How to negotiate vehicle auction sales
Essential questions answered by Aston Barclay on remarketing, from preparation through online buying to reserve price setting
1. How should a fleet prepare a vehicle prior to auction?
Fleets should try to adopt the mentality of a buyer when preparing their vehicles for sale at auction. Buyers expect cars offered from fleet and leasing companies
to come with all the required documentation for a quick retail turn, including V5, MOT and service book or print.
Vehicles should be well cleaned and offered in the correct environment to reflect the brand of the seller, building confidence in the vehicles on offer. This environment should have the correct lighting to highlight vehicles in the best possible way to professional buyers.
Fleets should also consider refurbishment of vehicles that require it, and if the cost to do so will add to the sale value. A vehicle that has no visible damage will always command a premium price over those that require work. Fleets should consider the cost, time and added days in stock that a buyer may incur for vehicles requiring time in the refurb centre.
2. How can a fleet calculate which sale will achieve the highest sales price?
Fleets should work actively with their remarketing supplier to ascertain the best sale times and locations for their stock, based on the performance of the supplier and any benchmarking in place.
Fleets should also consider the optimum route to market for their stock. A number of different channels are now used by a growing number of fleets with model mix, age and mileage the key factors in which route is best used. However, every vehicle will have a true market price and, unless demand is high and available stock is low, a vehicle’s value is out of the hands of sellers.
A number of remarketing suppliers specialise in attracting fleet buyers to specific fleet centres and sales. These fleet specialists will generally outperform non fleet specialists on a regular basis. Dedicated fleet sales will sell for a number of leasing companies, each of whom will benchmark their performance against a large number of routes to market. It is vital for fleets to have a good remarketing manager who will share knowledge with other employees through attending sales, calculating buyer attendance, monitoring vehicle preparation and measuring the efficiency of all routes to market.
3. How are online sales impacting on traditional auctions?
The growth of online sales over the past five years has been dramatic and has far exceeded all predictions on market share.
Online bidding has enabled a new audience of buyers to easily source stock from chosen sellers or locations without leaving their office. Prior to online bidding, this type of approach would have meant time away from the business and additional costs.
A large number of fleet sales now regularly see online sales accounting for over 50% of total sold vehicles on the day with a buyer base representing the breadth of the industry.
However, that being said, many large car supermarket buyers are wary of online auctions and will only buy from sales attended in person. This may change with continuing innovation and improvements to vehicle imaging, grading and appraisal, creating further confidence in the condition of vehicles purchased remotely.
Fleets should not lose sight of the fact that online auctions currently complement physical sales and so should still be prepared to invest in sale preparation for the physical buying audience on the day.
4. Would selling via an eBay auction achieve a residual value closer to retail than trade?
While eBay style auctions work well for a B2C relationship, they are not ideal for fleets with volume and can be troublesome, with vehicles not having the transaction
completed quickly, leading to higher days in stock. If a fleet were to run this type of auction, they should factor in the required storage capacity, IT infrastructure, administration and time involved of running this type of operation.
Many remarketing suppliers offer an eBay style timed auction, available to trade buyers. This can be effective at ensuring stock is available to the market at all times and, if used in conjunction with a physical auction programme, can be tailored for use either before or after physical sales.
5. How should a fleet set a reserve price?
There is a plethora of guides and systems available to fleets, all with the aim of helping to set reserve prices.
Market guides are exactly that, a guide to a snapshot of the market at the time the guide was produced. But data suppliers are working hard to make their prices more relevant and even real-time, taking into account factors such as desirability, average days to a retail sale, and the estimated retail price for buyers to work out their margin.
Fleets should consider any additional spec on the vehicles offered for sale and make an informed judgement as to whether the level of spec adds or detracts from the base guide value, working with their remarketing partner to react to market trends for makes, models, levels of spec, or seasonal changes to demand, setting reserves accordingly.
6. What is the lead time between a vehicle being defleeted and the sale proceeds reaching the company account?
Normally, funds will be available in the sellers company account within five working days, subject to the vehicles being as described and clear of any finance agreements.
7. What guarantees or warranties does a fleet need to provide for vehicles sold through auction?
Fleets do not need to provide any form of guarantee or warranty when selling via an auction provider. However, a number of remarketing companies offer an Assured three-to-five-day warranty on selected vehicles which meet a set of criteria. This form of product is designed to build confidence with the buyer and is provided by the remarketing supplier, not by the selling company.
It is at the discretion of the seller to add anything over and above normal auction rules when providing such products, but fleets should work fully with their remarketing
supplier through the entire process, ensuring that all parties are fully aware of the scheme and its consequences.