Vehicle dealers and fleet operators selling stock at auction in the next few weeks should make sure that they set realistic reserve prices that take into account the fact that market conditions may soften, according to the RMI’s Society of Motor Auctions (SMA).
The SMA, which represents the majority of the UK’s motor auctions sector, believes that increased used car volumes could lead to a drop in the value of used cars, which has been high in recent months.
Head of the SMA, Louise Wallis commented: ‘Sellers at motor auctions have enjoyed the best possible conditions over recent months, with reduced supply and good demand from buyers, resulting in high conversion rates and strong prices. Inevitably the rising prices must impact on consumer demand, and it is likely that this will affect price in the wholesale markets.
‘There is a risk that the market could soften in the near future, with increased volumes from lease and contract hire sources, plus additional dealer part-exchange vehicles reaching remarketing channels in the weeks ahead. This will mean there is greater choice and more competition for the buyer’s attention and any vehicles which appear over-priced relative to their age and condition may not sell at the same price levels as they have been.’
Wallis emphasised that it is important for sellers to maintain a dialogue with their auction partner: ‘If market conditions change, don’t be the last one to find out with a growing list of unsolds and re-entries. Re-appraise your stock if necessary, manage your inventory through the appropriate channel, be prepared to invest in pre-sale preparation and get it sold for true market value first time. Be aware that contract extensions will lead to higher mileage, harder worked vehicles coming back so an element of pragmatism will be appropriate when it comes to appraising stock, vehicle preparation and valuing for sale.’
Wallis concluded: ‘This year has been exceptional so far, so it would be understandable if sellers got a little over confident with their pricing. It is still critical to maintain good remarketing practice and accurate pricing, even more so if conditions change.’