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Three-year plan for BCA growth

A new balance in the supply and demand in the used car market should lead to renewed stability.

This belief forms the core of a three-year business plan being put together now by BCA.

CEO Jon Olsen believes the “catastrophic” price plunges experienced last year are unlikely to be seen again. 

“In the middle of last year the market was overstocked and it took six months to get back to sensible levels. Supply and demand is a little more balanced.There could be price erosion, but on a normal depreciation cycle,” he said.

Prices will remain supported because less new stock means less used, Olsen believes. 

Barring another economic slump, there should be a gradual growth in new car sales. 

The price awareness and confidence among vendors has improved, but there is still caution because of the vivid recollections of last year when average used car auction values fell from £5,880 in January to £4,765 in August, before rallying slightly to end the year at £4,836, according to BCA’s new Used Car Market Report, driven by the turmoil in new car sales. 

“New car sales grew to the point where the market couldn’t absorb them,” Olsen said.

“Now, the industry acknowledges the supply and demand equation is more balanced and, considering the trauma people have gone through, the likelihood in the medium term is the balance will be maintained at a sensible level. 

“We forecast new car sales growth in the order of 100,000 units per year over the next two-to-three years.”

Prime focus on divergent business model

A prime focus for the emerging BCA business plan is the divergent business model of services built around the foundation of its considerable physical auction business.
BCA is conscious of the potential market that remains untapped.

“There are lots of customers in the market – and millions of transactions – that we don’t touch. There’s a lot of the market that doesn’t come near us. Our intent is to get a share of that by looking at services we can acquire and develop to win customers,” said Olsen.

He refers to the drive to provide solutions across the industry as “build or buy” - a cornerstone of BCA’s growth strategy.
Latest examples of the latter element are the acquisition of United Fleet Distribution, a logistics and vehicle inspection company, and that of JTK, a small e-commerce based remarketing company. 

There are no further purchases on the cards, but BCA is “always looking”.

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