Andy Conde on Manheim rostrum

The Gavel - October 2021

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Wholesale market opinion from our resident car and LCV auction experts, Andy Conde and Stuart Peak.

Andy Conde - cars

Andy Conde on Manheim Rostrum

In what has undeniably been a challenging time for everyone in our industry, we shouldn’t forget the many positives that have come from the pandemic. The ways in which we buy and sell cars has changed drastically, likely forever, but it’s fantastic to see many well-established dealer groups adapting to these new ways of working and achieving record financial results. These companies are all run by expert motor trader operators, and it goes to show that you cannot beat experience during times like these.

As far as the market is concerned, the early stages of October have mirrored what we’ve been seeing for a many months now. CAP prices continue to rise, and many dealers are reluctant to pay the increase, but when it comes down to a choice between paying extra or having an empty space on their forecourt, the latter usually wins because of the lack of stock that’s out there.

We must take into account the effect that the ending of the furlough scheme might have. Could this negatively impact footfall? Perhaps, but we are now heading towards the festive period which historically brings more demand.

For this reason, I don’t foresee any real fall off in prices or demand. The one caveat is that when the market does turn, the first section to show signs of a drop will be the lower grade, higher mileage vehicles. But with Manheim now introducing three more physical auctions in Manchester, Washington and Bristol, in addition to our existing physical auctions at Birmingham, Leeds and Colchester, buyers are now able to touch and hear these lower grade cars and are more likely to take punt as a result.

Conversion rates are still hovering around the 90% mark which really is unprecedented for this time of year and many quality vehicles are selling for well in excess of CAP clean. Car supermarkets and the dealer groups are still going toe-to-toe, and those older little pippins are getting fewer and far between. I have said many times before that I don’t see any big volume increases until the middle part of 2022 and based on the current landscape I stand by that prediction.

Stuart Peak - LCVs

Stuart Peak on Manheim rostrum

As predicted, we saw the LCV market kick into yet another gear throughout September after some seasonality crept in during the summer.

Yet again, our average selling price rose to a new record level, an increase of £352 to £10,930. What makes this even more remarkable is that the average age rose by three months and the average mileage increased significantly to 79,356 miles, an increase of 6,034 miles vs. August. I did predict that we would see recovery in last month’s blog but frankly, I did not expect to see such a large increase in the average selling price.

We saw excellent demand for large panel vans throughout September, with two to three-year old Sprinter, Transit and Crafter all very much in demand and helping to push that average selling price up.

The average price of Euro 6 vans increased by £953 vs. August, and again to a new record of £14,675 highlighting the sheer demand for these vehicles with the clean air agenda very much front of mind. We saw a larger swing in the average age of Euro 5 stock sold, with an increase in age of 5.8 months and mileage increase of 11,024 miles, resulting in the average selling price falling slightly by £250.

Comparing September 2021 to September 2020, our average selling price has risen by 30% which blows my mind. I remember this time last year thinking how buoyant the market felt and having numerous conversations and debates with colleagues, customers and various people throughout the industry about how long it would last. And yet here we are, a year down the line and still breaking records each month.

The much talked about challenges around new vehicle supply have clearly helped to drive the market and we don’t see this changing anytime soon. Each empty space on a forecourt is a profit opportunity and with many dealers running as little as 40% of their usual holding capacity, competition remains fiercely strong throughout our LCV sales events. 

As we enter Q4, we find ourselves in the period where LCV rental demand increases with people thinking ahead to Christmas. As a result, we are expecting lower defleet volumes over the coming months as fleet utilisation, particularly in the rental sector, increases. This will continue to drive used LCV prices as buyers compete hard to own what stock is available.

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