Move towards internet remarketing was underway, but Covid-19 has helped accelerate trend, reports Tom Seymour

The remarketing and leasing industry is getting increasingly more comfortable with digital services highlighted by a massive 152% increase in the use of online auctions for cars by the FN50 in 2020..

Online auction volumes now account for an 18.9% of the market compared with just 7.5% in the 12 months previously.

Physical auctions saw a 19% drop year-on-year replaced by online auctions and a slight increase in sales direct to the public, which rose from 11.5% share in 2019 to 12% this year.

The big rise in online auction services was even more pronounced for the light commercial vehicle (LCV) market, increasing from just 5.6% market share in 2019 to 21% of all disposals this year.

Again, business was taken from physical auctions, which fell from 63.2% market share to less than half of all disposals in 2020.

The growth in online sales reversed what happened last year, when physical auctions actually increased their market share to the detriment of online auctions, which saw drops of 1.4% and 5.4% for cars and vans respectively.

Remarketing provider BCA has been selling exclusively online for six days a week having introduced a new Saturday sale programme in mid-September which then went weekly on October 3.

Stuart Pearson, BCA COO UK Remarketing, says: “BCA saw record numbers of customers buying online in September, with numbers of customers for both online auctions and fixed price purchase continuing to rise.”

Manheim Auctions parent company Cox Automotive said the lockdown has meant that even the most sceptic customers are now realising the benefits and efficiencies of buying online.

Philip Nothard, Cox Automotive insight and strategy director, says: “The move towards online was becoming apparent pre-pandemic, but this has been accelerated by Covid-19.

“We can’t forget that there is always a physical asset in all of this which requires storage, logistical support, maintenance, imagery as well as all the vehicle services support.

“There will always be a place for physical auctions as there is for physical retail dealers, but we can’t ignore the changing behaviours and what this means for our industry.”

Remarketing cars

Since early April, Aston Barclay has been remarketing cars entirely online.

This is likely to continue, particularly for ex-fleet stock, according to managing director Martin Potter.

He says: “Our ex-fleet stock is inspected and its condition well recorded and graded, and supported by multiple images and commentary that buyers can bid and buy online safely in the knowledge they know the car’s exact condition without seeing it.”

Matt Dale, G3 Vehicle Auctions joint director, says his company also switched to 100% online sales during the pandemic and has already seen volumes and sales return to Q1 levels and beyond.

Dale says: “We have seen an increase of 52% in our website traffic for Q3 2020 vs 2019, with a 27% increase of new account applications in that period, showing that more buyers than ever are using online auctions to fulfil their increased stock demand in the current climate.”

Dale firmly believes that both online and physical channels will play a key part in remarketing, both dependent on what the vehicle profile is with older high mileage vehicles benefitting from physical auctions and younger low mileage staying online.

There is a real mix in physical vs online disposal methods for the top 10 leasing companies with some of the largest still putting zero, or very little, volume through online channels.

Just one of the leasing companies in the top 10 puts more than 50% of its defleet stock through online channels, while all the others opted for a higher share of physical volumes.

At the other end of the spectrum, Venson Automotive Solutions is an outlier from the top 20, putting 99% of its car and van defleet volume through online auctions.

Fahad Romani, Venson Automotive Solutions pricing and risk manager, tells Fleet News: “We saw that with the abundance of auction houses and the number of sales taking place each week and in some cases on the same days, dealers were finding it challenging to get across all the relevant auctions.

“We saw that this situation was likely to continue and possibly get worse, so we took the strategic decision to move to online only unless it’s a specialist vehicle which needs a specific auction environment.”

Romani says using online auction features creates a transparent process for its dealer partners as they can see vehicles in detail with a multitude of images, along with detailed descriptions which highlight any particular issues with the vehicle.

He adds: “This means they trust what we are selling and don’t have the uncertainty of unwelcome surprises when they receive the vehicles.”

Average resale prices

The FN50 figures also showed the average resale price achieved versus Cap Clean or equivalent was 100.7% for cars and vans over the same period. 

This shows a slight increase from 98.6% and 99% respectively last year.

G3 has seen trends of anything between 96% and 110% (average of 103%) of Cap Clean with fleet, lease, and rental cars through different periods of 2020. 

Dale says: “In 2019, we had an average of 97% for cars, so we can see that buyers are paying more for stock this year.”

The increase in resale value goes alongside a number of other trends G3 has seen in fleet stock, with damage seeing a drop of 18% on the estimated cost to repair, both having an impact on the appeal of ex-company cars.

Dale says: “This suggests fleets are disposing of vehicles earlier than they were previously – potentially to release equity during these Covid times of uncertainty.”

The highest resale price achieved versus Cap Clean or equivalent for cars was 126% from Total Motion, while the leasing company with the lowest resale price achieved was 92%, a much better performance than the low of 84% in 2019.

Total Motion managing director Simon Hill says: “The vast majority of vehicles we defleet are sold direct to the public as we use this method rather than auctions.

“This has been the key driver for our performance on disposals.”

Total Motion has three used car retail sites which offer full retailer warranty and finance facilities, which Hill says has allowed the business to realise high returns.

He adds: “As all the disposals go through the retail site they are run in the same way a car supermarket is, but with one big difference.

“Instead of unsuitable vehicles and trade cars going to auction we have a network of around 150 trade buyers who are registered to buy from us.

“These deals are monitored and tightly controlled to ensure the right level of performance.”

Cox Automotive believes the positive movement for resale values will at least continue to the end of 2020.

However, there may be some volumes of end of contract or end of extension vehicles in the short term early next year and this may impact values going forward.

Nothard says: “2021 for many is still a concern to not only the fleet and rental sector but the broader remarketing, wholesale and retail.”

Average time to sell

The FN50 data shows the average time between defleet and sale has improved from 21.4 days last year to 20.8 this year.

Vans also improved very slightly from 19.9 days on average to 19 this year.

Aston Barclay’s time to sell resumed back to pre-Covid levels in Q3 at 10 days.

In Q2 it rose due to the market restrictions caused by lockdown, but once the defleet centres and delivery companies all got back to work, the speed of sale fell back to pre-pandemic levels.

Potter says: “The replacement cycles of fleets have definitely changed during 2020, some due to lack of replacement new cars being available for drivers, while some companies extended vehicles to gauge how the economy was going to play out for the rest of 2020 before investing in a new fleet. 

“The three-month rental-free period for consumers and fleets has also unsettled replacement cycles for leasing companies, which suggests until such time as all of these issues wash through the market, particularly the new car delivery delays, de-fleet policies will be very haphazard.

“This will affect the supply of ex-fleet cars into the used market.”

Cox Automotive is anticipating further changes due to regional lockdowns over the winter, but as Covid-secure measures are in place, the company “remains hopeful” that the industry will be allowed to continue trading in safe environments.

Nothard adds: “As social distancing measures remain in place, there will be increased pressures placed on vehicle movements and de-fleet efficiencies; however, this is not consigned only to this sector of the industry.”