Auction houses doing good business as prices edge higher

Many trade commentators are saying that dealers looking to replenish used car stocks would be best served at the auctions. This may very well be true when it comes to choice but in terms of price it has been a source of extreme frustration for a lot of trade buyers who find themselves in competition with many in the trade who are chasing similar stock. Of course the auction houses are probably the big winners in this as they become a steady and reliable source of used car stock for an increasing number of dealers. However the reality is that because of the lack of cars which fit dealer criteria on offer there are too many dealers chasing too few cars. This is leading to prices not being representative of what the guides, or indeed the market, are telling us the true values of the cars are.

The auctions, while providing a good barometer for used car values, are also drawing many buyers from across the trade that need stock for their forecourts. The fact that buyers can actually bid on something they can buy – rather than just bidding on endless cars offered to them from other dealers, who do not have the appetite or knowledge to be able to price stock which is alien to them – is somewhat reassuring. It also means that by attending auctions, if they are prepared to pay the money, they have a fighting chance of buying the car.

The downside, of course, is that no matter how experienced the buyer is if they need stock they will all too often pay prices over and above what they really believe the cars to be worth just to avoid the nightmare of empty line-ups.

From a customer point of view knowing that dealers are going to auction and bidding top money for cars should mean that they can feel confident of ensuring that, if and when they decide on purchasing decision, the value of the car they are trading in should at least be the equal of what trade buyers are prepared to pay at auction.

This will ensure that the auctions are not the only recipients of good news on car profits in this current market.

Subscribe to Motor Trade Insider by Email