By Chris Phillips
If internet shopping can topple high street chains like HMV and Jessops, it’s tempting to ask motor dealers looking to replenish or dispose of stock: Why go to an auction hall?
All the processes – from vehicle condition reports to the bidding itself – are now possible not just through a desktop PC; online business is being downsized to palm-of-the-hand kit.
Auction giants BCA and Manheim, along with SMA Vehicle Remarketing, are poised to launch their hand-held services, while Eastbourne Car Auctions activated its version at the end of last year.
But auction providers believe there will be a continuing need for the ‘physical’ advantages of halls.
And ironically it’s communication tools like smartphones that will help to ensure their survival.
Jon Mitchell, managing director of Eastbourne Car Auctions, said latest technology offers traders a ‘belt and braces’ benefit, complementing rather than supplanting halls.
Mitchell, whose company has a joint venture role with the recently-launched online remarketing company Carcom, explained: “Typically, you will see buyers at auctions equipped with smartphones and iPads looking at a vehicle and comparing it with a condition report on screen.
"Perhaps the report highlights some minor damage they haven’t noticed. ‘OK,’ they’re saying, ‘let’s have a closer look at that,’ while they’re flipping between Glass’s and CAP for a valuation.
"Plus, you get buyers who give a vehicle the once over and then sit in the canteen because they don’t want others to see they are bidding.”
Commented Tony Gannon, communications director of BCA: “Auctions are not just about selling, but the logistics of vehicle movement, storage and prep.
“A dealer gets the trade-in on Saturday and wants it gone on Monday. Online bidders still want the reassurance of seeing other bidders in the auction hall.”
Gerry Lynch, chief executive of Carcom, added: “Like any other business, there is always a need to get out of the office and make human contact.
"And auction halls give you the opportunity for some tyre kicking, especially with older vehicles.”
‘Hand-held bidding’ is an extension of BCA’s Live Online service and is due for launch in the second quarter of this year.
Though Apple smartphones and tablets are the most popular consumer choice, the company says the auction menu will be available through other digital suppliers such as Samsung.
Commercial director D’Vidis Jacobs believed its appeal would range from ‘remote’ buyers and sellers to those in one auction hall also wanting to bid for stock at another hall.
Jacobs said a key challenge was wi-fi connection – “you can’t afford a second’s delay; anything above 300 milliseconds and you have a problem”.
Manheim’s offer, eight years after launching Simulcast online auctions, is Simulcast 2.0, with iPad and iPhone access available to all the company’s online registered bidders during the first quarter.
Apps for other mobile devices will follow later in the year.
Manheim reports a near-20% increase in the volume of vehicles sold online between 2011 and 2012, while BCA says that about the same percentage accounts for the vehicle throughput at its Blackbushe auction centre alone.
SMA, with five auction sites located from Birmingham to Scotland, expects to have its Live Bid smartphone application available by the second quarter of this year, with managing director Bob Anderson saying: “This audio visual service moves closer to delivering a more engaged and authentic auction experience.”
Whatever the means of buying or disposal, demand for the most sought after vehicles – mainly in the one to five-year-old bracket – continues to outstrip availability.
This is highlighted in the latest report from the National Association of Motor Auctions, which notes that “constrained ‘supply” was chiefly responsible for an 8.7% boost in prices during December, from an average £4,969 in November to £5,402.
Taking the whole year, BCA reports a 4.7% increase over 2011 to £6,199.
Predicts managing director Spencer Lock: “Dealers will continue to face increasing competition when sourcing the most attractive and retail-ready used cars.”
His view is supported by Daren Wiseman, general manager of Manheim Seller Advance, who says: “Good quality vehicles, especially low-mileage three-year-olds, will be as hard to find as they were last year.”
This may result in dealers having to “broaden their stock profile” to include older/higher mileage cars, even with some minor damage.
When it comes to remarketing, he said dealers need to exercise tighter control of when, where and how they sell through auction, explaining: “One of the keys to a successful sale is market intelligence, for example, ensuring a vehicle in the cheaper end of the market fits in with the profiles of others at a particular auction, compared with the more expensive stock you’re likely to find with fleet and manufacturer disposals.”
Tony Gannon characterised the market as bigger, diesel-powered cars for fleet and smaller petrol-powered for retail, while Jon Mitchell said more attention was now being paid to emissions-based tax.
“A trader’s thinking ‘if I want to put six months’ tax on this, how much is it going to cost?’”
As for condition, Wiseman said: “Manufacturers and fleet tend to be more aware of the value of prepping – if a vehicle is in good condition
with a service history, common sense tells you it will achieve a higher price.”
However, Mitchell pointed to longer fleet contracts where companies were dispensing with the cost of final-year maintenance.
“Though refurb adds to residual values, the counter argument is that ‘we can’t afford the cost and delay of 10 days in the workshop, or whatever’.
And stock shortages mean that dealers are more willing to buy damaged vehicles and do the work themselves.”
Carcom’s Gerry Lynch, with 35 years of motor industry experience from his time with BCA, Inchcape and Autologic, warns that fleets taking a “liberal view of remarketing condition” do so at their peril.
“Condition is critical. Volume and specialist buyers from both independent and franchised dealer networks want to buy ‘oven ready’.“
From a dealer standpoint, Tony Gannon said: “Some see the value of prep, either doing it themselves or giving it to a third party such as us.
"Others take the attitude ‘just get it out of here and we will take whatever we can get’.
"Overall, we maintain that for every £50 spent on prep will add £150 of value.”
Recognising that more dealers are acquiring vehicles online, supply chain specialist Epyx has added a ‘retail ready’ category to its 1link disposal network.
“This provides dealers with stock that can be driven straight on to the forecourt and we are seeing a 10-15% per quarter increase in this kind of activity,” said sales and business development director David Wallace.
Still on the condition issue, Manheim has introduced a 1-5 grading system in line with National Association of Motor Auctions guidelines, featuring hand-held appraisal technology and imaging.
Like BCA’s Appraise Pro, it provides a standardised report, regardless of who is assessing the vehicle.
Complementing Appraise Pro is Market Price, a ‘real-time’ guide based on BCA transactional information and data from auto analytics provider Deltapoint.
Its menu ranges from mileage and service history even down to the number of keys.
ECA’s Jon Mitchell said: “Grading has to be 100% accurate because if it’s not we are stuck with the vehicle – the vendor’s not going to take it back because it’s a misdecription.”
Peter Smyth, director of Swansway Garages with 15 sites and seven franchises, said his company sources mainly from manufacturer disposals.
“It’s not worth physical attendance at auctions.
"Online is now so easy – a successful bid and two days later you get the car in the condition you expected it.”