Autoquake just couldn’t make it work

The sad demise of Autoquake demonstrates how difficult car retailing is and that having specialist used car experience and skill is clearly a pre-requisite for the job. Although it is inevitable that cars will in some shape or form eventually be sold purely on line, it is still a long way from being the silver bullet some people think it is, simply because of the sheer complexity of ensuring that car buyers get the experience coupled with the deal and the right car for their money.

Companies selling their goods via the internet continue to attract more willing customers and the amount we spend per year is ever increasing but when someone is spending thousands of pounds the necessity to touch fell and test is an absolute must. Expecting customers to miss out the middle bit and go straight to the handover and payment has proved to be a bridge too far.

Autoquake failure

Of course the failure of Autoquake may also be linked to the economic downturn. Whilst more experienced and robust car retailers especially franchised and specialist dealers have managed to continue to source retailable stock despite a dearth of product for the last few years, this may ultimately have caused problems for Autoquake. As any car dealer will tell you selling the cars is the relatively easy bit. It is pretty straightforward to get your preparation, presentation and marketing standards right but finding the stock to sell with a margin in them is the hard bit.

The continuing success of specialist re-marketers such as BCA and Manheim has meant that Autoquake have just not had access to cheaper retailable stock. Rental companies looking to re-market their own cars employ specialists to do that for them leaving a company like Autoquake in a position where they just couldn’t make it work.

Autoquake wanted to cut out the middle men and offer better deals as a result of not having showrooms just collection centres, but their downfall has been as a result of not being able to get the right cars at the right price.

Speaking to Motor Trader Magazine, BCA communications director Tony Gannon said: “The retail and wholesale markets are quite different from one another and the existing business models based on retailing through dealerships and wholesaling via auction and other remarketing channels are tried, tested and successful.

“The Autoquake model set out to offer something new by providing an online retail proposition to the consumer for used vehicles sourced direct from the fleet and leasing sector but unfortunately the reality has fallen short of the vision.”

Our understanding is that their idea was to retail ex-fleet and rental cars and pay for them only when they were sold but as soon as the rental/fleet companies found they could get the same or better money from the more traditional channels (and instant payment) the Autoquake venture was doomed to failure.

It seems in the long run that Autoquake were not skilled or experienced enough in the used car sector or had enough contacts to successfully challenge traditional retailers. This could pave the way for a manufacturer backed online retailer or, as has been rumoured even Tesco, to seize the initiative.

Lack of experience added to lack of the right priced product to sell coupled with a completely different way of selling and challenging customer behaviour equals a sadly inevitable outcome.

Autoquake model

Pros and cons for the Autoquake model

Pros
Web interface was slick and user friendly
The process was fairly straightforward and easy to follow
The imagery and video of the vehicles was first class as was the marketing
The presentation was very confidence inspiring to customers
The found a niche in the web space and had a vision for the future of car retailing

Cons
Not enough variation in stock
Prices weren’t competitive enough
Lack of flexibility in customer needs
Lack of real used car expertise
Difficulty in sourcing stock at the right price
Not taking advantage fully of the millions of annual hits by monetising the site better
Started their blog too late and didn’t take advantage of the space they were in
Didn’t take part exchanges maybe should have sought out strategic partnerships with other specialist car buyers or developed their own system massive lost opportunities to remarket these cars
Tried too hard to apply a tried and tested e-commerce template to car retailing
There was not enough profit in the cars to be competitive


Subscribe to Motor Trade Insider by Email

 

, , ,

3 Responses to Autoquake just couldn’t make it work

  1. Mark Robbins March 19, 2011 at 10:14 am #

    Autoquake did have some relatively cheap cars and the concept itself seemed to offer straight forward online car purchasing at very affordable prices, however, scratch the surface and it was easy to see why this was so.

    As a small online retailer in the used sector we constantly watch the competition no matter how large or small with regards price and model comparison, with Autoquake we were unable to match their prices for late run of the mill stock, but when it came to high spec, best colour, wantable models we were easily able to outgun them, for example, they may have had Ten late Astra’s or Focus in “Life” “Zetec” or “Design” spec and yes they were cheap, but so did everyone else!

    Time and time again we spoke to customers who had indeed seen a cheaper model on Autoquake but it didn’t match the spec they were after, very often we were able to sell our slightly more expensive model on the fact it was the highest of spec, we may only have had two against their ten but was what the customer wanted.

    Anybody can throw alot of money at a professional online retailing business and you can employ all the business models you like so often targeted at the motor trade, but when it really comes down to it, it is ALL about choice, but that choice must include top spec, top colour, best mileage AND price.

    Now if we could all buy those cars in quantity the job would be a hell of a lot easier, but we can’t, and it isn’t, as Autoquake have found…………………………………….

  2. tom bennett March 22, 2011 at 7:24 pm #

    I agree Mark it’s not just large car choice people want its large spec choice. The x-rental fodder is all much of a muchness but the hgher spec models are what make the money. If you are copmpeting on price which Autoquake were then they were never going to make enough money if they didnt have some ‘hero’ cars with unique selling propositions. It will be interesting to see if one of the big boys get hold of them and re-launch with a bit more expertise.

  3. D Miler March 29, 2011 at 10:54 am #

    Autoquake sure gave the motor trade a kick up the ass when it came to website offering. Many Dealers now are still playing catch up from 5 years ago.
    They (autoquake) brought even more transparency to the consumer when it came to car sales. Which is a good thing.
    For as much as they positioned themselves as an ‘online’ purchase, the vast majority of AQ’s customers did not buy a car solely on what they saw on the web site.

    In essence AQ’ had a clever qualification process, ‘leave a deposit and you can view the car’.
    This means Autoquake did not need high number a staff to deal with customers who were at an early stage in the buying process, who wanted to look have a chat for some advice and have a test drive.
    You know – basic customer service.

    If all dealers insisted of taking a deposit from customers before letting customers visit or see a car, the customer would feel like its high pressure sales, and would go bust. Autoquake only got away with what was bad service as it was an ‘internet model’.

    AQ’s marketing via the organic listings in search engine such as google was quite good and AQ leeched of other dealers names in Pay Per Click, but all is fair in love and war.

    When selling cars with a low margin you really have to get volume up to cover expenses and create profit.
    This was ultimately AQ’s down fall. THEY COULD NOT MAKE A PROFIT. The catch 22 for AQ was either to increase margins but sales will fall or stay at the same number of sales with not enough profit.
    AQ needed to cut thier expenses and fast, but they had nowhere to go. They went through Millions of £’s in no time at all, most probably still paying themselves a fantastic director wages.

    As for stock acquisition it was a good idea, but why if I was a leasing company am I going to let AQ have my car for £8k when they are making £8,750 in the auction.?? It though swings an roundabouts.

    Thats my bit ….

Powered by WordPress. Designed by WooThemes