Andy Conde on Manheim rostrum

The Gavel - May 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

The automotive industry has faced many headwinds this year – some we predicted, some unforeseen – and it can sometimes be hard to find positives amongst the daily headlines spelling doom and gloom. But while we find ourselves in a similar position now than we did when I penned my last update a month ago, I’m happy to report some green shoots of recovery emerging within our auctions.

A big increase in car buyers has led to an increase in prices and a slow increase in conversion rates. I say slow because when we see a dip in the markets, there is always a backlog of those overpriced re-entries which have had great bids refused in previous sales now attracting lower bids than before. It’s a bitter pill for vendors to swallow, but one they must as CAP values continue to fall, although not at drastic rates, but enough to have an adverse effect on buyer confidence.

The vendors who are brave and experienced enough are taking current market conditions into account and are reaping the benefits of pricing their vehicles smartly. Many are experiencing conversion rates higher than 90%, and CAP performance hovering around the same percentage.

I’ve spoken many times before about how our line of work is confidence driven. Buyers need the confidence that they can buy a vehicle that will earn them a profit, and vendors need confidence in their remarketing partners that they will get the best possible price for a vehicle. As ever, it’s a balancing act, but there’s enough of the pie to go around for everyone, and I’m encouraged to see both buyers and vendors alike using their years of experience to navigate the current challenges effectively.

As we head towards the summer, we are beginning to see greater demand and prices for convertible vehicles, and buyers are also taking fuel consumption into more consideration as the trend of cleaner and greener motoring grows. There is also a market for top-end prestige vehicles as those fortunate enough to be able to afford £30k plus vehicles are not too concerned about the price of fuel.

We all know that we will not get the influx of vehicles we hoped for in the second part of the year, but what we are likely to see is increased demand and an upturn in trade. So as I said at the start, there are early signs of optimism, but it will be a steady recovery.

Stuart Peak - LCVs

Stuart Peak on Manheim rostrum

As I predicted in last month’s update, April certainly had a seasonal feel to it with many buyers taking the opportunity to spend time with their families and go away on holiday.

However, there was still an appetite for stock throughout the month and we saw first-time conversions increase by 2.5% vs. March. We also saw a shift in stock profile as average mileage increased by over 14,000 miles.

We previously predicted that we would see the average mileage and age increase as the supply chain issues continue to hamper the delivery of new commercial vehicles, and as a result our average selling price reduced by £889 compared to March.

If we look at the first week of May, we have seen some positivity at our CV sales with conversions rising and more buyers logging on to our daily sales events. With guide values reducing on average 2.3% for a 3-year-old/60,000-mile van, I feel that we are now seeing vans being priced a little more sensibly after two years of continuous rises. But there is still a way to go on some models to align to current market values.

As always, those vendors that react the quickest will be the ones that reap the rewards. We continue to see some vendors chasing guide values and on many instances over the last two months I have seen vans sold for hundreds less than previous best bids in the first sale. In a buoyant market, it is easy to measure the strength of the market on sold data knowing that conversions are strong, but in a more challenging market, conversions should be watched closely and stock that is not selling in the first or second sale should give an indication of current desirability.

In challenging times such as we find ourselves in now, I feel that it is of greater importance to be looking at what is NOT selling rather than what IS selling to give a true indication of how the market is performing. Heavy duplication can of course cause challenges, as will damage levels, but sensible pricing will always attract buyers no matter how hard a market feels.

Much like the seasons, in spring everything has a bright future and I feel that we shall continue to see positivity throughout the month as we kick on towards the halfway point of 2022.

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