Cars Marketplace

The used car market in the U.K, in recent times, has been a very busy place. With 7.9m used cars sold in the 12 months to March 2019, it is more than obvious how busy this market is. Statistics show that the average number of cars in the U.K now stands at a figure of around 30 million. The average car usage cycle (life expectancy) has been put at around 14 years and 150K miles.

You would think this market, as busy as it can be, has so many players in it. Wrong… at least to an extent.

The used car marketplace is a monopoly in the UK. With more than 13,000 retailers available, there are really no other alternatives for them asides ExchangeandMart, eBay, Gumtree. But all of these are still small, compared to the size of Autotrader.    
With a turnover of £328m in 2018 and the average number of live car stock advertised at 453,000, AutoTrader is the go-to site for those who are either looking to buy cars or looking to sell cars.

For the Buyers
Autotrader is one of those platforms mainly used by company traders to list and advertise used cars.  With over 453,000 listed cars, it ranks highly among the frequently used platforms.

The database shows that only 3% of listings are private (individual) listings and 97% company listings.

Autotrader is not the only car platform available. There is also ExchangeandMart (Newsquest Media Group Limited) which has 140,000 listed cars. If you’re in search of your next car, these two platforms will give you first-hand opportunity to make the best choices.

For the Traders
There are a number of ways you can go about trading cars. One of the answers is on auctions and via "trade-in" services
Cars that cannot be sold by dealer in-house or on Autotrader will be moved to auction. These are cars without full history or cars that are considered not good from dealership prospective or very expensive to repair (being thought in roadworthy conditions).

The largest UK auction is BCA (BCA Marketplace PLC). BCA auction is a mix of ex-dealership cars, problem cars, or something that cannot be sold and need to be sold quickly. On BCA, 1.4m used cars are sold each year, an average of 1 car per minute.
BCA have bought portal that harvests almost 0.5m used cars each year.

The cycle of the used car market is pretty much the same. If someone wants a new car, he can exchange his old car for a new car in a dealer's office. In the end, The old car will be either re-sold on one of these auctions and later on Autotrader platform.
If this person decides to sell to, it will be re-sold on one of these auction platforms. The car will still appear on the Autotrader platform.

Autotrader is simply a marketplace that matches buyers and sellers. Historically it has emerged that almost 95% of cars are sold with Hire Purchase or Loan. This means the buyer doesn’t own his/her car and physically can’t sell his/her until the loan is fully paid.

Moreover, at the end of the financial agreement, there is a balloon payment, which is a quite significant amount. Therefore because of laziness and financial liabilities, it is easier and convenient to trade-in a car with a dealer rather than trying selling on these marketplaces.
This trap causes losses of approx 10-30% of the money which is lost by overpaying to dealers of financial institutions.

What the future holds for the car industry is still not favorable. The influx of driverless cars may affect the market and impact sales. With the likes of Uber, car owners will continue to drastically reduce. Owning a car will become very expensive, eliminating every need to sell or buy cars.

May 03, 2019

UK Directors

Have you ever wondered how many companies or businesses there are in the UK? Or how many business owners or Directors walk the streets every day in the UK? Well, the answer to these two questions will definitely surprise you.

First, in every 10 people in the UK, 1 is a Business Director (he or she owns an LTD company) Yes. It’s that common. According to the Companies Act 2006 (sec157 CA2006) legal requirement, as long as a person is up to 16 years, he or she can own a business and thus, become a Director. Therefore, there are 6 million Directors in the UK. From the 65 million living in the UK, when you deduct the 20% children population, the remaining 50 million people are eligible as Directors. Many people are making good of this opportunity and so this figure (6 million) is on the rise.

Interestingly, the number wasn’t always this large. In the 90s, specifically 1950 the number of Directors in the UK was only in 20 thousand. In 1980, it grew to 100 thousand, then began the continuous growth that brought it up to 0.5 million in 2000. Now, at 15% annual growth rate, almost everyone is a Director.

