Andy Conde on Manheim rostrum

The Gavel - April 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

By the time you read this update for The Gavel, your showrooms will be prepped, sanitised, and ready to welcome retail buyers back with open arms. But the question we’re all asking ourselves is will consumers return in the numbers we’re accustomed to, or will online buying remain the norm for many even as we approach the end of this awful pandemic?

We have noticed that many of our die-hard physical buyers – those who vowed never to buy a car online – are indeed buying online and, dare I say it, even enjoying the process. When we have a conversation regarding a return to physical auctions their attitudes have certainly changed. That’s not to say they wouldn’t still attend a physical sale, but as time goes on, they have become far more comfortable and confident in buying vehicles online. We all know however that a return to physical auctions should only happen when it is safe for everyone concerned.

Trust is a big factor too. I stress to our auctioneers every day that it takes five years to gain trust and respect but just five minutes to lose it. Therefore, it’s really important in any form of auction, whether it is online or physical, that we are open and transparent in everything we do.

As far as the actual auctions are concerned, we continue to see high prices, high conversion rates and low volumes. The numbers of buyers joining online sales continues to break records every week, and yet despite the great results we are still seeing, some vendors continue hanging on for every last penny instead of getting vehicles on sale early. Buyers need confidence that if they bid, they buy. It is a known fact that once a vehicle is put on sale early, more often than not, the price achieved will exceed the reserve price, but many vendors continue to hang onto stock too long.

CAP values across the board have generally increased for the first time in many months, but the real winners have certainly been convertibles, with many models jumping up in value by over £2,000 in a matter of weeks – it seems that sometimes the pent up desire to spend money takes a leave of our senses. We have also seen a big increase in demand for sporty cabriolets, large executive models and luxury 4x4s.

I’ve spoken before about how easy online auction are these days, and this is highlighted by the fact that we are seeing more southern-based customers buying from our Scotland and north-east sites, and likewise Scottish customers buying from Bristol and other southern sites. Interestingly we are also seeing a slow but sure return to the export market as our European friends and those further afield are hopeful of a return to some form of normality.

Looking to the months ahead, as always performance will be governed by supply and we are still seeing a shortage of the highest quality stock to sell. But even if we did see an influx of vehicles, my view is that the demand is there and would cope without having an adverse effect on conversion rates or prices. With the hope of any overseas trips still on the distant horizon, the freedom during following months of lockdown and hopefully another brilliant British summer, consumer confidence will be high and there will be plenty of deals to be done.

Stuart Peak - LCVs

Stuart Peak on Manheim rostrum

Last month I reported that there was an air of caution at times throughout January and February as buyers watched to see how the market was moving. Well I am very pleased to report that in March, any signs of caution were thrown out of the window.

First-time conversions increased, with 9 out of 10 vans selling first time and we saw yet another record month for our overall average selling price, up £104 from the previous record set in February to £9,578. As we know, stock profile can play a big part, however our average age and mileage both saw slight increases in March versus February.

We also saw overall volumes sold increase by 26% versus February, creating the perfect storm for what has been an incredibly successful month. Our buyers have been wanting to buy vans and have been as busy as ever selling at retail, despite the Covid-19 restrictions. It’s safe to say the market has exceeded all expectations.

There has been increasing interest in our LCV sales from both existing and new customers this year, and in March we saw even more with a 15% uplift in the total number of unique buyers that purchased throughout March versus February. I was always confident that this would happen considering the number of new buyers signing up to Manheim this year and the wide range of vehicles on offer throughout our daily sales programme. One area in particular stands out - a 38% uplift in the number franchised dealers that purchased an LCV throughout the month, amounting to 15% of all stock sold. I have had many conversations recently with contacts throughout the franchised dealer network and they have all reported a very strong start to the year – long may this continue. 

Average CAP prices have increased 0.7% as we entered April, another sign of a healthy market. We have seen increasing volumes of larger panel vans enter the market this year and demand has held up incredibly well for this product, particularly in the 1-2-year-old bracket. I don’t see this changing any time soon.

We continue to see green shoots within the minibus sector, and whilst certainly nowhere near pre-Covid levels, demand has certainly increased. Anything chassis derived continues to perform well, with ‘tipper’ very much sought after and also strong demand for ‘luton’ and ‘dropside’.

Euro 6 remains in strong demand, with 55% of all stock sold falling into that category and an increase of average selling price to £12,876. Nevertheless, older Euro 5 vans are performing well too, and we saw a number of these coming back from large fleets throughout the month. I suspect this appetite is because they represent value for money compared to the younger Euro 6 stock. 

One thing that has stood out for me last month was the alarmingly strong stand-in-values (SIVs) on some part-exchange stock at auction, often way above true market value. From an auctioneering perspective, an old saying goes: ‘the first bid is usually the best bid’. Whilst this may not always be the case, I have certainly seen examples of strong bids being rejected at the first sale and then the vehicle struggle to achieve a value close to the original bid next time round.

VAT can also have major implications on vehicle values particularly vehicles fitted with nine seats such as Tourneo, Shuttle and Vito Tourer. CAP prices published on this type of vehicle include VAT (Qualifying) and if there is a VAT element to the deal, this should be reflected accordingly. If this type of vehicle has an SIV that still has commercial VAT to be added, it is 20% the wrong way, almost always resulting in a loss for the vendor somewhere down the line. The best way to look at this type of vehicle is to treat them as a car – you would never sell a car plus VAT!

To summarise, we have had a fantastic start to 2021 and March in particular was an incredibly buoyant month, roll on Q2!

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