Manheim, the 50% shareholder of Borusan Manheim, is part of U.S. based Cox Automotive Group. Cox Automotive decided to withdraw from the countries except for the main markets as part of its global business strategy. In addition to Turkey, those countries included Portugal, Spain and Italy. In this context, Cox Automotive handed over its shares to Borusan at the end of 2018. Borusan Araç İhale conducts its business operations as a 100% Borusan company.
A 100% Borusan Company
A 100% Borusan company since 2019 and the first multi-brand used car platform in Turkey, Borusan Araç İhale is an integral part of Borusan Group’s expanding network of automotive dealers. The company had 8,495 buyer members as of the end of 2019. Since 2001, the company has been organizing auctions for member dealers with used vehicles from fleet lease companies, independent dealers, authorized dealers, banks, insurance companies, distributors, and commercial fleets.
Strategic Positioning
Borusan Araç İhale is the unique multi-channel and multi-brand auction company in the Used Car sector. Borusan Araç İhale also differentiates from the rivals by being the only trusted auction service provider between the 3rd party sellers and buyers. Borusan Araç İhale diversified auction channels and managed to provide fast sales and premium prices to their customers in 2019. With the deployment of the CRM system, Borusan Araç İhale started to manage all customer operations centrally and provide a more personalized service to its customers. In cooperation with the group company Borusan Lojistik, Borusan Araç İhale can provide countrywide logistics service in addition to other value-added services such as local/mobile inspection and storage, and valuation.
Borusan Araç İhale can also provide easy-to-integrate B2B Valuation service to automotive companies, thanks to the API-based pricing system. Having its own sales channels, its valuation tool calculates the prices based on the real sales data, which is also its unique differentiator in the market.
The majority of the applications are developed by its local team in Borusan Araç İhale. They include, among others, the new fixed/mobile inspection tool, field management tools, portals of online services and some mobile services. Borusan Araç İhale also transformed its inspection and photography areas to cutting-edge premises to obtain minimal inspection errors and the most realistic car pictures.
Competitive Advantages of Borusan Araç İhale
- Development of CRM system
- In cooperation with Borusan Lojistik
- Integration of B2B Valuation service into automotive companies
- Majority of the applications are locally developed
The conjuncture of the Turkish Used Car Market in 2019
Last year was a tough one for the automotive sector. In 2018, the New Car sector shrank by 35%, and the total of sold cars and light commercial vehicles dropped to 620K units, compared to 956K units in the previous year. In 2019, the sector further shrank by 23%, ending up the year with 480K units. High interest, tax and exchange rates were the main factors affecting the results.
In contrast, the Used Car sector kept slightly growing last year. A total of 7 million sales transactions were carried out in 2019, compared to 6.8 million transactions in the previous year. While the majority of the sales took place between the consumers (C2C), business to business (B2B) sales shrank significantly due to changing dynamics in Rent-a-Car (RAC) companies and Franchised Dealers. High prices in the New Car sector forced RACs to extend existing contracts instead of reselling the existing car park. On the other hand, the Franchised Dealers had to support the dropping of new car sales by selling used cars directly to end customers, while they were previously conducting used car business mainly for trade-in.
Characteristics of Turkish Car Market in 2019
- High interest, tax and exchange rates -> shrinking the new car market by 23%
- A total of 7 million sales transactions-> growing the used car market
- Changing dynamics in Rent-a-Car (RAC) companies and Franchised Dealers -> shrinking sales between C2B and B2B
- High prices in New Car sector -> forced RACs to extend contracts/Franchised Dealers had to sell used cars directly to end costumers
The Market Leader in Physical Auctions
Turkish automotive industry had steadily grown for a couple of years by the end of 2017. However, it shrank sharply in 2018 and 2019 due to the economic turbulence. This affected significantly the Rent-a-car companies and Franchised Dealers, which were the main suppliers of Used Car Auction companies like Borusan Araç İhale. In spite of the decreasing sales, Borusan Araç İhale leveraged the tough market conditions as an opportunity to transform for the sake of sustainable growth in the future. In this context, online channels and C2B will be the strategic growth areas in 2020. On the other hand, market expectations are more positive for 2020, and a gradual growth is anticipated both in new and used car sectors.
Borusan Araç İhale is the market leader in physical auctions. Digital and process transformations were the key success factors for cost optimization in this area. The profitable physical auctions enabled Borusan Araç İhale to invest in the new innovative growth areas such as online auctions, machine learning, and C2B.
In this strategic growth area, C2B will provide a huge supply channel and diversification in sold cars, which is a significant added value for the ~8.6K Independent Dealer buyers. Borusan Araç İhale will keep on investing in digital transformation and new business models.
2019 Business Outcomes
- Economic turbulences in 2018 and 2019-> affected the Rent-a-car companies and Franchised Dealers (main suppliers of Borusan Araç İhale)
- Growth area of Borusan Araç İhale in 2020 -> online channels and C2B
- The leader in physical auctions -> digital and process transformations are the key success factors for cost optimization
- Investing in online auctions, machine learning, C2B
