The Gavel - November 2020
Wholesale market opinion from our resident car and LCV auction experts, Andy Conde and Stuart Peak.
Andy Conde - Cars
For the first time since we returned to business after the spring lockdown, we have seen a downturn in the markets. Now this is no surprise as historically the end of October and into the first few weeks of November is known to be a harder marketplace, so there is certainly no need for panic or knee jerk reactions. But it is more noticeable this year as we have enjoyed such a great run of high demand, high conversions and high prices - but as I keep saying, had we known we would have been in this position in those dark days of April, we would never have believed it.
As we go from October into November, we have seen a CAP adjustment of -2.2%, the first negative since June, but overall CAP values are up 4.4% year to date, which is incredible really. We publish this latest Gavel with Wales in lockdown measures and on the eve of England starting a second four-week lockdown period, so only time will tell what effect this has – though the positive news this time is auction programmes will be continuing as per the ‘new normal’ that’s been established over the summer.
Some of our vendors are having to face the stark reality of having to deal with not sold vehicles that they have refused some very strong bids on previously and now cannot get anywhere close to those previous bids. When the job does change, we all must react at speed and make sure we are ahead of the curve and more importantly listen to the advice being given. Seeing the same vehicles going around and around does not inspire confidence, but having said all this, its certainly not all doom and gloom.
Manufacturers sales - which consist of mainly grade 1 and grade 2 vehicles that can go straight on to forecourts - are still making in excess of CAP Clean and in the general fleet sales, it’s a similar picture as the supply of these quality vehicles are in short demand and buyers are keen to pay premium prices for premium stock. Vehicles that are of a poor grade are getting tougher to sell and the reserves need to be set accordingly.
The age of online only sales will be with us for some time to come and as auctioneers we have had to change our styles to suit. It’s a little bit like being a sports commentator - when you watch a game on TV you don’t need to say too much, but when you do radio commentary, you have to bring the game to life. So that is exactly what myself and my colleagues are trying to do; bring the sale to life and make our buyers and vendors feel as though they are there with us in the auction halls. Finally, as I have said, its not all doom and gloom, just a reality check and I am sure that once the current situation settles down and we see a reduction in uncertainty, we will be back to the heady days of high conversions, high prices and strong demand.
Stuart Peak - LCVs
I started off my last blog by stating that we had seen an increase in the market conditions for the fifth month on the bounce. Did I expect to be writing the same now? Honest answer? Yes, I probably did. And have we seen another increase? Yes, we certainly have…. and some! Our average selling price rose by £232 in September vs August, and in October, we saw an even larger increase of £546, pushing us up to a new record high of £8,936. This equates to a 7% increase vs September. This was also with an increase in average age of 1.3 months and an increase in average mileage of 2,363.
I also stated last month that I felt that the market was sustainable but frankly, I did not expect it to move up yet another gear in quite the fashion that it did. Yes, volume challenges are with us, with fleet extensions and rental demand clear to see, but absolutely we have maximised every unit potential. Every unit was fought for and by running the daily sales strategically, we have managed to reduce our days to sell to a new record low of just 8.4 days, demonstrating a month-on-month reduction of 3 days and a year on year reduction of 6.
Offering stock from around the country in our daily virtual events has enabled this to happen and the results have been simply incredible. Conversion rates remained incredibly healthy with 9 out of 10 vans selling first time.
Throughout the month, 46% of all vans sold in our sales ticked the Euro 6 box, an increase of 7% vs September. Across the Euro 6 vans sold, we achieved an average selling price of £12,772 - an increase of £632 vs September. This was coupled with the average age increasing by two months and the average mileage increasing by 3,621. We did however see a slight reduction in average selling price of Euro 5 vans, down £103 from September to £5,706. If we look at the average age and mileage of the Euro 5 stock sold throughout October though, we saw an increase in average age by five months and average mileage by 5,664. When you start breaking down the statistics, it all makes sense!
My phone went into meltdown on Monday morning after the news of an impending lockdown later this week with the trade obviously keen to know what our stance was. I predicted at the start of the day that buyers would be as keen as ever to own stock and that has certainly been the case so far this week with two absolutely mind-blowing sales held at Shepshed and Haydock respectively. We have adapted incredibly well to change over the last six months as a business as an industry and even those old school van dealers who have been about forever and a day continue to operate their businesses in a modern way, offering retail customers click and collect which is great to see. Long may the van job stay buoyant and healthy!