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Online auctions bid for bigger share of the market

Lower mileage trend

“However, there will be a gradual decline in the amount and quality of vehicles sold in the physical auction.

"There’s already an upward trend of lower mileage and late plate vehicles appearing online while the older, higher mileage or damaged cars are more likely to go to auction.”

With a client base of 4,400, Dealer-auction.com, set up by ex-franchised dealers and a relative newcomer at just three-years-old, has seen an average of 300 cars a week auctioned via its website in 2010 increase to around 650-700 per week this year.

Director and ex-Toyota sales manager Gavin Smith predicts in 12-months’ time, the website will auction around 1,500 cars a week.

He said: “We offer the most profitable route available; traditional auction houses simply can’t compete.

"Our £40 fee per car sold means all the profit of a sale is the dealer’s.

"Even if a dealer group has an auction policy or a contract, not every car is going to sell at auction so there’s a place for us among these businesses although many of the dealers who have always used us as the second option are now coming to us first.”

By morphing the actual and the virtual with its Live Online facility, where online buyers compete with bidders in the hall, British Car Auctions sold 105,863 vehicles via on- line channels in 2010 and its popularity is growing; the first six months of this year saw around a million bids made, an 18% increase, and 55,000 vehicles sold to online bidders, up 11%.

Remarketing director D’Vidis Jacobs said: “With used vehicles becoming an increasingly vital profit source for dealers, it is inevitable that online channels will continue to grow in importance alongside the physical channels for stock acquisition.

"Some cars will sell better in a physical auction, others online, and for the majority a combination of the two is the best solution.”

It is the cut and thrust as well as the networking opportunities, best practice sharing and feeling closer to the process that is lost in the virtual world and is missed by the likes of Paul Drake, group used car manager for Citygate, a London and Home Counties-based Volkswagen and Skoda retailer, who has not attended an auction for a year.

He said: “Now, it’s too easy. Auctions are not just about buying cars, you are communicating with other people in the trade and that’s an important part of business that we are missing out on.”

Despite the closure of its Rotherham site last year, Manheim is pursuing its ‘bricks and clicks’ approach which sees the recently rebranded online and telephone trade-to-trade service Manheim Direct (formerly vrs) relocating to its 670-acre remarketing centre at Bruntingthorpe in late December.

With an increase buyer base of 9% this year, Manheim Direct also plans to launch a new online platform eAuction while its figures show the physical auction is gaining ground with franchised dealers - 73% more purchased from Manheim Remarketing in open auctions in July 2011 compared to July 2010.

Manheim Remarketing marketing director Craig Mailey said: “We expect Manheim Direct’s sales to continue to grow as online buying becomes a normal feature of a dealer’s acquisition strategy.

"Generally the service is com-plementing traditional auction activity. Physical auctions will always have a place, and success for any true remarketing company will come from combining these channels into a successful ‘clicks and bricks’ strategy.”

What appears to be missing from the equation is the manufacturer. Automail.com’s Watson firmly believes that online remarketers have a role to play ‘repatriating’ vehicles to their brand of origin and as such thinks manufacturers are ‘missing a trick’.

He said: “While we are first and foremost a service for dealers, if manufacturers supported their dealers’ online remarketing strategy, it would help more vehicles find their way back into the corresponding dealer network.”
 

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