Andy Conde on Manheim rostrum

The Gavel - June 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

To say the market is booming would be an understatement. The rise in demand and prices for quality, retail-ready stock throughout May has been nothing short of remarkable.

Prices in the three-year/60k mileage bracket have increased an average of £825, while the one-year/20k mileage bracket has seen a 5.6% rise. These price increases in such a short period of time are unheard of and are a consequence of the odd situation we find ourselves in during this recovery period. However, I must add that these price increases aren’t uniform - the 10-year/100k mileage bracket has seen just a modest 1% rise in values.

The three-tiered system I mentioned in my last blog is still playing out. Most manufacturer sales continue to see 100% conversion rates and CAP figures in excess of 110% and our fleet and finance sales continue to take my breath away with average conversions above 90% and eye-watering CAP returns. With demand for quality stock as it is, the cheaper end of the market continues to test the skills of us auctioneers, but positively we are still seeing conversion rates higher than 70%.

The problem we’re seeing is that to secure a deal, dealers are having to offer over and above market value for part-exchanges. As a consequence, those that cannot be retailed end up in the auctions with exceptionally high reserves that don’t take into account the condition. I have to keep reminding some of our vendors that we continue to use gavels, not wands!

By the end of June, the value of a used car will have likely increased by close to 20% over a four-month period. Those lucky enough to purchase a new car earlier in the year could conceivably sell it for a profit today. I am hearing stories of car supermarkets selling close to 150 vehicles a day and are desperate for stock, but with the supply of retail-ready vehicles set to remain low I can only see the prices of these vehicles increasing further over the coming months. The question is whether these prices are sustainable? Or is the current climate giving us a false sense of security?

From what I understand, the increased prices that buyers are having to pay for vehicles is not necessarily being reflected on the forecourts, therefore profit margins will become even tighter. We must hope that we see some form of realism once the furlough scheme ends in September. I fear for how some of our incredible smaller buyers will cope with the market that’s being created as they are already struggling to source stock.

But make no mistake, there are still bargains out there to be had. The sub-£2,000 market, which has historically been flying, is very steady and sometimes there is a greater profit to be made from a vehicle at the lower end of the scale than one that you have lay out a substantial amount out for. As always, it is imperative that any vehicle offered for sale is reserved in accordance with its condition, has a V5 and if possible, a current MOT. There is always a buyer for everything, but every buyer, even in this crazy marketplace, has a limit.

Stuart Peak - LCVs

Stuart Peak on Manheim rostrum

At the risk of sounding like a broken record it will come as no surprise to you that the LCV market continued to get stronger and stronger throughout May, and as a result we have seen another considerable increase in CAP values going into June. May did however feel like a month of two halves, with the first two weeks having a seasonal feel while the last two weeks felt much more buoyant.

May can be a strange month with the bank holiday at either end and warmer weather setting in - this can often lead to buyers taking time away from their businesses to spend with their families. That said, it is now commonplace to see buyers bidding throughout our sales using mobile devices while away from their normal places of work. One buyer I recently spoke to, who sits in our top five buyers this year, said he more often than not bids while out on various building projects that he also runs – how the world has changed!

We saw our average age and mileage profile increase throughout May – by four months and 3,000 miles respectively – which caused our average selling price to decrease slightly from our record levels last month. The decrease was small though, just £225 down to £9,678 for the month. It is clear to see that demand is still very much outstripping supply, a trend that I feel will continue for a considerable amount of time yet. 

59% of all stock sold throughout the month fell into the Euro 6 category, an increase of 2% month-on-month. We saw the average age of Euro 6 vans increase by three months and average mileage increased by over 4,000 which caused average values to fall by £340. I did notice strong demand for late and low product throughout the month with Euro 6 stock achieving 104% of CAP average.

In terms of models, two- to three-year-old Transit and Mercedes Sprinter product has been very much in demand and we also saw increased demand for 12-month-old Transit Leader. The long lead times on new vans has certainly helped to drive performance.

The average age of Euro 5 vans increased by seven months and mileage by 2,000 in May, but this certainly did not put buyers off at auction as this stock achieved CAP values of 105.5% throughout the month. First-time conversions also improved by 5.5% versus April with nine out of ten vans selling first time – yet another sign that demand is out stripping supply.

We all need to remember that guide values have increased considerably going into June. I’m not saying that this trend won’t continue as we have now seen 12 months of increased guide values for LCVs, but we need to all remember how far the market has moved and be realistic when it comes to setting reserves. More often than not, once a vehicle is put on sale, it will continue to attract bids and end up selling for over the original reserve price. Hitting that green button and letting the buyers know the vehicle is on sale makes a huge difference to any sale price and first-time conversions. With this re-alignment in guide values, there has never been a better time to hit that green button nice and early, and this will certainly help to continue to drive performance as we head into the summer.

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