AM Online

Falling used car market prompts calls for more market research

Vendors are being urged do more research into current used market values to ensure they maximise conversion rates at auction.

In a month when CAP has reduced average used value prices by 4%, Aston Barclay is seeing conversion rates fall across the auction industry as vendors strive to achieve unrealistic values on their used stock.

Conversion rates of between 35-45% have been typical over the past few weeks as reserves are often a few hundred pounds higher than the market is prepared to pay for ex-fleet stock.

“We are doing more homework than ever to help vendors set realistic reserves on cars and enhance conversion rates.

"Recently we identified a two-year-old Network Q approved Astra sitting on a dealer’s forecourt at the same price a vendor was expecting a trader to pay at auction for an identical car.

"Such examples are not uncommon.

"The auction reserve was a few hundred pounds too high and the car didn’t sell. This reinforces the danger of just using CAP as a single source of market intelligence,” said Barry Watts, operations director of Aston Barclay Group.

Watts is recommending vendors check out other sources of used price information such as Auto Trader and manufacturer used car price websites to supplement pricing information from CAP.

“In a falling market two or three other sources of used car prices help determine a reserve price that gives a vendor a strong chance of selling their car on its first entry into the auction,” said Watts.

“We always aim to sell cars first time in a falling market. Holding the car back for a few weeks before putting it into auction again to achieve 100% of CAP Clean, when the book price falls, is a false economy and can lead to the vendor receiving £300 less than the first time it went under the hammer.

"Low conversion rates cause vendors an additional headache as the number of unsold cars can mount up week after week, making them unable to turn used assets into cash,” he said.

Watts also urges the industry to price vehicles in accordance with their condition and specification. This will result in many cars, currently reserved at CAP clean, being reserved at CAP average or below, a much more accurate guide to their value.

“A buyer will obviously consider condition and specification as well as market demand when determining how much to pay for a car, vendors should take these points into account when setting reserves.

"If a vendor’s reserve reflects this then the car stands more chance of selling first time, every time, and for more money,” he added.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Login to comment


No comments have been made yet.