Used BYD and Jaecoo cars will be “very lucrative” for some car dealers as they enter the market over the next three years.
That’s the view of James Brearley, MD of JRBA automotive consultancy and former managing director of Lookers and CEO of Inchcape UK.
“The early adopters, the first sellers of Chinese brands in the UK are enjoying significant chassis margins and volumes. Omoda/Jaecoo Motherwell with 400 units delivered in March this year for example,” said Brearley on LinkedIn.
“However, the drive for exponential market share leads to more and more franchise points, which leads to more price competition, all of which erodes margin quickly. Great for the consumer but not great for retailer profitability.
“High volumes of similar new cars sold on cheap monthly payments always leads to very low residual values over time, which will make the ability to sustain new car growth on price very challenging. Just look at the established brands that have wrestled with that for years.
“The huge growth will give significant aftersales opportunity once parts supply and software support are fully established, however the single biggest opportunity during the next 36 months will be for used car profits.
“Anxiety about battery life will diminish over time, supported by better warranties and in a market recently starved of good value sub four-year-old cars the sheer volume of BYD and Jaecoo cars that will re-enter the market will be very lucrative for some,” he said.
