The early part of this year generally provided a very good month for used vehicle sales, helped by a continued lack of any real volume at auction centres around the country. This was the scene at Aston Barclay Westbury Auctions in the middle of the month where a reasonable size selection of LCV’s sold extremely well.
However, like most auction sites there was plenty of room for more stock under the canopy, it simply is not there at the moment.
The trade are reporting that for both cars and LCV, “things are back to normal” on the retail front with a reasonable flow of customers through the doors.
That said, the number of retail sales is nothing like during previous years through the Pandemic, with sales staff having to work very hard to secure every deal. We are now seeing plenty of offers at Dealerships for both new and used stock, including 0% interest free loans, free servicing, part exchange offers etc.
It would also appear that the semi-conductor supply crisis will ease this year, as the microchip industry is now turning its attention towards car manufacturers and their shortages; thus far it seems the domestic appliance sector has seen more than its fair share of microchips throughout the Pandemic, leaving vehicle Manufacturers with a severe shortage. This normalizing of supply should enable new vehicle supply across all sectors to improve this year with the resultant ‘return to normal’ for fleet replacements.
There is a way to go yet though before any kind of normality can be claimed. Currently there remain long lead times with most Manufacturers for new vehicle supply, across all sectors. It would seem that the resultant used vehicle supply into the wholesale used markets will also remain restricted, for some time to come.
As we have said previously, in a normal market this restriction of supply would create extremely strong used prices, as indeed it did in the early years of the Pandemic. For much of the last year created by the cost of living crisis, industrial unrest and of course the continuing Ukraine war. It is highly unusual to experience a lack of supply AND a lack of demand but that is exactly the market conditions in which we have found ourselves of late.
As such many vehicles are not reaching the, probably still too high CAP Guide prices for a variety of reasons. Price point is one of the main issues, as in times of economic unrest most traders resort to the less risky cheaper stock, typically sub £8000 so that vehicles can be retailed at £9995 or less. It is this lower end of the used markets that continues to thrive this month and is likely to continue in this vein for several more months to come.
Then comes damage. ANY vehicle with moderate to severe damage on them are unlikely to sell during the first outing at market and, when they do sell it will be significantly below the ‘Guide’ price. Significantly below!
Thus it is against this backdrop of a highly unusual market that we continue to manage vehicle sales for our clients. It has never been more important to be actively managing each and every sale, to ensure vehicles are properly appraised, priced and ultimately offered for sale.
With a steady market, most cars are selling and finding new homes. Those left behind are either badly damaged, priced too highly or electric!
Just at a time when used volumes of pure electric cars are ramping up at auction as major fleets begin to dispose of them, demand has taken a very sharp dip. Speaking to the trade they almost all claim that electric cars are proving hard to sell, even at those retail sites within a ULEZ. Some dealers have had their stock of EV’s for many months now and are resorting to huge price reductions to shift them. Consequently when (and if) they do go back to auction for more stock they are not going to offer anywhere near the Book prices, regardless of condition. As a used prospect these cars are now several thousand pounds more expensive than their ICE equivalents, meaning that retail opportunities for such expensive stock in these tough economic times are limited.
There also remains significant infrastructure problems with recharging, leading to range anxiety issues; potentially UK PLC is currently unprepared for the electric revolution, something that needs to change rather quickly.
Damage could be easier to deal with, but in reality it is very hard to manage within Fleets. Apart from the obvious dents and scrapes that seem to beset cars of any description, poorly repaired accident damage remains a real issue in the used car market. Having an entire side of a car that has been poorly repainted is almost worse than presenting the car with the damage!
The trade are extremely adept at spotting this as indeed are the auction inspectors now; gone are the days when the only way to check for this issue was to physically see the car. It is now very high on everyone’s radar and so will be found, causing significant reductions in sales values.
Price spots are very active at the moment, as the trade all seek to find that cheaper, good condition car to buy. Sub £8000 is the real price point and here, even cars with moderate damage still prove very popular, enabling retail at under £10000.
Basically the more expensive the car gets, the less buyers there are willing to invest in them. Therefore as we head up the price ranges, any issues with the cars such as damage, pedigree, paperwork etc becomes more sensitive, affecting values.
Overall the used car markets do remain stable and, for the most part very good but only for the right stock.
It is a similar picture for used LCV’s, where damage is treated very harshly indeed. Heavily damaged vans will still sell, but for a long way behind their Book values.
The trade do not particularly want to bother with repairing heavy damage, losing valuable time in bodyshops and awaiting relatively scarce spare parts. As such any stock that is nearly ready for retail is the most popular currently, especially those examples with full documentation. Those are the LCV’s that are achieving in excess of Book values, anything else though can be expected to sell for significantly below the Book.
In terms of demand, speaking to the trade is does appear that there is more demand for LCV than that for cars, as commercial vehicles remain that necessity purchase, irrespective of the economic conditions. As such the trade continue to return to auction to replace sold units, if not buying for ‘stock’ anymore, creating a reasonably buoyant market.
As with any sales though rostrum management remains absolutely vital, with constant intervention throughout the bidding process required to ensure the right and fair values are achieved.
