Fleet News

Remarketing 1 - The Auction House

Why use an auction?
Auctions have long been regarded as the most efficient method of disposing of cars and commercial vehicles at the end of commercial contracts or periods of use on a fleet.
Auction houses such as Manheim Auctions and BCA have well established sale programmes for the fleet market, delivered through national networks of auction centres.

This means that there is nearly always a suitable auction on your doorstep. It’s worth looking at the huge variety of organisations which use auction as the primary route to remarket their vehicles or those reputable dealer groups who buy vehicles for their retail forecourts at auction.

Selling vehicles by auction will usually provide the quickest and most reliable way for fleets to turn their unwanted vehicles into cash.

The larger auction houses cater for all types and values of vehicles from the cheaper, higher mileages ones right up to the luxury end of the market.

From start to finish the entire process is generally handled by the auction company and there is little involvement required on the part of the fleet operator.

The most obvious advantage that auctions have over other methods is that they can attract thousands of trade buyers which ensure a fair market price for your fleet vehicles.
By using auction you do not have to get involved in advertising vehicles or dealing directly with dealers and traders.

By keeping the sale at arm’s length through a reputable auction company, you will also minimise the risk of selling vehicles to somebody who may not fully honour the payment.

How can fleet managers ensure they are dealing with a high quality auction company?
All reputable auction companies belong to the Society of Motor Auctions (SMA), which is part of the larger trade association, the Retail Motor Industry Federation (RMIF).

Members are bound by the SMA Customer Charter which promises to:
• Promote ‘Best Practice’ in the industry
• Be fair to both seller and purchaser
• Protect the purchaser against defect in title
• Commit to the SMA Code of Practice
• Ensure all staff are familiar with customers’ rights under the code
• Have an easily identifiable procedure for the handling of complaints
• Provide access to an independent arbitration facility

The SMA has over 70 members who between them sell in excess of 1.5 million vehicles per annum and their research suggests that over 60% of all fleet vehicles are sold by auction.

A good yardstick as to whether or not to use a particular auction is to simply look at which other fleet operators are selling their vehicles through that auction.

It is fairly safe to assume that most of the larger operators will have conducted rigorous checks before sending their vehicles there for sale.

What services should a fleet manager expect from an auction company?
The range of products and services available from auction houses, particularly the larger ones, is surprisingly comprehensive.

There should be very little that an auction company cannot provide a fleet operator to ensure ex-fleet vehicles are sold at maximum market value in the shortest possible time.
Most services are available on a clearly priced menu basis and all the fleet operator needs to do is to pick those which are most likely to fulfill their specific requirements.

There are two different types of auctions held - ‘open’ auctions: these are open to all-comers, trade or private buyers and make up the vast majority of auctions.

‘Closed’ auctions: these are for authorised trade buyers or dealers only and are not open to all-comers. They mainly cater for vehicles coming directly from the motor manufacturers and represent less than 10% of all auctions.

An essential part of any auction service is their ability to collect vehicles promptly within a short period of time from anywhere in the country and deliver them into the chosen auction centre.

Auction logistics can collect single vehicles or full loads of up to 11 vehicles at a time. They offer a highly responsive service which should see all collections undertaken within three working days from initial request or even quicker using a number of premium ‘fast track’ propositions.

The leading auction companies all have access to large fleets of in-house or contracted vehicle transporters, plus huge teams of trade-plate drivers and these combine to provide the capacity and responsiveness required.

Who buys vehicles at auction?
Every vehicle sold by a fleet operator requires a buyer and the leading auction houses have well-established relationships with thousands of them.

Generally speaking, vehicle auctions attract trade buyers but, with the exception of ‘closed auctions’ the halls are also open to members of the public.

There are literally thousands of trade buyers, comprising franchised dealers, independent retailers and wholesalers who buy stock at auction.

The great majority of vehicles, easily exceeding 85%, are sold to motor dealers who bid against each other in the auction for the stock they require.

This combination of a broad spectrum of wholesale trade buyers, coupled to an increasingly significant number of private consumers, creates strong buying power from which the fleet operator benefits.

Dealers who are regular attendees at auction often buy a number of vehicles in one sale, sometimes buying hundreds of vehicles each year.

On the other hand, members of the public are usually only going to buy a vehicle every two or three years.

It’s worth looking at how the auction companies market their sales locally, regionally and nationally through mailshots, catalogues and increasingly through website promotion.
Check out the main websites and look in particular for online information services such as ‘What’s On Guides’ and ‘Sales Calendars’.

These show how the overall sales programme is marketed by the auction companies to buyers, often categorised by vendor source and the type of vehicles on offer.

Source: Managing Your Company Car, Expert Opinion, by Colin Tourick. Contributor: Rob Barr, Manheim.

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