"Auction prices today are an unsteady indicator of future buy-back figures"
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Love them or hate them, the auctions are now a major force in the used vehicle market. And they're likely to retain their power well into the next century. While the trade has struggled to shake off its back-street image, the auctions have been successful in developing an environment that's clearly encouraged end users to step confidently on to the turf that was once the hallowed preserve of the dealers and traders.
Used truck traders might well regret the shift towards the auctions—but they're still the most regular patrons. What's more, the influence of the auctions has not left the traders untouched, especially in terms of how they buy and sell.
However, there's still an uneasy balancing act between the auctioneers and the used truck retailers—not least as the overheads incurred in running even a medium-sized sales outlet give little chance of returning a profit to the business when the vehicles on its forecourt are bought in competition with the customers. ,.
Have auctions become too powerful an influence in determining residual values at the expense of dealer expertise? Auction prices today are a certainly an unsteady indicator of where future buy-back figures should be set; few auction prices ever match up with "guide" prices. End users must also realise that while the auctions are outwardly attractive they don't offer the guidance and back-up that a dealer can. But then, that's not their job. The gamble taken by the end user when bidding at auction is relatively straightforward; is the money saved on the purchase adequate to compensate for any later repair bills and down time? In the end, as with any auction sale, it still boils down to buyer beware.
Even the auctions aren't immune to the current decline in business. Across the country one word seem to be on every auctioneer's lips—"provisional". Vendor expectation of vehicle values continues to differ substantially from that of the general trader. Some auction sites are struggling to sell even 50% of the entries they attract for two distinctly different reasons. First, good stock is still hard to come by. Second, the auctioneer, in trying to close the sale, has become a victim of his own success. By achieving ever stronger money, he is now expected to sell even the roughest vehicle for a small fortune.
This is fine in a strengthening market but not, as has been the case in the past three months, when the market flops. Nowadays reserves need to reflect reality. Some sensible bids over the past weeks have been turned down by auctioneers who, while seeing the trade sentiment as sensible, must continue to keep the vendor happy. Hopefully, after August the retail customer will re-emerge and the used market will lift. So long as fleets disposing of sizeable numbers of late models use common sense when disposing, and auctions advise on sensible reserve prices, we might still see 1995 make the grade. After a good first quarter dealers are now asking: Where's all the trade gone?" Many operators also say that while the finance companies are certainly easing up, bank managers are reluctant to give in to any business that is not blue chip.
Close scrutiny of the HPI figures for finance business for May reveals a 5% rise in used car-derived van HP for the First five months. However, used truck finance was nearly 13% down over the same period, which is in contrast to the new sales finance proposals, where heavy trucks showed a 21% increase. These figures usefully reflect the level of activity with the dealers at grassroot level.
Used CV values are inevitably depressed with little remaining steady. Typical downward movements for lightweights are between £250-300, while rigid four-wheel trucks have fallen £450 on average. In particular 7.5-tanners, always a volatile stock, have taken a big downturn. Six and eightwheelers are down by £750. Tractor unit values Fell by around £500, as doubts continue over how long new sales discounts can go on unchecked. However, Volvo in particular is taking positive action to minimise the importance of discounts while emphasising their trucks' merit.