By Ian Halstead
Trust and transparency are the major influences which underpin the valuations market, so it’s no surprise that dealers and consumers alike prefer to deal with the brands they know best.
So although none of the market leaders are showing the remotest sign of complacency, the big names in data are pretty much as they were: Auto Trader, Eurotax Glass, Cap HPI and BCA.
Numbers aren’t everything, of course, but Auto Trader’s retail and consumer products director, Karolina Edwards-Smajda, has an array on her side.
“We collect around 1.5 million consumer valuations a month and provide more than 3 million valuations every month to the trade. We know that consumers trust our valuations and roughly two-in-three of sellers use Auto Trader to value their car,” she said.
“We’ve been at the heart of this business for a long time, have more data than anyone else and our valuations are used for about 80% of all forecourt transactions in the UK.”
Not that Auto Trader employs armies of analysts and industry observers to turn its data into valuations – today’s number-crunchers rely on sophisticated purpose-built software and algorithms.
“We aren’t calculating values, we are ‘playing back’ the latest prices for which cars are selling. We just watch the market and apply a little science, so our values are purely retail-driven,” she said.
“Of course, we provide both the trade and consumers. Our part-ex guide prices are pitched slightly below trade, to allow for costs and protect retailers’ margins. There are so many other valuation providers out there, but we are trying very hard to align the ‘understandings’ of both parties.
“Around 20% of consumers walk away from a potential deal because they are not happy with the price, so clearly there’s more work to be done. It is a very scientific process, and the algorithms we develop just keep getting better.
“However, my instinct is that the 20% figure is increasing. We hear a lot about how ‘millennials’ want to trust sellers and don’t like to haggle, so that may well be a significant factor here.”
“We’ve even set up part-ex training courses to make sure all our people are better informed, and that they know how to make consistent judgements” Stuart Pearson, BCA Marketplace
Auto Trader has always tracked its valuations to see how they compare to the selling prices and also monitored hammer prices at auctions, but its next focus will be to see if we can adapt its valuations for any optional extras the vehicles might have, she said.
“Firstly, we need to discover how to capture this information and, secondly, to see how these extras impact on prices. It’s an evolving process, but we’d hope to have something in place this year.”
Rupert Pontin, now head of valuations for Eurotax Glass’s – and former chief car editor of Glass’s Guide – is certainly no millennial, but is using his 30+ years of industry experience to keep his company ahead of its peers.
“As of mid-August, we were more accurate than our competitors in 10 of the previous 12 weeks,” he said. “Each of our editors ‘handles’ more than 20,000 vehicles, so our methodology and our business tools have to be market leading.
“Our Radar product, which monitors data on a daily basis, is proving very popular with dealership groups and the independents who really like their stats. Our analysis tools can go down to postcode level, so dealers can find out what’s happening right on their doorstep.
“Equally, manufacturers also need to know where their cars go after sale and where they’ll be in one, two or five years. The market is changing so quickly that the need for accuracy is greater than ever.”
“The market is changing so quickly that the need for accuracy is greater than ever” Rupert Pontin, Glass’s
Pontin identifies two major issues which have changed the trading landscape in recent years and placed an even greater premium on price forecasting and part-ex values.
The biggest impact has come from the increasing number of used cars coming back into the market, which passed 4 million for the first time in the first six months of 2016, he said. “For the last four or five years, supply has been short, so cars could be placed back into the market and be sold pretty easily.
“In the last few months, though, we’ve seen millions of vehicles which were bought new after the 2008 crash coming back in. It’s not a blip, it’s a genuine trend, and it places even greater pressure on the industry to understand when these vehicles are coming back, what condition they’ll be in and what they’re worth.
The second influence is that vehicles once considered niche, such as 4x4s and crossovers, have become mainstream.
”We saw an element of this shift before 2008, but the economic aftermath of recession has taken quite a while to shake out. Now, though, this is happening before our eyes. There’s no major panic here, but people do need to understand the impact these forces will have throughout our industry.
”Looking ahead, our aim is to develop even higher levels of market intelligence. Some people might be happy selling at 97% of Glass’s prices, but if we’d known more about the market, it might have been 99%”
At BCA Marketplace, Stuart Pearson, UK managing director for remarketing, also has large numbers on his mind, as his group is opening a major new site on the outskirts of Birmingham in late-autumn.
With a location close by the M6, space for 2,000-2,500 vehicles, a large digital suite and two massive configuration areas, it’s a major investment for any business.
“It’s a mature model, so we’ve thought long and hard about where auctions are going,” said Pearson. “Some investment will be visible, like Birmingham and expansion at Bedford, but we’ve also spent heavily on gathering more data and making valuations for part-ex stock even more accurate, because margins are still so tight.
“We developed a branch appraisal app to improve consistency of our gradings, did a lot of work in the pre-sale area of activity and enhanced the search facility on our website, because feedback from a number of key buyers indicated that would be appreciated.
“In terms of important business wins, we’ve signed a three-year exclusive deal with Inchcape, have another in place with JCT600, and Jardine has renewed with us for another two years. I’ve been with the group for just over 20 years, and we’ve evolved more in the last two than in the previous 19.
“Equally, I know from talking to senior dealership executives that we have to be even better when it comes to supplying data and market intelligence. We’ve even set up part-ex training courses to keep all our people better informed and ensure they know how to make consistent judgements. We process around a million vehicles a year, and now we’re building real rigour and discipline into every aspect of that process.”
It genuinely is the end of an era at Cap HPI, as its famed Black Book products abandon print and move to digital platforms next April after 37 years. James Dower, senior editor, Black Book, who joined the group’s Leeds-based data hub earlier this year, is clearly relishing his new role.
As the integration of Cap and HPI has proceeded, a lot of senior editors have moved from UK valuation to international. That has allowed it to recruit new people, such as Dower.
He said: “We’re also taking on new database developers, analysts and software specialists so we can improve our services still further.”
“In terms of customers, we’re already into the high 90%s of the AM100, and in terms of new products and services, Cap HPI is developing a global code, which we’ll be introducing gradually so we can compare values across different countries.
“We’re continually looking at our processes to be sure we’re keeping up with the times and monitoring our KPIs and we’ll be introducing enhancements to our guides once we go digital. Joel Albyn, who was a director of e-commerce strategy for Walmart, will also be helping us develop new digital services.
“We have several digital products under development, which will strengthen our position as the leading valuation service.”