Why does e-commerce legislation exclude most players in the used car sector?
The shortage of new cars makes the second-hand market, especially the online market, flourish, but most players are excluded because the law on e-commerce is not harmonized.
Some used models even sell for more than new ones. Lockouts have boosted the number of online car sales. Admittedly, the market is under pressure and is down 13.6% compared to 2021, but the average price of used cars continues to rise by €22,356. According to Harris Interactive research for Heycar, the French still overwhelmingly see second-hand cars as a good way to save money (81%) and a more environmentally responsible choice (64%). Online sales are gaining momentum in France, with 47% of buyers saying they are willing to buy a used car online, according to YouGov. However, as the law is not harmonized, most of the players of this market are left out of this sales channel, e-commerce.
The main barrier to entering this market is the 14-day withdrawal period imposed by e-commerce legislation that protects consumers when shopping online.
The latter are now used to it and it seems unlikely to go back. However, a law should be made for everyone: all companies should be able to sell online while complying with the law and protecting consumers. But this law, in fact, excludes the majority of players in the second-hand car market, because only large structures, owners of car parks that rely on a solid cash base, can change the notice to the consumer and directly assume the loss. this means: repossession of the car when the seller is overpaid. Conversely, most car dealerships will jeopardize their financial survival and their teams’ jobs by returning unsold items from online sales. This will mean a loss of excess weight, as the car will already be paid to the seller.
With the evolution of technology and the advent of the Internet-savvy Generation Z, online sales of used cars will become more democratic than new cars. This is a market that will increasingly weigh on the circulation of car dealerships, which can rely on the Tesla model, which has succeeded in distributing its cars around the world without a physical point of sale. Online sales are the future of our industry, and we, the small multi-brand car dealers, are not ready when half of our used model sales come through this channel.
The law protects the consumer and should continue to do so. However, it could be amended
This would allow us to sell used cars online without fear of decommissioning and therefore jeopardizing the survival of our business and our business. That’s why we offer a 72-hour cooling-off period so that the customer can make their decision completely safely and protect our cash flow. Today’s and tomorrow’s technologies will allow the consumer to be reassured: he can check the condition of the car he wants to buy through a video taken live and transmitted via tools such as Whatsapp, Skype or Instagram. This is what has been practiced during various arrests and has resulted in exceptional market growth. In addition, the customer will receive 3D, immersive and time-stamped photos of the vehicle, and going further, a dealership employee can take a test drive to finalize the sale once the online payment is approved. . Another advantage of the 72-hour deadline: start shopping on a whim and reserve the car of your dreams within three days, on an evening when dealerships are closed, to mature your decision. This delay will also protect the seller, who is guaranteed to sell his car within 72 hours.
E-commerce offers great opportunities to grow your traffic, but you still need to be able to take advantage of them
However, the current legislation is designed for large market players who can increase the volume of the car and return it after overpaying the seller. Small and medium-sized dealers do not have access to the online market when they need to transform: car consumption has changed, because the generation born with the Internet no longer goes to dealers to buy cars, whether new or second-hand. Therefore, discounts will disappear in the profile of corners and online sales. The automotive market will evolve like the banking market, which has drastically reduced the number of physical branches to meet the new needs of consumers. Therefore, the law must anticipate this change to adapt to these new practices. Offering a 72-hour cooling-off period, as with consumer credit, would remove barriers to entry to this growing market. It is our responsibility to small and medium-sized dealers, who represent the majority of market players, to change the legislation and benefit from the additional sales generated by e-commerce. And that’s without the risk of running into cash flow and inventory issues. The sustainability of our economic model depends on it.