicates that while car buyers are keen on conducting more activities online, they still value offline experiences such as test drives and car collections.
To address these shifting consumer expectations, Auto Trader UK introduced the ‘Deal Builder’ tool for dealers. This product encourages dealers to provide a consistent online journey between buyer and dealer. With ‘Deal Builder’, buyers can complete as much or as little of their order online as they wish, directly through Auto Trader. The order can range from a reservation-only deal to a deal encompassing part-exchange, finance agreement, and delivery option. The dealer receives the order as a ‘deal’, which they can then finalize with the buyer and fulfil the order. Also, Ben presented some promising results on the product adoption and included a live interview with a happy customer.
To summarize, as reflected in the final slide of Ben Smith’s presentation, online car retailing is experiencing a significant shift towards digital car retailing with transactional physical experiences. Those who fail to embrace this trend risk becoming obsolete.