Some bright spark had the wacky idea that in the future, you’d be able to buy cars online. How we scoffed – how can you get a good look at them from a computer screen?
Fast forward to the present day, and such sceptics are eating their words. Buying and selling cars is now big business – and growing.
Vehicle auctions have been around almost as long as cars themselves and have always been a favoured way of getting rid of cars and vans at the end of their fleet cycles. Buyers like them too, as there is always the possibility of a bargain and plenty of vehicles all in one place.
Admittedly the checking of a potential buy is often little more than a cursory glance, but surely that’s better than squinting at a selection of pixels on a monitor, as is the case with online remarketing? Not so, says Rob Barr, communications director for auction firm Manheim.
He said: ‘Selling vehicles sight unseen is not new. The motor trade has been doing this for decades, mainly by telephone. With online channels it’s about replicating the same trust that exists between motor dealers and applying efficiency to the process using technology.’
Confidence in the technology is also a big part of recent growth, said Tony Gannon, commercial strategy and communications director for BCA. ‘The vendor business has boomed over recent years because of internet technology. The area that’s seen the biggest explosion is the combination of physical and online auctions.’
BCA held 200 online sales in the UK during 2005, and online buyers made up 20% of the clientele. The number of total entries to such sales rose by 43% and the volume sold rose by 84%. So far in 2006, as many sales have been held in the first five months as in the whole of 2004 and there are 6,000 buyers registered online.
Although the rise in popularity among fleets is relatively recent, such internet technology has actually been around since the early 1990s, when manufacturers used dial-up modems and basic computers systems to sell their wares to dealer networks.
Gannon remembers those days.He said: ‘In the early 90s technology became an enabler to allow more efficient production.
Since then you see a broadening of the base of the business. As the internet has become more accessible, technology has made it easier to get products on a system.’ Such systems work by broadcasting live video, with auctioneer commentary, over the internet as a physical auction takes place. Internet buyers register their details online and can then search for particular cars or just monitor auctions and bid with a click of the mouse. Those at the auction hall see the bids on large plasma screens.
There are various systems based around this idea – Manheim’s is called Simulcast, while BCA’s is called BCA Live Online. Gannon said by combining the traditional method with the new technology, online bidders could gain that all important trust in the system. ‘If someone sees an ex-fleet car online and sees real people bidding in the hall, it gives them the confidence to bid,’ he said.
Such confidence can be further buoyed by being able to access all the information a buyer would need, such as photographs and condition reports.
And before buying anything online, buyers like to make sure the provider has a strong infrastructure to provide sales support, logistics and administration post sale.
At auctions offering Simulcast, online buyers now account for between 15 and 20% of vehicles sold, and Barr said many of Manheim’s vendors sell substantially more than this. For example, Volkswagen UK’s auctions see online buyers secure 30% of all vehicles, while between 20-25% of Fords sold at auction are won online.
Advanced though the UK is, it’s America that really pushes online technology. In such a large country, buying vehicles online really makes sense to avoid long distance travel.
Manheim runs around 100 Simulcast sales in the US every day, with buyers taking full advantage. Barr said: ‘We have learnt a lot about the best methods of online selling from our USA operations and, in particular, our centre in Atlanta that pioneers it.
‘What we’ve developed in the UK to date has been done to carefully match the available technology, as well as the buyer’s requirements.’
Although working in similar fields, BCA and Manheim differ in their strategies. Manheim sees itself as offering a whole package for anyone that wants it, offering a range of online sales products to fleets, carmakers and rental companies depending on their requirements. Simulcast plays a big role in their business.
BCA, however, says it feels online sales are best employed at well-promoted events with professional buyers and stock from Blue Chip vendors. Its Live Online service is much more targeted at particular clients.
Technology is not the panacea for all remarketing ills
Just because the technology exists does not mean that it is the answer for everyone for selling cars – small fleets in particular should be sure that online remarketing is best for their business, rather than pursue it because it is the ‘latest thing’, according to BCA’s Tony Gannon.
He said: ‘There are some issues that any vendor needs to be mindful of. Where is the vehicle and what condition is it in? Would it benefit from repair and preparation to bring it up to a higher standard?
‘For small fleets to avail themselves of that opportunity, they will need to engage with someone like ourselves to take custody of the vehicle and do the things that need to be done to it. You’re unlikely to be successful just putting the registration of a car in your car park on a system and hoping it will sell, because it probably won’t. That’s where this kind of system differs from something like eBay.’
If selling your fleet on over the internet makes commercial sense, then it’s well worth looking into. The market for online selling is growing, and Gannon sees no signs of that changing. However, don’t expect it to eclipse more traditional defleeting methods completely. Gannon said: ‘I can see this growth continuing, although a physical auction is still very efficient in bringing large numbers of vehicles and buyers together.
‘At the moment e-sales provide niche opportunities for both vendor and buyer. The volumes are still relatively small, but we have no doubt that they will grow.’