The Gavel - August 2021
Wholesale market opinion from our resident car and LCV auction experts, Andy Conde and Stuart Peak.
Andy Conde - cars
Ever since the supply of new cars changed to twice a year, August has been a relatively quiet month as far as car sales and the wholesale market goes. But this year, as with everything since the pandemic started, things are different.
In the past month we have continued to see huge demand for quality used cars and CAP values have increased again by another 3% for vehicles up to three years old with 60k miles. Over the past five months, the average value of a one-year-old vehicle with 10k miles has increased by £2,500, and many have increased by considerably more. However, volumes continue to be down on what we want to see, so buyers continue to log in online in their droves to snap up the cars that are available, helping to inflate prices.
The biggest news from the month has been our much-awaited return to physical auctions at three of our largest centres at Leeds, Birmingham, and Colchester. With so much change in the last 15 months, we’re using these five weekly sales to build a better understanding of demand and any performance variations vs our online sales. Plus of course, with Covid-19 very much still a threat, it gives us a chance to bed in new procedures required in the ‘new normal’ way we must do things. Nevertheless, we’re delighted to now be able to give many dealers the option to attend auctions physically if they wish while those who are now more than happy to continue buying online can continue to do so.
The vehicles that will benefit the most from physical sales are those of a lower quality. Buyers who can physically look over a grade 4 vehicle with 80k miles on the clock are more likely to be able to make an informed judgement as to whether there’s profit to be had. A buyer at a physical sale is also more likely to bid on something spontaneously once they’re caught up in the atmosphere created by our quality auctioneers.
I must admit that having been one of the lucky ones to conduct a physical sale, it was quite emotional when my gavel came down on the first few vehicles, and I know that the buyers and my colleagues in the hall felt the same way too. After more than 40 years working on rostrums, it was like going back to those early days of remembering to look around for bids rather than relying on the computer screen. But rather like riding a bike, it soon felt like second nature.
So, as we head into August, I expect to see some form of stabilisation within the markets as prices cannot continue to go up at the rate they have for much longer. I think we may see some consumer caution around the ending of the furlough scheme in September and this may well force buyers into keeping their pounds in their pockets. This is not to say we will see a market crash – far from it – but we will see the most desirable vehicles making all the money while those little pippins that would normally head to our auctions continue to be retailed. The new car forecasts for September should paint an interesting picture.
Finally, I would just like to pay my respects to our dear friend James Davis who sadly passed away in July. The Cox Automotive family are full of sadness, and I know so many in the industry will be feeling the same. James was a wonderful human being, caring, considerate and always putting the needs of others before himself. He will be greatly missed. RIP JD.
Stuart Peak - LCVs
There is only one way to start this month’s blog off and that is to pay my utmost respect to a great friend and industry legend James Davis. JD truly lived and breathed commercial vehicles and was the most inspirational and thought-provoking leader, oozing charisma with every word spoken and trusted and respected by everyone who had the pleasure of knowing him. JD’s untimely passing has left a huge hole in many people’s lives, but anyone who know James would know that he would not want us to be sad, but to carry on the show in true fashion. Over and out JD, it has been a blast.
Now onto the regular monthly update, and I think the buzz word for this month is ‘seasonal’. It comes as no surprise – and as I predicted in last month’s blog – that retail activity has weakened over the last month which has led to buyers being pickier throughout our daily sales. Many buyers are opting to go away with their families on holiday with the relaxation of travel restrictions, so naturally we are seeing less buyer activity. It is certainly not all doom and gloom though and I feel that we shall see an upward trend in buyer activity from September onwards, particularly as there is still a genuine shortage of used stock in the market and much talked about issues with lead times in the supply of new vehicles.
Our first-time conversions in July fell by 6% versus June although the average selling price achieved was still very strong, at £10,189 for the month. First-time conversions are almost certain to dip again throughout August though we are still seeing respectable numbers of buyers logged on to each daily event - some even from their holidays abroad!
We absolutely should not forget just how far the market has moved over the last year and whilst the results this time last year were ever improving in exceptional circumstances, there comes a point where we will see more seasonality creep into the market and that is exactly where we are currently. It’s nothing we aren’t used to at the end of the day, we are simply seeing normal August market van conditions.
My advice for vendors over the next month is to be to be realistic with reserve setting, get the vehicles on sale early and take a serious look at damage levels and vehicle condition on each and every vehicle – this will continue to help to drive the market over the next month.
Let’s keep those wheels turning!