Auf Wiedersehen, Plaid Suits and Greasy Lots

Pre-owned cars outsell new wheels 2 to 1 in Germany | “Well-preserved ... vehicles are the fiercest competitors for new cars”

Dorothee Tschampa

Pre-Owned Vehicles Take the Lead


With fewer Germans buying new cars, BMW, Daimler, and Volkswagen are trying the next-best thing: pushing second-hand models. Counting on the cachet of their brands, the German automakers are stepping up efforts to cash in on the growing demand for used cars. The push, which includes leasing offers and fast-tracked loans for previously owned vehicles, is helping attract buyers for premium rides tradition-ally beyond the reach of many new-car customers. It’s also increasing competition for mass-market nameplates such as Peugeot and General Motors’ Opel brand. For used Mercedes-Benz vehicles, “we can make financing decisions in less than 15 minutes and offer very attractive conditions,” says Franz Reiner, head of Daimler’s banking unit. “Used cars offer an entry into the Mercedes-Benz world.”

With new-car sales in Germany this year headed toward the lowest level since the country’s reunification in 1990, analysts say the secondhand market, which is less developed than in the U.S., has become a welcome source of profit for German automakers. Loans and leasing deals on pre-owned cars climbed 10 percent, to €8 billion ($10.5 billion), in Germany last year, according to car-financing association AKA. Almost 6.9 million vehicles changed hands in 2012, the highest in a decade and more than double new-car sales.

To tap this market, Volkswagen in April started Leasingboerse, a website that offers vehicles owned by the company. (German automakers often provide cars as an employee benefit and need a way to later dispose of those relatively young vehicles.) A silver 2012 Golf hatchback with less than 3,000 kilometers (1,865 miles) was available in June for €152 a month with no money down on a three-year lease. The equivalent deal on a new model would cost €233. The automaker aims to increase the number of its used-car financing contracts across Europe by 50 percent over the next five years, says Lars-Henner Santelmann, head of sales and marketing at VW’s financial-services unit.

The used-car push is part of a broader effort by Europe’s carmakers to boost revenue from sources beyond the volatile business of selling new vehicles. Besides offering traditional add-ons — insurance, maintenance packages, and extended warranties — Daimler’s Car2go offers one-way rentals of tiny Smart models by the minute. BMW has a similar program called DriveNow, and in 2011 it set up a $100 million venture fund to invest in transport-related services.

A far cry from greasy used-car lots of old, a Mercedes showroom in Frankfurt displays about 750 used vehicles it calls Junge Sterne, or Young Stars, in a round, glass-paneled two-story building. A pathway painted like a pedestrian crosswalk leads through aisles of cars to a bistro area where customers can get coffee and other drinks. All the vehicles come with a two-year guarantee.

BMW puts its used cars through a 72-point check before granting them what it calls Premium Selection status. That gives buyers a certified vehicle history, a guarantee that the car will be maintenance-free for 12 months, and the chance to exchange it if it doesn’t live up to expectations. Sales of used cars through the company’s dealer network in Germany rose 13 percent over the past five years, to 259,000 vehicles in 2012. BMW’s annual new-car sales in Germany have fallen by about 400 vehicles (0.1percent) since 2007, to 284,500 vehicles last year, according to data from German motor vehicle office KBA. Used-car sales “pave the way for customers who couldn’t afford a luxury vehicle in the past to switch from a mass-market to a premium brand,” says Erich Ebner von Eschenbach, head of BMW’s financial-services division.

The used-car business in Germany has traditionally operated on a more informal level, with about half of pre-owned cars sold privately. Without reliable vehicle history data from firms such as Carfax in the U.S., most transactions are based on trust. The new focus on used-car sales gives German manufacturers an opportunity to make money in their home country by providing peace of mind. Also, German automakers’ big market share at home — nearly 60 percent, counting imports of the Volkswagen-owned Seat and Skoda brands — creates an incentive for manufacturers to try to prop up the used-vehicle market to prevent weak prices from spilling over to new cars and protect the value of hundreds of thousands of leased vehicles that auto-makers will eventually have to take back.

More than half of 20- to 30-year-olds in Germany would rather buy a secondhand luxury car than a new model from a mass-market brand, according to a 2012 Deloitte study. “Well-preserved used vehicles are the fiercest competitors for new cars,” says Thomas Schiller, an automotive partner at Deloitte in Munich. Although the manufacturers’ certified used cars cost more than similar vehicles from private sellers, they “give the customer the feeling that he’s not buying a cat in a sack.”

The bottom line About 6.9 million used cars changed hands in Germany in 2012, a 10-year high and more than double new-car sales.


Magazines Review offers you a broad range of popular American magazines online. Browse an extensive directory of magazines, covering most important aspects of your life. Find the most recent issues of your favourite magazine, or check out the oldest ones.

About content

All the articles are taken from the official magazine websites and other open web resources.

Please send your complains and suggestions through our feedback form. Thank you.