Diesel vans clearly dominate the used LCV sales across all sectors as Manufacturers were relatively slow to some to the (LCV) AFV party. However when an AFV LCV does appear it will attract interest, although the vehicles do need to be correctly placed around the country, close to the towns and cities that have implemented (or are about to) ULEZ’s.
Electric vans continue to prove quite popular although, like cars there are fewer buyers out there in the used markets for them. And if they are ‘1st generation’ EV’s with a limited range (up to 100 miles) then they are not popular at all, selling for well below their Book values.
A pre-requisite for any EV sale to be successful at market is the presence of the correct charging lead; the trade have quickly caught onto the fact that sourcing the correct lead is both time consuming and expensive and so will bid accordingly on the vehicle.
The general consensus amongst the trade is that, like cars, there is a way to go yet for more general consumer acceptance in terms of infrastructure and range acceptance.
4×4 Pickups have experienced a more stable market as we work our way through the winter months and with little in the way of surprises.
The more toys the ‘lifestyle’ variants have the better the sale outcome so, for example a good quality truckman type rear back body will reap dividends at sale time.
Workhorse examples continue to be the most popular with anything direct from a Utility home sure to sell well, almost regardless of age or condition.
In summary the LCV markets remain stable and the expectation is that they will continue in this vein, as stock shortages continue. There is also now a general acceptance that the type of stock returning from Fleet, Utility in particular is generally older and with more battle scars. A trader at a recent LCV sale was heard to comment “these vans should be sold for scrap”, such is some fleets’ reputation for poor quality and ageing stock at the moment. Many fleets have clearly had to hold onto stock far longer than normal to ride out the Pandemic and new vehicle supply issues, with the consequence that many of their de-fleets are of necessity because the vans simply do not run anymore. As a result any former Utility stock that is in reasonable order and with less than 90k miles recorded is sure to be well received in today’s markets.
This sector has continued to perform well although the stock shortages seen in previous months now do seem to be a thing of the past. With new vehicle supply beginning to increase back towards normal levels and with the Christmas rush over, truck sales are beginning to show signs of stagnating. Euro 6 trucks will continue to sell if not for Book money but, anything older than E6 (with the exception of more specialist trucks) will begin to suffer.
As we head through the first quarter the sales of trucks from our Vendors appear to have held reasonably well, but we are not sure of how the economic recession and continuing war in Ukraine will affect the markets going forward.
Older more specialist trucks such as this 2007 Mercedes Dropside with the all important Loader Crane remain quite popular for export and usually find a new home at the first outing.
Tractor units remain ok this month, with E6 examples such as the Mercedes Actros 6×2 seen below selling ok.
However the volume of tractor units coming back to market is now quite high across all Euro derivatives, giving the trade much more choice. 6×2 Tractors in ‘fleet’ spec are particularly dominant with values now falling as a result.
As usual in the tractor unit market, those sleeper cabbed high horse powered examples with plenty of specification tend to sell the quickest and for the most money; basic examples with day cabs are already struggling this month so any more volume will exacerbate the problem. 6×4 tractor units remain very popular for export.
Road trailers are also beginning to suffer at the hands of volume. Many more older trailers are entering the used markets with only those that are ready to roll making reasonable money. Non-running and very old trailers are really now only selling for scrap or storage where applicable.
PLANT AND EQUIPMENT
Unlike the vehicle markets, this sector continues to provide strong returns for Vendors.
With a very active export market but also some strong ‘home’ demand, entries at Plant Sales have attracted strong interest and subsequent bids.
The Agri and Construction sectors are showing strong sales this month as the trade get back into stride after the Christmas break, with many machines destined for export.
There are some signs of over supply into the markets, especially with small Dumpers and excavators, however this will only serve to slightly reduce the prices, rather than create any kind of stagnation. And can there ever be too many large Excavators in the markets? The answer of course is no although, those with desirable attachments and plenty of them will always prove more popular than basic, stand-alone machines.
The more specialist machines such as the Paver seen below does tend to take a little longer to find suitable homes, although much of the work is done before the sale, to ensure there are enough interested buyers logged in. That will usually produce the right results in terms of price.
Some assets need no help at all from the ‘virtual rostrum’, such as the always popular Unimog seen below at sale this month. They always make absolute fortunes because of their scarcity in the used markets, and their broad appeal in any country worldwide.
And if these come with a Loader Crane fitted well, simply name your price!
Overall the plant and equipment sector remains extremely buoyant across all sectors and is likely to stay that way for the foreseeable future, despite all auction sales remaining ‘online’ only.
THE NEXT FEW MONTHS………
With signs of new vehicle supply issues now easing, a return to ‘normal’ supply seems a possibility during the latter stages of this year. If the sluggish demand continues throughout the year then we could see the supply and demand scales tip the wrong way, for pricing stability. We are a way off that happening though in all sectors, so we believe that the rest of this first Quarter of 2023 will see some good results with vehicles finding new homes eventually. Pricing of used vehicles will continue to provide the challenge for this period as used prices come under further downward pressure in the Guides. As a result we expect to see a prolonged period of a relatively poor performance against CAP as the Guides seek to adjust according to the markets. This will certainly be true for any damaged stock where Guide price does now seem unattainable, although one should bear in mind that today’s used pricing remains around 30% higher than pre Pandemic levels. Thus any reductions can be viewed as relative.
XBG FLEET REMARKETING LIMITED
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