The used car market

In “normal” times, an average of 2.5 used cars are sold for every new car. In concrete terms, this means that in a “normal” year, during which around 2.2 million new cars are sold, on average 5.5 million used cars change hands.

However, the Covid-19 pandemic has completely disrupted the market. Not only have the French massively shunned new cars, which have become more and more expensive over the years (€25,000 on average for a new car in 2021), to save money or to buy used cars.

In addition, as we explain in our article on the automotive market in 2022, the second-hand segment is strongly fueled by the boom in leasing, for both individuals and professionals, which brings to the market recent and maintained vehicles.

The result, according to experts, is that we should very soon go to an average of 3 used cars for every new car sold. In reality, in the month of September 2021 alone, according to Autoscout figures, 490,699 used cars were sold in France for 133,835 new cars, i.e. a ratio of 3.7.

Finally, the shortage of semi-conductors, essential for the manufacture of new vehicles, is leading manufacturers to close certain production lines. This results in waiting times of sometimes up to 9 months for a model in high demand. Delays that push consumers to turn to recent opportunities... whose price therefore reaches that of new, in the face of the pressure of demand.

Open a used car garage

The used car market is therefore in good shape and it is tempting to open a used car dealership or a used car garage to take advantage of it. However, the stock of second-hand vehicles from manufacturers and dealerships is falling automatically since it comes mainly from vehicle trade-ins made during sales of new vehicles.

Thus, at the end of 2020, the stock of used vehicles at dealerships and affiliated garages was 500,000. In August 2021, it was only 400,000. Therefore, if this pushes prices higher, there is a risk of market saturation in the medium term.

It therefore seems difficult to open a used car garage at this time.

Automotive intermediation to sell second-hand cars

On the other hand, if manufacturers are struggling to supply the market, you have to go directly to the source: among individuals. Indeed, more than 60% of used vehicle sales were made between individuals in 2016.

It is to take advantage of this dynamism that certain brands, developed in particular through franchises and brand licenses, have positioned themselves in automotive intermediation. The principle: franchisees are sellers who act like real estate agents. They don't buy the car but sign a mandate. They therefore have to advertise the sale, find a buyer and then secure the sale. By the way, they take a commission.

During this process, the brands generally offer to carry out an audit of the car to secure the sale: exterior and interior inventory, but also mechanical. And this, for example, to offer guarantees.

Between warranty extensions and financing solutions, not only do they facilitate sales by reassuring buyers, but they also have additional sources of income with these services.

This is how franchisees positioned in this niche achieve an average turnover of €300,000 made up of commissions, for financial flows ranging from €2.5 to €3.5 million.

The offer is wide enough for you to choose the car franchise that matches your desires and your profile.