Used car market playing catch up in Mexico

Written by Autorola in category 
September 23, 2020

With a population of almost 130 million, a rich cultural history and diversity, and abundant natural resources, Mexico has the 11th largest economy in the world. Primary activities include farming and fishing; secondary activities comprise manufacturing, mining and construction; and tertiary activities cover retail and the services sector.

Yet it is a country that now faces many health and economic challenges. The Covid-19 pandemic has caused vast challenge with over 70,000 deaths recorded to date. A knock-on implication, but by no means the only contributing factor, has also seen the country’s GDP fall by -17.1% during Q2.

Positive economic signs since May
Mexico’s president, Andrés Manuel López Obrador declared the economy had ‘hit bottom’ in April and May. There have been positive signs since with Mexico’s economic activity advancing 8.9% in June.

Amongst this backdrop, Alfredo and his team have clearly faced their own trials, but indications are that road ahead looks increasingly positive.

“Quite simply, April and May were horrible,” explained Alfredo. “We sold 10% of what we are used to selling during that period.

Used market playing catch up
“Since then, the used car market has been playing catch up and we are now ahead of all expectations.”

Alfredo reports a significant rise in demand for used vehicles since June, from all Autorola partner OEM brands – BMW, FCA and Mercedes Benz – with conversion rates up in the high 90% per sale. This is in contrast to the typical 75% sales conversion rates pre-Covid-19. Such has been the performance that other OEM brands are also looking on with interest to provide their dealers with a steady flow of stock.

And whilst the used car market shows a significant uplift, the new car market continues to be hard pressed. A combination of economic factors and personal security issues highlighting just a few of the challenges.

Daily rental is growing
One area showing some real potential for growth is rental – not least of which because of the geographical challenges Mexico represents with a central urbanisation, surrounded by dessert and mountain ranges.

Some of the highly populated tourist areas which are home to large fleets of tourist transport – Cancun as an example in the south east or Los Cabos on the Baja California peninsula – require defleet vehicles to be shipped long distances to get them back into densely populated areas (central Mexico). Some rental businesses are now exploring the opportunity to use the Autorola platform to facilitate this ‘remote selling’ function.

Our online platforms are suited to OEM activity
Alfredo explained, “Without doubt, the OEM side of the business continues to be key and our platforms are made for their activity, but the rental market opportunity is an interesting one that presents its own challenges and opportunities for fleets and buyers. There is exploratory work to be done but the capabilities and flexibility of our system is opening up potential new opportunities for different market sectors – something we will continue to explore.”

For Alfredo and Autorola Mexico the road ahead is becoming increasingly clear and already there are some exciting plans afoot which will see the business continue to go from strength-to-strength.

As Alfredo himself puts it, “This is an exciting time for us as a business and we are genuinely excited about what is to come over the next few weeks and months.

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