A few weeks ago I returned to BBC Motorsports from running an errand and my partner mentioned that we had two guests that I knew. I drifted into my partner’s office, Miles Burr, and greeted the young couple. I had not seen them since their early college days, as they were good friends with my children.
We exchanged details of what they had been doing and what brought them to BBC Motorsports. This young couple had just been hired in the Park Cities to teach in the same school. They decided that they wanted to sell one of their vehicles, an Acura TSX. The reason was two-fold. They thought they could live with one car and secondly, they wanted funds to travel through Europe for the summer. We purchased their car through our Sell Us YourCar/Mobile Buying Service.
Curiously, I asked how they came to that decision. They said they wanted to reduce monthly expenses and could use Uber or Lyft for those times when one car could not handle the daily logistics. They also said if it does not work out we can always buy another vehicle.
I have been pondering the impact of their decision on the future of the used car business and have done a little research. I think the jury will be out for many moons before we really know, but I would say that the 18-to 34 year old adults known as the Millennials will be the catalyst for the change.
Ride services and ride sharing are what the new MBA’s call disruptive technology. New names of these services are popping up daily. We now have Uber, Lyft, Curb, Carma, Ola in India, and Didi in China and more to come. In fact, Uber just exited China because of competition.
How is this disruptive technology going to change the New and Used car business? McKinsey & Company, a high brow consulting firm, states that annual sales growth could go down from 3.6% to 2%. CNBC concludes that Uber like companies may be encouraging delay in vehicle purchases by up to 22%. Bloomberg states that ride sharing services will have little impact on car sales, and Kelly Blue Book states “Uber will kill car sales”.
This is my take. The current generation is not in a big hurry to get their driver’s licenses much less ask for a car. The Millennial generation does not want to be strapped by the average car payment of $500 per month and a long loan term (average of 68 months) per David Kiley in a Forbes magazine article. They just do not want to pile on huge long term debt. I really get that. They will drive their vehicles until the wheels fall off.
However, the Automobile market is huge. It is the largest in the world. Worldwide it is trillions of dollars and competitive beyond belief while being highly regulated.
How does a small business like BBC Motorsports in Dallas adapt to this disruptive technology and serve the Millennials and the ever changing dynamics of automotive buyer. BBC Motorsports’ approach is centered on having a great selection of quality, reliable, value driven vehicles in all market segments. BBC Motorsports will continue to provide a shopping experience unlike anywhere else. We will be the guide for the buyer, provide all the detail information, and be attentive if and when the shopper makes a decision to purchase a vehicle. Buying a quality used car makes incredible sense today. Reduce the total debt by thousands of dollars and payments by hundreds. Spending less allows the buyer to shorten the finance term and save thousands in interest. Buying a used vehicle reduces cost by letting the first owner absorb the initial new car expense of drive off depreciation. One car might be the new normal for a young couple or family. Uber, Lyft, Side Car Taxi Magic, and Carma may be the donut hole. This scenario could be the great wisdom of the Millennials and beyond.
