The Gavel - June 2020
Wholesale market opinion from our resident auction experts, Andy Conde and Stuart Peak.
Andy Conde - Cars
It’s now been over a month since our auction programme started back up and I must say it feels great to have a gavel back in hand. As auctioneers we may have swapped packed auction halls for a computer screen, but it’s as nice as ever to be back amongst my colleagues, vendors and loyal buyers, even if only virtually.
Looking back to the dark lockdown days of late March through to May, there were times when it was hard to see how we would emerge with any optimism, but I’m thrilled to report that the markets have opened back up with a bang. Before lockdown we were seeing record prices, but now they are higher than ever, with pent up demand and short supply causing a frenzy over the stock that’s available.
We all know that current demand and prices will not last and eventually things will return to some sense of normality as more stock comes into the market. We understand that it’s vital to work with vendors to adjust expectations accordingly when this happens.
But for now, whilst supply and demand is such, prices remain high. I’ve personally seen a Range Rover Sport that’s over five years old and with more than 70,000 miles on the clock, make thousands over its reserve and CAP value. Older vehicles in many cases are making double their value.
Another post-lockdown change is how buyers are currently obliged to resort to online channels to source stock. As a result, online attendances in excess of 300 irrespective of the start time have become the new norm.
We’re seeing buyers, who vowed never to buy a vehicle unless in a physical auction hall, become more open to the idea and logging into our auctions via Simulcast. They’re also bidding with confidence thanks to the detailed information and extensive imagery provided online, coupled with our auctioneers and Buyer Services team guiding them and making them feel like they are with us in person.
Stock profiles at auction have also changed as vendors push through vehicles that they had hoped to sell in April and May. It’s not surprising to see one of our evening sales, usually known for selling predominately low value cars, now selling vehicles in excess of £30,000. The beauty of online is that a vehicle can be sold from virtually anywhere to anyone in the country.
Truthfully, there has been an adjustment period for us auctioneers, with sales taking longer and extra details to cram in. The analogy I use is that it’s like being a radio football commentator who must try and bring the game to life in the absence of visuals and make people feel like they are there in person. Of course, we have the benefit of live online video for all our auctions (with vehicles still driving through the lanes as usual), but the job of trying to replicate the real buzz of the auction hall virtually is all the same. Thankfully from speaking to buyers, old and new, it appears we’re doing just that.
Looking ahead, I predict that we’re likely to see current levels of activity at auction for a while yet. Retail demand for quality used vehicles is at an all-time high as many people look to avoid using public transport and low fuel prices have made running a car an attractive proposition for many who wouldn’t normally. Dealers will need to replenish their stock, and Manheim have the stock choice and expertise to help them on the road to recovery.
Stuart Peak - LCVs
LCV auctions at Manheim have now been back for over seven weeks and I think it’s fair to say that no one could have predicted the success we’ve had.
In the months leading up to lockdown we were seeing some fantastic results, and our first sale back on 13th May was very much in line. Since then, auction performance has continued to exceed expectations every time.
It’s mind-blowing to look back at how the market has evolved over the last seven weeks. Average prices have increased 18% to £7,650 compared to February 2020, with very little variation between the age and mileage of both periods.
Excellent retail activity is causing a huge demand for fresh stock; coupled with short supply, this has caused the prices we’re seeing. It’s also fair to say that lockdown has resulted in huge pent up demand.
For the time being, auctions have of course moved online only. I’m pleasantly surprised at how well our buyers have adapted to this, many of whom have never bought online before. The sheer number of buyers participating in our auctions each and every day is incredible.
All businesses are facing unique pressures at the moment, and we’re not immune. We’ve had to adapt our sales programme to coincide with demand and logistical complications, but this has just proven how agile we are. Vehicles are being sold across multiple platforms and sites as we endeavour to offer stock as quickly as possible. Buyers are screaming out for stock and we are meeting their needs.
The confidence for buyers to spend at auction is high due to the retail activity they’re seeing, but there are undoubtedly other factors that are causing this. Grants for business rates, VAT deferrals and the hunger for people to get back to work are all playing a part in creating the perfect storm for getting the economy and our country back up and running again. To meet demand, we’re running LCV auctions every day of the week. Stock is selling fast and prices are blowing CAP figures out of the water.
If I think back to the recession in 2008, a number of rental companies succumbed to the economic climate and we saw large volumes of LCVs enter the market as a result. Stock was still selling very well, but it was a lot cheaper. For example, during this time, a three-year-old Transit with sensible mileage would go for around £4,000 at auction. The equivalent vans today will fetch in excess of £10,000.
Whilst the country is seemingly in poor economic state again, the set of factors causing it couldn’t be more different than in 2008. As a result, the current situation is the complete opposite, with a huge hunger to own LCVs but a shortage of stock available.
Commercial vehicles provide the backbone of the UK’s economy. E-commerce and home deliveries have seen huge growth in the last few months as many of us change the way we shop and live our lives. But to enable this growth, a van is often the most important working tool. With new van supply being restricted due to factory closures during lockdown, we’ve seen a huge demand for nearly-new at auction. The next best thing to a new van is a nearly-new van after all.
Looking ahead, I personally don’t see the market slowing down any time soon. Whilst demand continues to outstrip supply, I have one piece of advice: there has never been a better time to sell a used LCV.