Andy Conde on Manheim rostrum

The Gavel - April 2022

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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

A wise man once said, ‘There is no such thing as a free lunch’. With what we are seeing now in terms of both demand and prices, I believe that adage more than ever before. We all knew that there would be a market realignment sooner rather than later, but the current market feels like payback for the rampant conditions we’ve all enjoyed since June 2020.

I had previously predicted that we would be in for a bumpy ride from the spring, but I certainly could not have predicted the headwinds that were coming. From the distressing conflict In Ukraine, through to the ever-rising cost of living, it’s clear that both new and used car demand is weakening as a result, in both the wholesale and retail space.

However, we all have a part to play to ensure the cogs keep turning. From an auctioneer’s perspective, I have asked my team to get as many bids as possible on all vehicles to give our vendors a decision to make. And to our vendors, we are encouraging them to attend the sales, whether that’s in person or online, as it can make all the difference having a decision maker there in those crucial moments during a sale.

Heading into April we have seen another CAP reduction, but to be honest I was expecting much more than what we got. The big 4x4s are certainly where the value for money is right now as we didn’t get a lot of bad winter weather this year which has reduced demand. And as we head towards summer, the convertible market will begin to pick up as it always does, while there is often good margin to be made at auction on those cherished one careful owner eight- to ten-year-old hatchbacks.

There’s no denying the job is getting tougher, and yes it can be frustrating, but I am urging all our vendors to come to the party. I recently did a sale where a vendor had over 100 vehicles entered. They ended up selling 60% of the lot at over 100% of CAP. A good result you might think, but they could have sold the whole entry at 98% of CAP if they were willing to accept the bids that were on the table. They saw that as taking a hit, but in my view, those 40 not sold vehicles will now attract considerably less than they did during the first sale.

Reading the market is vital in this current climate, but it’s easier said than done. That’s why I encourage everyone to listen to our expert teams and heed our advice. We see thousands of vehicles go through our physical and virtual lanes every week, so more often than not we can see where the market is heading before it gets there.

Stuart Peak - LCVs

Stuart Peak on Manheim rostrum

With Easter just around the corner and Q1 already out of the way, I ask myself where does the time go? It’s safe to say, time absolutely flies by with a busy auction schedule and lots of stock to sell!

As I mentioned in last month’s update, arrivals had increased 30% YoY for the first two months of the year, but we actually saw a reduction in arrivals in March, meaning Q1 arrivals ended up 18% ahead overall. This came as no surprise with new LCV registrations falling in February, and March wholesale volume were noticeably lighter than the first two months of 2022 as a result.

First-time conversions reduced slightly throughout March to 63.1%, and Q1 overall was 17% weaker than last year. Positively, our average selling price remained strong at £10,616 for Q1 as a whole – our strongest quarter on record. Price remains a key focus for all, and March’s average hammer price was 14% stronger than the same period last year.

Looking at the market in general, it’s safe to say that demand has been softer than what we would normally expect to see in Q1. Market confidence and retail buoyancy are simply not at the levels we’ve seen for the last 18 months, but this is no surprise considering all the factors impacting consumers right now.

We’ve seen a trend of less demand ever since Q4 2021; however, despite this, guide prices have continued to rise, making for some challenging conditions. But now in April, we have seen the largest downward movement in guide values - on average 2.3% - and there have been some larger adjustments to certain sectors, e.g. Sprinter and Transit chassis derivatives, reducing by up to 8%.

Whilst this may seem like a large reduction, in pound note terms, a Transit Dropside that is now three years old still books at more money than it did this time last year when the vehicles were just two years old. For this reason, I can only see further reductions in guide values as we head in to Q2 which in turn should help the market to realign.  

I also predict that we will see more realignment throughout the LCV market in April and the softer market conditions shall continue. With the extended holiday period for schools spanning at least three weeks and Covid restrictions in most respects over, I expect that many buyers will take the chance to spend time with their families and possibly take a holiday.

To summarise, Q1 has been a success but it has certainly had its fair share of challenges and I see April playing out much the same. Retail activity remains flat, and buyer confidence is lower than what we have seen over the last two years, so sense must always be applied when it comes to pricing used LCVs, taking age, mileage, condition, and current desirability into factor.

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