The Gavel - January 2019
Andy Conde, Manheim’s Head of Group Auctioneers, has years of experience at the front line of vehicle auctions. In this new blog series, Andy shares his opinions on the current auction market including his top tips for vendors and buyers.
So somehow the first month of 2019 has already passed in a flash – a year that promises so much for our industry after a turbulent and uncertain 2018.
As suspected, the uncertainty has continued into the start of the year where we haven’t seen the big spike in prices and conversion rates that have become the norm in recent years.
A number of issues are to blame, but the biggest factor has to be used car supply. Although the supply of vehicles has been relatively high at auction, we’ve noticed a distinct drop in quality across the board.
As a consequence, ready to retail vehicles – those that can be bought, cleaned and sold with no further expense – are making all the money, and buyers aren’t shying away from paying over and above the current market value. At the other end of the scale those vehicles that can be described as sub-standard are much more difficult to sell.
I cannot stress enough the importance of pre-sale refurbishment and the effect it has on final selling price. I’d advise vendors to invest in their stock early on if they want to see higher margins at auction.
Similarly, you can never underestimate the importance of a quality disposal manager who understands the market and has the expertise to get vehicles on sale at precisely the right time. Buyers come to auction to buy, not watch the same vehicles go through the lanes week in, week out, so it should be remembered that CAP and Glass’s are merely a guide, and the true value of a vehicle is defined by what someone is willing to pay for it.
Last month’s highlightsDespite the rocky start to the year, we’ve seen some stand out performances, most notably Manheim Colchester’s Thursday evening sale, which continues to attract over 600 vehicles and a hall full of eager buyers every week.
Colchester has taken on many new vendors in recent times and they certainly haven’t been disappointed with conversion rates in excess of 85%. It just goes to show that if you connect the right stock, at the right time, with the right buyer, you can achieve great results, even in today’s market.
Looking aheadThere’s no doubt that political uncertainty regarding Brexit, WLTP and clean air zones is having a detrimental effect on the motor industry, and the news last week that Nissan is scaling down its manufacturing plant in Sunderland at the detriment to hundreds of jobs will do very little for confidence.
So how do I see February panning out for the wholesale market?
My view is that we’ll see a much stronger month both in terms of prices and conversions. There were already signs of this at the end of January where Manheim saw an uplift in prices, and this is set to continue.
The supply of vehicles will not outweigh demand, but big dealer groups and car supermarkets will need stock, after all, you can’t make a profit from an empty forecourt. All of this means we could see a superheated auction marketplace with buyers willing to pay above market value for good-quality stock.
Head of Group Auctioneers