For the thousands of fleets which lease or contract-hire their vehicles, the end of the replacement cycle is when vehicles are handed back to the leasing provider. Many fleet operators will have no idea what goes on at an auction and seeing exactly what happens can be a huge help in understanding the effect on a car’s used value if it has been poorly treated, or not cleaned and prepared professionally before buyers see it.
Fleet News went behind the scenes at British Car Auctions’ (BCA) Nottingham centre for a dawn-till-dusk account of what happens throughout the day. On arrival, an upmarket restaurant, buzzing snack bar and contemporary reception desk seemed similar to something a shopping centre might offer, which prepared us for a day of surprises.
Pre-sale
EACH day, an auction centre has dedicated sales and Friday at BCA Nottingham is fleet and finance sales day.
An average day will see 500 customers pass through the centre with auctioneers putting more than 300 vehicles under the hammer.
But before the sale commences, a lot of legwork has to be put in by the seller and the auction centre.
The seller will send a collection request to BCA two to three weeks before a sale with a list of the vehicles which need picking up.
When the transport company collects the vehicles a vehicle collection report (VCR) has to be signed.
This shows any damage and is signed by the seller and the former driver of the vehicle.
Once the vehicles arrive at the auction centre, an electronic appraisal is completed and entered onto a computer database. Vehicle history company Experian checks vehicles for any outstanding finance obligations or if the vehicle has been reported stolen.
All documents, including the VCR form and registration documents, are filed and staff check whether the vehicle has a V5, which is a vital element of ensuring a car sells, as obtaining a replacement can stop a dealer from selling on the vehicle quickly. Before the sale begins, BCA Nottingham completes a marketing drive to ensure the maximum number of buyers attend the sale.
Robin Wilde, centre manager at BCA Nottingham, explained: ‘For today’s sale we posted 489 catalogues to selected buyers.
‘A further 270 texts were sent to buyers and a bulletin was posted on the BCA website. We also e-mailed 1,500 buyers based in the Nottingham area.’
Sale day
7.00am: The yard staff arrive and position the cars in lines ready to be driven into the auction arena. Some of the management staff also arrive to prepare for the sale. A catalogue check is completed to ensure that each set of paperwork matches the vehicle. This is done by checking any specification on the vehicle with that listed in the catalogue.
8.00am: BCA’s customers, including LeasePlan, begin to arrive. Vendors check that all their vehicles are in good order and are presented to their agreed standard. This will be used to ensure a realistic setting of a reserve price, a set value that bidders must reach before the vehicle is automatically sold. Reserves are not set in stone and can alter depending on how recent sales have progressed.
Geoff Albutt, disposals manager at LeasePlan, said: ‘The system is flexible and if the same model didn’t do too well at auction yesterday, then we may lower the reserve price in the sale today.’ The standard of valeting will be checked to ensure vehicles are presented to their agreed standard. The vendor will also check that any bunting or branding is in place prior to the sale.Paperwork will be checked and any catalogue changes the BCA account management team has picked up during a check the previous evening will be recorded. This includes incorrect specification listings. The vendor will check if any documents are missing and liaise with its head office over any discrepancies in the sale.
9.00am: The doors open and buyers arrive. Both account and non-account customers register at the reception desk before heading to the auction hall or café for food or drink.
10.00am: The first sale starts. Some sales only last for 15 minutes, so they have to be completed at a fast pace and on time so there is no delay in any subsequent auctions. The auctioneer often sells a vehicle every 30 seconds. The speed of the sale also ensures buyers are kept interested.
Vendors expect sales to start on time, to ensure they get maximum coverage for their vehicles. However this hasn’t always been the case. Wilde said: ‘Things have changed over the past 15 years. Sales now start a lot earlier and more work has gone into sales such as lining the cars up in advance and having the vendors check them. About 70% of vendors also now have a representative on hand at the auction.’ The frantic pace of the auction can depend on the number of bidders in the hall. ‘People tend to bid more when the auction is full. It seems they gain confidence when others are bidding,’
Wilde said. In a fleet sale, vehicles can range from £1,000 to £30,000 but on average they are between £5,000 and £7,000. Often buyers want five to 10 vehicles to replace stock they have recently sold. If a vehicle doesn’t reach its reserve price, it is ‘provisionally’ sold to the highest bidder. After the sale, the vendor decides whether to sell the vehicle at less than reserve or reach a negotiated settlement with the bidder.
If an offer doesn’t seem acceptable, then a car might go back into another auction, but there is a risk involved, as buyers may recognise the vehicle and stick to their low bids, or the whole market may move down and leave the vehicle worth less than when it first arrived.
Albutt said: ‘Sometimes we have what is known as ‘hindsight’ cars. Bidders have made an offer and we have refused it, then when the vehicle is re-auctioned it fails to meet the previous offer.’ While a sale is in progress the vendors will take position on the rostrum with the auctioneer for the sale of his section.
Here they are able to deal with any problems that may arise and ensure that the sale runs smoothly.
3.00pm: The last sale of the day begins. Bidders at the auction are often competitors and do not want their rivals to see what they are bidding for. This means that rather than pushing a hand in the air to place a bid, it is done discreetly with the twitch of an eyebrow or a flick of the head.
Albutt said: ‘Often buyers are competitors and the trick is not to let other buyers see you bidding. Bidders make very subtle signals.’ There may also be bids by mobile phone and in some centres, web-based bids as well. If a vehicle is unsold at the end of the sale vendors often re-adjust the price and may try to resell in a different part of the country, where prices for that particular vehicle might higher.
3.30pm: During the day, successful bidders go to the reception centre to settle their bills. BCA staff have details of the amount bid and take payment in full on behalf of their sellers, who pay commission for the sale.
As the day comes to a close, the remaining customers pay for the vehicles they have purchased and arrange transport to the dealership or drive the vehicles home.
The vendor’s work isn’t over either, as they have to complete a post-sale report. This analyses how the sale has gone, prices achieved and the number of vehicles sold – known as the ‘conversion’ rate. Albutt said he compared the day’s sale with other sales, held by LeasePlan at other centres, and this helps him to make a decision on any provisional sales.
If vehicles have achieved 105% of CAP Clean, but are still below the expected prices of the seller, then Albutt may let the vehicle be sold. But if the bid price is about 95% CAP Clean, then he may decide not to sell.
A management report is also completed once a month which analyses how the auction process is going. This will show the vendor key statistics, such as how many cars were entered for sale and how many were sold, the CAP percentage and the top bid where a vehicle remained unsold.
Every quarter, customers such as LeasePlan produce their own report on BCA showing how the site is performing. This will look at whether the auction started on time, if the vehicle collection reports accurately showed damage, valeting, paperwork and the crowd attracted.
4.00pm: The yard is emptied of cars and yard staff begin preparing for the next day. Cars for the impending sale are lined up in the yard, the auction hall is tidied and the restaurant winds down for the day.
5.30pm: Pre-sale preparation is completed for the forthcoming sale, which includes collating vehicle documentation. Yard staff complete split shifts either early or late to keep an eye on cars left in the car park and cover the long hours the auction site is open – on most days from 7am until 9pm.
There are also 24-hour security staff who remain behind to check vehicles and to take care of out-of-hours deliveries during the night for the next day’s sale.
Auction house facts and figures
(Source: BCA)
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