Used Market Place Trade Talk
The markets this month have seen further downward pressure on pricing.
Part of the problem is the Guides, CAP and Glass. Both have (correctly) been reflecting price increases through the post-recession last 3 years, driven largely by a lack of stock in the marketplace.
And so we reached the peak of the pricing increases earlier this year, followed by a rapid cooling off over the last 3 months. With more stock arriving daily, for both cars and LCV at the major auction centres, the guide prices remain too high. But as ever, they simply cannot fall quickly enough, leading to uncertainty in the auction rooms. Traders are now very much buying stock based on what it is retailing for, rather than what the guides say it is worth.
I had first-hand evidence of this during the month, with my own Skoda Yeti, shown left at Shoreham Auctions.
The Book price for this car stands at £9175 Clean Trade. It retails for £9495 and so, the sales price at auction was £7600!!
It is the same story across the car ranges, particularly the luxury marques, where most values are now quite widely over stated.
For LCV’s the situation is similar, although nowhere near as severe. Book prices are a bit high, but not overly so. Coupled with a lesser volume coming back to the used markets there remains confidence to buy stock, but only at the cheaper end of the market.
Any, direct from fleet stock below £4500, is selling well, especially if there is minimal damage. Many vehicles easily out-perform their Book values, because the trade want to buy direct stock, with warranted (low) miles and minimal damage. Even internet bidders are confident to buy the stock without seeing it. But the ‘window’ is quite small, the vans have to be direct from fleet, sub 85000 miles and with only minimal damage. If any of these criteria are not met, the van will sell for below its Book value.
The newer stock, i.e. over £5000 and certainly the £7500 and over, is really beginning to struggle.
Typically these vans are not making their Book values, irrespective of damage or miles, and have to be cheap to sell. Most traders are simply not willing to take the risk of suffering big Book value reductions, whilst buying this expensive stock.
Equally important is damage. When the markets become sticky as they currently are, badly damaged vehicles will suffer a great deal, by 4 figures too.
Evidence this Ford Transit shown right, at South Western vehicle Auctions; the sister vehicles with much less damage were making £300 – £400 OVER Book values.
This van, owing to the damage, made £1300 less than Book, so a net loss of around £1600.
The car market is even pickier. Any significant damage will render the car almost unsaleable, unless it is very cheap indeed.
Other significant news this month concerns Scottish Motor Auctions, which have been bought by BCA Marketplace PLC, for £43m. BCA, which recently floated to achieve PLC status, has purchased SMA Group and all of the sites to create “a value accretive acquisition”.
For the time being at least, it will be business as usual at SMA, with all of their centres operating under the same branding of SMA Vehicle Remarketing. Just how quickly this situation changes remain to be seen but, currently, our Legal Agreements and Bank Guarantees remain valid with SMA. Clearly we will monitor this situation very carefully indeed.
It will be interesting indeed to hear from the BCA management team who, up until now have consistently refused to allow any earnings to be sourced from the Buyers Fees.