The Gavel - March 2021
Wholesale market opinion from our resident car and LCV auction experts, Andy Conde and Stuart Peak.
Andy Conde - Cars
If you recall my last blog, I was full of optimism and hopeful for what the road map would be as we headed towards the end of the lockdown restrictions. Like most of us, I was still perplexed as to why I could call at my local garden centre and buy a plant, but I couldn’t go to my local showroom and buy a car. We were all disappointed that the proposed opening date of showrooms wasn’t until April at the earliest but at least in England we have got dates we can aim for and be hopeful for what lies ahead.
Because of the dates set out in England, we have certainly seen a spring in the step of our auction business as we enter a new month. Conversion rates have increased significantly over the last few weeks and average prices are up, however an imbalance between buyer demand and stock supply remains. While demand remains high, I don’t see a vast number of vehicles hitting the auction market for several months.
With reports that retail business is strong and plenty of enquiries for vehicles, we are seeing many of our larger buyers returning to work and our auctions after spells on furlough. In general, buyers have become far more comfortable in using our online auction platform Simulcast and it will be interesting to see what happens when the choice is there for them to actually attend a physical auction. Will they return in numbers like we saw over a year ago or will they continue to buy online? I suspect a mixture of the two for most. Regardless of what happens, the safety of our staff and customers is paramount.
It is interesting to see the new dynamics online auctions have created with many buyers taking advantage of the ability to buy at new auctions that were once geographically out of reach. Many of our northern sites are seeing southern-based buyers logging in and bidding, especially the evening sales with the demand for the sub £5k vehicle as strong as ever.
I thought the recent 1.5% reduction in prices from CAP was a little harsh and I am intrigued to see what the March to April movement is. Looking at the current state of play we should be seeing a positive move rather than a negative, so make sure to keep an eye on how that situation evolves.
Stuart Peak - LCVs
Reflecting back on 2020 it certainly was a strange year, but a true record breaker in terms of how well LCVs performed at auction. So how has 2021 fared so far you ask? I would say very much in the same manner as we saw 2020 develop, albeit with more caution due to the latest lockdown.
First time conversions have remained healthy, with eight out of ten vans selling first time, and total volumes sold have increased 16% as well. I am also delighted to report that we absolutely smashed our record average selling price in a single month, with a huge increase of £526 versus our previous record set in October 2020, up to a £9,478. If we compare that figure to February 2020, it represents a 46.5% increase! We know that stock profile can often play a big part, however, if we look at the average age and mileage profile between the two months there is surprisingly little difference.
We shouldn’t lose sight of how significant the price increase has been over the last ten months.
CAP values are now much more aligned to the current market, although there are certainly cases that I have highlighted to CAP where certain models are still too expensive or too low. With our average age of stock sitting at 59 months in February, let’s not forget that a lot of those RVs would have been created nearly five years ago and as a result the vast majority of vendors are reaping the rewards of an incredibly strong market.
I have been looking at average price increases a lot over the last few weeks and firmly believe that those vendors that react to the market quickly will massively benefit in the short to medium-term by keeping the buyers engaged and coming back for more. This applies even more so to those who may see moderate amounts of duplication throughout their fleets. I get asked to value a lot of LCVs for all types of customer including large corporate fleets, councils, franchised dealers and SMEs. One thing that forms part of my opinion now is tracking the monthly CAP movements which I find helps to set expectations.
As we entered March, we saw another marginal increase in CAP values, up 0.6% on average across all sectors, although many have remained static, particularly in the large panel van sector. We have continued to see steady demand within this sector, although with guide prices looking strong, we have noticed buyers bidding cautiously at times. February was an excellent month throughout although I sense more caution in the last week which is not uncommon as buyers sit on the fence and wait to see CAP movements.
I always write this blog in the first week of every new month so I can look back and study the full set of data from the previous month. I am pleased to report that the sales so far this week have been excellent. We continue to see huge numbers of buyers showing interest and we are opening up many new buyer accounts daily as professional traders and owner/operators look to broaden their buying opportunities at auction. We listen to our buyers and take on board their feedback and always operate an open-door policy. It has been great speaking to many of our new buyers over the last few weeks who may have once used other auction suppliers, and it has been a pleasure to welcome them to our sales and see them actively purchasing.
With our daily LCV sales and with our virtual offering capabilities, we are selling stock from not just our dedicated LCV sites, but also many various third-party suppliers de-fleet sites as well as our own network of Manheim dedicated car sites. With so much happening, roll on the rest of March! I can’t wait to review the results this time next month, I think the buyer data will paint an interesting picture.