Remarketing insight: Bank holidays apply brakes to auction sales

Duncan Ward, LCV operations director at BCA

Calling of snap general election also had some impact though not as much as the EU referendum.

With a proliferation of public holidays during April and May, activity in the used van market has been stifled, with a mixed bag of results reported by the big auction houses.

Average used van prices rose by 13.8% to £5,154 at Manheim in April compared to the same period last year, while they fell slightly at BCA.

Matthew Davock, head of LCV at Manheim, said: “Despite a challenging month where bank holidays impacted the general market mood, and in which we witnessed a slightly tougher atmosphere in the commercial vehicle market than seen so far this year, our vendors enjoyed strong sales in April. It was helped by a reduction in the average age of vans sold through our auctions of seven months, compared to April 2016 – down to 63 months – and average mileage falling by more than 10,000 miles year-on-year, to 74,731.

“Following a record first quarter in terms of the number of vans sold and records set for the average conversion rate at Manheim’s commercial vehicle auctions, ‘activity’ was the buzzword in April. While overall buyer footfall and clickfall remained healthy for a bank holiday period, it was slightly down on previous months and many buyers have reported that April was the slowest retail month seen this year.”

While buyer activity may not have been as high as in previous months, the growth in Manheim’s buyer base in the first quarter means the firm is well placed to capitalise on the opportunities that the rest of the year presents

Davock added: “We are confident that buyer activity will remain healthy in the coming months. Vehicle condition remains key. Also, as we enter the time when seasonality plays a bigger role, we continue to focus our vendors on realistic reserve-setting, given the current market, to ensure they continue to enjoy healthy conversion rates.”

BCA reported a slight decline in average van values in April as model mix changed and demand softened in the post-Easter period. 

With relatively fewer late-plate, higher-value rental vans reaching the market, the headline average LCV value fell by £95 to £6,431, a drop of 1.4%.

Despite this, the first four months of 2017 have achieved the four highest monthly average values on record. 

BCA’s LCV operations director Duncan Ward (pictured) commented: “The market dipped slightly in the post-Easter period but overall demand has held up well, particularly when considering external factors such as the snap election, which might have introduced some uncertainty.   

“The model mix is starting to change as we are seeing rental volumes easing for the first time this year, while 4x4 double-cab volumes continue to rise.  

“The latter sector has seen some price pressure in recent weeks as a result of these increased volumes and the price guides have not always reflected this.”

Ward added: “With plenty of choice for buyers, it is import-ant for vendors to appraise vehicles sensibly and value them in line with market expectations to sell first time.  

“Condition is key and must be taken into consideration when setting reserves. The market is seeing increasing numbers of re-entries because vehicles have been over-valued the first time they were offered for sale. This trend inevitably increases the time to sale and potentially results in higher holding costs for sellers.”

Meanwhile, sales continue to boom at Shoreham Vehicle Auctions. Such is the strength of the used LCV market, both from trade and private buyers, that the long Easter weekend and early May bank holiday had no impact for Shoreham, with buyers out in force.

With increasing numbers of defleeted vehicles continuing to arrive following the March plate change period, Tim Spencer, commercial vehicle sales manager at Shoreham, said buyers were “relishing the choice on offer”. He added: “This places a greater emphasis on low mileage examples in good condition, helping to keep prices stable.” 

The most popular models continue to fall into the 3.5-tonne panel van segment, although buyers are remaining selective, due to the variety of spec levels, trim and ancillary equipment on offer.

The small van and tipper sectors are two other aspects of the market that continue to prove especially popular at Shoreham, with buyers looking for low mileage stock in the halls and online. Luton vans with tail-lifts continue to be highly sought after, as long as they’re in good condition with all equipment in a good working order.

Spencer said: “The duplication of stock in the market is having a minimal effect. There is still an extremely healthy appetite for used LCVs of all shapes and sizes.

“If buyers can source the exact stock they require, they are willing to go above and beyond its reserve, due to its popularity and spec levels.”

At CAP Red Book, Steve Botfield, senior editor, commercial vehicles and motorcycles, said a slowing down in the market had been expected. “With Easter coming a bewilder-ing 20 days later than last year, right in the middle of the month, the downturn in the market we witnessed at the auctions came as no surprise,” he said. 

“Although footfall remained reasonably healthy there were clearly more private buyers around and, as seems to be the case during the holiday periods, many of them had not come on their own, making it harder to assess the true number of potential ‘hall’ buyers. If there were fewer professional buyers around in the halls we didn’t really notice it. However, we did pick up a sense that many were holding back. 

“Auctioneers struggled at times to keep the pace of the sales going and, were it not for the internet buyers, many more lots wouldn’t have sold. At times, such was the ratio of hall to internet bidding activity, it was if we were watching an online-only sale.”

The good news is that Botfield sees the downturn as nothing more than a blip, which will end during May. 

He said: “The prime minister’s call for a surprise snap general election, at a time when there is still considerable apprehension about the impact of last year’s Brexit vote, leaves us all with mixed feelings about what the outcome might mean for the UK economy – and more specifically how it might affect the used LCV market. Our view is that, if anything, it will have only a minimal effect on used van retail sales in the short term and it’s nothing more than a temporary distraction that may show up in our research data just as the EU referendum did last year. Sales volumes plummeted last June, only to swiftly recover in July, which coincided with the referendum. 

“The used LCV market weathered a much greater storm during the EU referendum and came through it unscathed. As political and economic events go, they don’t get much bigger than the nation deciding whether or not to leave the European Union so we see no reason why the election should affect trade sales.”

At Glass’s Guide, Andy Picton, chief commercial vehicle editor, said the typically quieter month of April proved to be that way again this year, with the bulk of new sales concentrated on the plate change month of March and also to take advantage of the lower VED rates.

He said: “The used market for April has seen volumes sold at auction drop by nearly 28% on March with the average selling price also falling by 0.9% over the same period, with 72.9% of those selling at the first time of asking. 

“This is a near 5% decline on the same point in 2016 and reflects a weakening market with conversion rates coming under pressure.” 

The average age of stock and miles covered increased slightly from 62.8 months to 63.4 months and 73,749 miles to 74,711 miles respectively. The average sales price reduced slightly by 0.9% during April. However, this figure was still £300 and 6% higher than the same point last year. 

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