Aston Barclay has issued a vendor warning that the growth in used car volumes in Q2 means a change of strategy is required to retain high conversion rates at auction.
The auction group has seen conversion rates reduce by 4% across its vendors in the past few weeks, together with a reduction in performance against CAP as the market makes its Q2 move to higher volumes following the March-plate change.
It has put together a three-point plan to share with vendors to help them retain conversion rates and prices.
Set a sensible reserve based on the grading condition of each car in the sale.
Prepare to invest in refurbishing some cars to optimise their price and speed of sale, particularly when moving the condition of a car from a Grade 5 to a Grade 3.
Be prepared to accept more of your provisional bids rather than risk the car losing value by going through the auction for a second or third time.
Vendors are being encouraged to work with their remarketing partner to work out reserve prices car-by-car based on condition. After months of achieving CAP Clean it’s often difficult for vendors to prepare for a change in market conditions.
Refurbishing cars prior to sale is another option and Aston Barclay estimates that moving a grade 5 car to a grade 3 car can generate a CAP improvement of £699, well below the investment in refurbishment.
The benefits associated with selling used cars first time every time is also clear from Aston Barclay’s statistics. A grade 1 car sold first time achieves on average 99.6% of CAP clean and 100.25% of reserve, while a grade 1 car sold second time achieves on average 97.0% of CAP clean and 98.6% of reserve. This equates to a difference of 2.6% in CAP performance which on a £10,000 car is £260.
The National Association of Motor Auctions stated earlier this year that typically vehicles sold first time achieve on average a sale premium of £44.
“There is always plenty of used stock around in Q2 and this year is no exception, although it seems to have arrived a little later than usual,†said Martin Potter, Aston Barclay’s group operations director.
“It’s important we provide vendors with some options to fine tune their disposal tactics, sometimes car-by-car, to keep conversion rates and prices healthy.â€
