The Gavel - February 2021
Wholesale market opinion from our resident car and LCV auction experts, Andy Conde and Stuart Peak.
Andy Conde - Cars
Who would have thought this time last year that we would have to endure a year of restrictions, on and off lockdowns, and changes to our industry that would normally take a decade to introduce, let alone less than twelve months? Now we find ourselves in 2021 and once again locked down with nowhere to go, but amazingly still selling thousands of vehicles.
Many of our large buyers took the cautious approach in January and have put their foot on the brake when it comes to buying volumes, but others have really taken advantage of the falling CAP values. Sensible vendors who need to keep stock turning are adjusting their prices accordingly. The old saying ‘speculate to accumulate’ is the name of the game.
Stock levels have remained static, much lower than you’d expect at this time of the year, so the fact that we still have high demand from our buyers has helped to keep the wheels turning in our virtual lanes. This demand is helping to drive conversion rates, particularly for our manufacturer vendors who are enjoying regular sales conversions in excess of 90%. Our dealer vendors have reacted well and have made appropriate allowances when doing deals, however some of our fleet vendors are still holding firm on their prices. While their CAP returns are high, their conversion rates are low—you can’t have everything!
More recently, we have seen the lifting of government restrictions on the sale of repossessed vehicles and I am hearing stories of some substantial numbers that will be hitting the market over the coming months.
Talking of the coming months, it seems everyone at the moment is trying to estimate what will happen in the market. The very optimistic are forecasting a boom like we saw at the end of the first lockdown in June, but I prefer to be more conservative. While my view is there will be a spike in both demand and prices, we should be careful not to carried away with ourselves, particularly vendors should not have expectations that prove too ambitious. It’s important to keep our fingers on the pulse of the market and set prices that reflect its ever-changing nature.
Looking at how the whole industry has adapted to virtual buying has been truly amazing, with buyers just as confident in buying a £200 banger as they are a £50k beauty. The auctions have worked hard to build trust so that when a you buy a vehicle, it arrives as described. As always, the grade 1 cars are the most sought after and buyers are quite happy to pay close to CAP clean money for the right model. However, it’s not just condition that’s affecting the bids, having a V5 and full-service history also helps.
As for electric vehicles, we are seeing more and more hit our auctions, but to do well it is imperative that they come with charging cables and clarification on whether the battery is owned or leased. There’s far more to think about with electric vehicles, but as I’ve said on many occasions, if a vehicle can be bought, cleaned and sold quickly, buyers will pay a premium regardless of the fuel type.
Finally, I’d like to give kudos to everyone who has adapted to the ever-changing markets over the last year. It’s been a tough year, but we’ve come through it largely unscathed, and in the words of the late Captain Sir Tom Moore: “Together we can ensure that tomorrow will be a good day.”
Stuart Peak - LCVs
So here we already are in the second week of February, and over a month into another national lockdown. With everything seemingly against not only the motor trade but the nation as a whole, it has been far from the ideal start to the year and a million miles away from where we were this time last year. I am however very pleased to report that the LCV sales throughout January delivered excellent results again and appetite for stock remains steady.
We’ve not quite seen the usual January boom this year and it’s fair to say that there has been plenty of watching going on, particularly in the first two weeks of the year. Each and every sale seems to have taken that little longer than it usually would, and we’re having to work very hard on the rostrums to generate interest.
Whilst this may seem a little downbeat, it most certainly isn’t. We have to remember that we have seen consecutive CAP price increases over the last eight months, including yet another 1.5% increase at the start of February. It’s no wonder that buyers have been more hesitant at times to start bidding, but once they get going, more often than not they keep bidding until the unit is sold. Our provisional bid management teams have been working very hard to convert bids and this has been a huge contributing factor in producing an excellent set of results throughout January.
Average selling prices in January were the second highest on record, up £241 versus December to £8,768. Compared to January 2020, this represents a massive 34% increase in average selling price. We also saw our days to sell reduce by 21% versus January 2020, down to 11 days.
Digital channels have allowed us to make more stock available to our customers meaning 14% of all stock sold throughout the month was at an offsite location and in total we sold LCVs from 19 different locations. First time conversion rates also remained very healthy at 83% despite average mileage increasing slightly to 76,791.
The general feedback I have received is that retail activity has been patchy over the last few weeks, but there has been pockets of strong retail demand and a few dealers reporting excellent results throughout January. We’re also not quite seeing the levels of activity from our franchised dealer buyers that we would usually see this time of year due to many dealer groups utilising the furlough scheme. However, those that have been active have been getting stuck in which is great to see. Clearly there is still a strong demand for LCVs and despite being in lockdown, most buyers have the confidence to keep buying.
To summarise, January was not quite a record breaker, but it wasn’t far off. With everything going on in the world, to deliver the results that we have in January is remarkable and the signs looks good for another great month in February.