BCA Marketplace (BCA) offers unique access to each stage of the vehicle lifecycle. Dominant in used car vehicle exchange, the company has built up its presence in vehicle buying through We Buy Any Car (WBAC) and is developing its Automotive Services division. Going forward, the company aims to develop its market-leading positions through its range of physical and digital (‘phygital’) offerings and services in the UK and Europe.
With over 70 years of operating vehicle auctions, BCA is by far the largest vehicle exchange in the UK. It sold 1.0m used cars in FY18, with a c 60% share of auction volumes, which account for around 20% of annual used car market transactions. It has been developing online and digital services since the 1990s, and provides additional services such as grading, vehicle checks and buyer finance to increase value per vehicle. In 2013, it acquired We Buy Any Car (WBAC), which is the UK’s leading online vehicle buying company. Since 2015 it has also built up throughlifecycle physical services by a series of acquisitions, creating the UK’s largest car transporter fleet and offering vehicle preparation, storage, inspection, refurbishment and logistics. It is also operating online and in physical auctions across nine countries in Europe, selling 0.4m cars last year, increasing dealer awareness of auctions and injecting digital tools from the UK as volumes rise. It is creating a standard buyer offering through its One Europe programme as an increasing number of cars are sold across borders.
FY18 saw strong progress with good growth in volumes across remarketing exchanges as well as WBAC, and improved value add from incremental services. Further synergies should accrue from combining the digital and physical services to provide an integrated offering in the UK, and rolling these out across Europe. The recently announced five-year Auto Services Solution flagship contract with BMW UK is the largest deal ever won by BCA. We feel it verifies that the strategy to provide a full range of solutions across the automotive supply chain is gaining traction with customers, and BCA appears best positioned to win more of these agreements.
Our fair value, which we calculate as a simple average of a capped DCF and a peer group comparison, currently stands at 252p. The recent approach by Apax Partners at 200p was rebuffed and clearly management feels that the growth strategy can add significant value as the fully integrated service model is matured.