Back to the future: An update on the van auction market

26 January 2024 #Uncategorised

While some of the economic changes brought about by the pandemic were temporary, others might be here to stay, but the light commercial vehicle (LCV) auction sector is a sector always in change.

Despite the return of physical auctions and customers in 2023, the year saw online bidding establish itself as a key part of the buying experience, with some companies introducing AI vehicle checking technology to streamline their processes.

According to British Car Auctions (BCA), LCV values at its events continued to realign as 2023 drew to a close, averaging £8,037 in December – the lowest monthly figure recorded since the UK was in lockdown in 2020.

The company said several factors contributed to the decline in average values in 2023, which peaked at £10,325 in April of last year.

Alongside the well-publicised economic issues of high inflation and rising interest rates affecting consumer confidence, the market was affected by the changing mix of stock and rising numbers of lower grade vehicles washing out from extended contracts during the pandemic.

The recovery of the new van market, up by 22% year-on-year in 2023, also offered more choice to van buyers and took further pressure off the used sector.

Any vehicles requiring significant work to get into retail condition needed to be very realistically valued to attract the buyers’ attention.

In addition demand for the very best condition light commercial vehicles continued to significantly outstrip interest in the more poorly presented vehicles.

However, it was noticeable that a number of customers actively took advantage of significantly lower prices in December to refresh their forecourts and many have been realigning their existing stock frequently.

Stuart Pearson, UK Chief Operating Officer at BCA, said: “As last year drew to a close we continued to see the effects of a two-tier market, where well presented, higher grade vehicles attract a lot of interest, while older, higher mileage volume models need to be competitively valued, particularly if they require repair and refurbishment.

“The dynamics that drove demand during the pandemic are well and truly behind us now and we are back to the basics of good remarketing practice.

“Proper preparation and good presentation are critical to achieving the best possible prices for used LCVs along with the correct documentation to support the vehicle provenance.”

Pearson concluded that the LCV wholesale market has got off to a “steady start” in 2024, with interest continuing to be highly sensitive to price and condition.

“With a fairly plentiful supply of new LCVs entering the market and an ageing fleet driving many contract hire returns, I’m sure that this won’t be the last time that we mention that the best results will always be obtained by following the remarketing basics”, he added.

Meanwhile, Manheim said its highlight of 2023 was the opening up all of its LCV sales to physical buyers and embedding its hybrid auction approach at all locations, which has led to a 28% growth in volumes sold year-on-year.

August was Manheim’s strongest month for volumes sold, which set the trend for the second half of the year.

The company said that in weeks 20-49 of 2023 it handled over 7,500 more vans than it did throughout weeks 20-49 in 2022 – a 26% increase.

Stuart Peak, National LCV Manager at Manheim UK said: “The reason for being so specific here is that it truly gives you an idea of exactly when the new vehicle supply challenges started to ease, and de-fleets began to kick into gear.

“Cast our thoughts to the start of the year where it’s safe to say the market was very buoyant and buyers were competing hard to own stock.

“As we navigated through Q2 and into the early part of the summer, seasonality started to creep in and demand started to reduce.

“Then, as we came out of summer and entered in to Q4, we saw a big return in demand and some serious metal has been shifted since.

“All in all, I would say that 2023 has seen the return of a ‘normal’ LCV marketplace, with perhaps stronger demand at the back end of the year than what we would expect to see – but that’s certainly not a bad thing.”

Since returning to one hundred percent physical auctions at the beginning of 2023, auction house Aston Barclay has seen an increase in attendance for its LCV auctions.

According to the company, all used stock continues to be made available for online buyers – with around one third of vehicles purchased online.

In addition, the company also recently introduced a Proovstation Inspection Gantry, which uses Artificial Intelligence (AI) to map and process data related to damages on each vehicle.

Its automated inspection scanner employs an AI-led process to ensure precise and consistent appraisals.

On entering the gantry, the vehicle undergoes a comprehensive assessment.

Dedicated tire scanners measure the wear of all four tires, and internal lights illuminate the vehicle, enabling cameras to map the entire exterior. This process identifies chips, dents, and scratches as the vehicle drives through the gantry.

Following the inspection, the gantry processes the collected data, and within 90 seconds, the findings are transmitted to the inspector’s handheld device.

The information is then fed into Aston Barclay’s internal damage-appraisal engine, which calculates the cost of damage and assigns a National Association of Motor Auctions (NAMA) grading for the vehicle.

The technology significantly improves inspection accuracy, as well as reducing the time it takes to complete an inspection, all of which aids Aston Barclay’s ability to reduce the number of days to sell.

Aston Barclay currently uses the system in Wakefield and Donington, two of its six sites, with plans to roll out the technology out further in the coming months.

Nick Thompson, Chief Customer Officer at Aston Barclay said: “Not only does this [technology] allow us to provide a more efficient service for our customers, but we can also ensure there is consistency for all vehicles across our centres”.

Used electric LCVs are unlikely to hit the auction houses in quantity for some time, probably around the middle of the decade, as the mass supply of these vehicles has happened only relatively recently.

Paul Hill, Consultant at NAMA, said: “The (eLCV) market is currently in a state of flux, but members find solace in the fact that all are facing similar challenges.”

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