Why grade enhancement is a game changer in today’s wholesale market
Put yourself in the following scenario:
You have a Mercedes GLA at the end of its retail contract and wish to dispose of it through auction. The car has been inspected to NAMA standards, which present the vehicle as a grade three unit, with a CAP Clean value of £15,650.
However, this being a used vehicle, it has some minor damage which is preventing it from being categorised as grade two condition, where it could potentially achieve a higher resale value.
In this instance, the cost of repairs required to move the vehicle from a grade three to a grade two is just £252. The same car sold in August this year for £17,400 which means the potential uplift in sales from a grade three to a grade two could be as much as £1,750.
Can we agree this sounds like a sensible use of £252? Read on…
What is grade enhancement?
Before vehicles are presented at Manheim Auction Services, qualified vehicle inspectors examine each one and grade them according to their condition using the definitions stated by the National Association of Motor Auctions (NAMA). Vehicles are graded 1-5; with ‘grade 1’ representing minor repairs, through to ‘grade 5’ representing a minimum of 2 major repairs. ‘Grade U’ classifies vehicles that are uneconomical to appraise either because they have parts missing, multiple recorded items have exceeded the criteria of Grade 5, or they have multiple unrecorded items.
All grades of vehicles are popular with buyers, but high-grade stock sells at a premium (especially in today’s stock-starved market). Often by spending a small sum on grade enhancement, a higher resale price can be achieved. Higher grade vehicles also typically attract greater bidding competition, since most auction buyers are looking for high quality vehicles that they can sell quickly, with minimal spend and effort.
Another important reason for considering grade enhancement is the positive effect that it can have on the reputation of your business. Buyers trust vendors that have high grade vehicles, so if you can quickly become known for high quality stock, this can make the bids your stock attracts more competitive, further boosting your return on investment.
Why trust Manheim Vehicle Services with grade enhancement?
We work in partnership with all our customers to ensure we’re completely aligned with their remarking objectives. For some vendors, days to sell is the most important metric whereas others are more motivated by profit. We recognised there’s no one size fits all approach.
We provide a grade enhancement report to guide the customer’s decision making. These are completed by experienced inspection and refurbishment specialists who understand what repairs or works are needed to improve the grade. While these are typically smart repair jobs, for example scratch removal and alloy wheel refurbishment, we can also undertake more in-depth repairs to transform the retail value of vehicles.
Perhaps the most important factor however is our connection to Manheim Auction Services and the relationships we have with our customers. We work with our customers to understand their stock profile in detail, and through our knowledge of working with Manheim Auction Services, we can understand the ideal buyer profile and their motivations and preferences.
This knowledge ensures we always add value. Our skilled refurbishment teams know instinctively when to intervene with grade enhancement and when grade enhancement will not deliver return on investment from the additional cost. After all, this is about always finding the right solution for our customers.
We are operating in a buyer-led market where demand for vehicles is soaring and average vehicle prices at auction are higher than normal. Often, depending on the condition of a vehicle, the buyer profile and other factors, a relatively small investment to aid grade enhancement can result in a big difference in the sale price.