Andy Conde on Manheim rostrum

The Gavel - June 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

I think it’s fair to say that the past month has been fairly mundane within the auction environment, bereft of many surprises to keep us auctioneers on our toes.

We all know the challenges that the industry is facing right now, but with so many unknowns we are seeing plenty of our customers playing a bit of cat of mouse. Buyers understandably are looking to pick up bargains, while vendors, understanding they need to sell stock, are trying not to have too much of a knee jerk reaction to the softening in values and demand we’re seeing.

While CAP values continue to drop, the rate in the decline has slowed somewhat. But getting good-quality, retail-ready vehicles through the lanes continues to be a challenge across the whole market and we’ve seen a further reduction of these cars in May as the challenges in the new car sector only increase.

Despite the drop in book values, we have seen in a slight increase in prices as buyers look to snap up the best quality stock available, but there continues to be a big gap between the best and worst quality stock that’s only widening as the year goes on. I expect this to get worse before it improves as buyers are reluctant to spend money on refurbishment with margins so tight.

Fleet and finance companies, the primary source of the sub-three-year vehicles the wholesale market craves, have been extending lease and finance agreements during the pandemic due to the lack of new car production, but the knock-on effect is older vehicles entering the used market, and in considerably poorer condition than first imagined.

It’s only human nature to focus on the doom and gloom, but I prefer to look for those good or surprising stories as often as I can. One such example of this is the big demand for exportable vehicles we have seen recently, especially those heading to Cyprus, which may come as a surprise with everything going on around the world. Buyers are keen to give very strong money for stock that fits the bill. The job I am so lucky to be able to do never fails to amaze me.

As we head into the summer months, I do not anticipate any real market changes. We are just going to have make the best of the situation we’re in and wait for the various market dynamics to be resolved over time. My advice to vendors during this time is to consider every bid your stock receives and allow me and my auctioneers to work with buyers who still need stock but are understandably cautious. Quality stock always sells, but sometimes you need to offset some profits against some losses.

Stuart Peak - LCVs

Stuart Peak on Manheim rostrum

Reflecting on May, it’s clear we are seeing many of the same trends playing out that we’ve been seeing since the start of the year. This will come as no surprise to anyone reading this, but there continues to be a shortage of volume and an ever-increasing age and mileage of stock.

That’s not to say there haven’t been any green shoots in May; we’ve seen a modest increase in first-time conversions and average selling price month-on-month.

But the type of vans entering the market continue to be older and with higher mileage. We reached our third highest average mileage in May, and fourth highest average age. Vehicles are also entering the market with more damage as fleets run vehicles longer than they usually would due to the problems in new van production. Most vans will enter the used market with some damage as expected, but the average damage levels have increased in May by an average of £372 per vehicle compared to the same period last year highlighting the extra use these vehicles are receiving.

At the same time, guide values have decreased for the third month running by 3.7% on average, the largest single movement in a month for a decade. But this should come as no shock to anyone. If you remember back to pre-pandemic times reductions in guide values were the norm each month. To put this all into context of how far the market has moved in these unprecedented times, our average selling price in May 2022 was £104 higher than May 2021, despite the average age being three months higher and average mileage over 15,000 higher.

Whilst the market has certainly not had the buoyancy that we saw last year, guide values falling more in line with market conditions will certainly help to keep vans selling at auction, particularly in the fleet and leasing sectors. If you think about part-ex values, my advice continues to be to err on the side of caution. Whilst some SIVs may have been agreed when orders were placed and due to longer than expected lead times, revaluing could pose a challenge. But those conversations should be happening where possible to avoid SIVs that are no longer in line with market conditions.

One final note - Friday 1st July shall see the return of our annual Novuna offsite ‘Premium’ sale down at Novuna’s head office in Trowbridge. With over 150 quality used LCVs up for grabs on the day, this will be our largest ever sales event held at Trowbridge and we shall be welcoming buyers on the day to bid, as well as broadcasting via simulcast to anyone who cannot attend. The event, with full support from our friends at Novuna, is being held in memory of our much-loved colleague and industry legend James Davis. A £50 contribution for each vehicle sold on the day will also be donated to the Alzheimer’s Society. Look out on our social media channels over the coming weeks for further details and some video content to whet your appetite!

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