Surprisingly, most of the businesses that are registered are registered for the most unexpected business activities. Every business or activity is becoming a Limited (LTD), that is why stamp collection activities, communal cleaning, and grass cutting activities or even household horse activities are registered as a business. As a result, most of these businesses (364,082 of them) have no “Class of Business” information supplied and over two hundred thousand are dormant.

In addition, an analysis of the SIC codes of registered LTD's in the UK has shown that the businesses are IT, Consulting, UK House property market companies and other Business Services.

The big question, therefore, is, why the unchecked growth?

The figures have risen so fast because of the number of business registrations by UK Directors. This has led to abnormal exponential growth of Directorship in the UK. As at this year, the growth rate is at 15%, a number that will increase if unchecked.

UK population growth is at about 0.5% annually, if this continues and migration rate remains constant, by 2036, the UK population will be at 70 million. If the rate of growth of Directorship in the UK remains constant, in 2036 (with an estimate of 66,337,332 companies), there will be more Directors in the UK than people living.

Meanwhile, the whole craze about owning an LTD is all about the money. It is way more profitable for professionals to work via LTD than through direct employment. Most Nurses in the National Health Scheme (NHS) are a self-employed contractor – an LTD. The same goes for a good portion of Managers and well-paid CEOs.

Ultimately, the growth of Directorship in the UK is as a result of a lack of regulations. Over the years, the government paid no attention to this growth and its implications until recently. The announcement of the IR35 compliance for the public sector and the transition of the rules to all UK contractors in 2020 is the first step in the right direction. These regulations are vital to prevent the impending danger of tax optimization or tax avoidance.

February 04, 2019

Big Money

Everyone has heard about big and rich companies in the United Kingdom, but what does the statistics show? How do firms compete and what is cash by itself? Let's try to find the answers together.

So, what does the money really mean? The top three richest companies in our list (that you can see below) have almost £50 billion in cash each and even more!

Let's imagine for a while, what can we buy with one billion pounds. Is it possible to buy the London Eye? Yes, even 10 ones! The London Eye costs about £80 million to construct. And with £50 billion you can afford ten costs of hosting the Olympics or one tenth of all the houses in Ireland!

As we noted, we are dealing with cash. But what counts as cash on a corporate balance sheet? The answer might surprise you. All corporations have cash, which is to say they have bank accounts that contain normal currency. But many wealthy companies put some of their cash to use. For example, if your company only needs £500 million in cash on hand for the quarter, and has £4 billion sitting in bank accounts, it might drop the excess into short-term investments. Why not earn a bit more on the money?

Even more, as the investments are ‘short,’ they will quickly become cash once again. This is useful in case continuing operations are cash flow negative. It is simple to see why short-term investments count as cash. Here is a working definition of a short-term investment: “Marketable securities with original maturities greater than three months and remaining maturities less than one year are classified as short-term marketable securities.”

Now that we have a working definition of corporate cash, what are the ten largest  UK companies by cash? Mainly they are biggest banks, investment funds and insurance companies), ordered by their cash reserves. You may want to click on a company link to find further insight: 

Company Name Cash in Bank
HSBC HOLDINGS PLC £67,019,999,999
LLOYDS BANK PLC £58,420,000,000
BARCLAYS PLC £49,710,000,000
HSBC BANK PLC £39,750,000,000
AVIVA PLC £33,680,000,000
ROYAL DUTCH SHELL PLC £21,510,000,000
LEGAL & GENERAL GROUP PLC £20,680,000,000
SANTANDER UK PLC £16,840,000,000
* According to UK law each limited company and PLC submits this value to Company House once a year.
** This figure was obtained from public sources and is for guidance and personal interest.

And it is only the thin end of the wedge, because all companies try to minimize their cash in banks and to accelerate the liquidity in order to get bigger profit. That's why the real value of the companies is much bigger than their cash piles in banks. Thanks to such companies the UK is one of the most attractive place for investment and creates a good economic climate for business

January 22, 2017