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.”