Tuesday, December 2, 2008
Colchester was Steve Banner’s destination this month to meet up with Alex Wright, sales director, commercial vehicles, at Manheim Auctions.
One of the biggest auction groups in the country, Manheim is in a good position to assess what’s happening in the used van market. So how healthy it?
We’ve still got a strong base of bidders but there’s no doubt whatsoever that the market is under pressure. Yet although prices have tumbled, they haven’t fallen quite as dramatically as many people seem to think. We recently analysed wholesale used van prices over the last three years and discovered that while they fell an average 21.6 per cent in the third quarter of 2008 compared with the same period 12 months previously — when new light commercials were in short supply — they were only 8.7 per cent lower when compared with what was achieved during the third quarters of 2005 and 2006. It’s also interesting to note that sales volumes were higher during the third quarter of 2008 than they were in the same quarter of the three previous years. My view is that the used van market has dropped as far as it is going to and is now bumbling along the bottom of the trough.
So although times are tough, they’re not disastrous. But who bids at Manheim sales?
We’re seeing more end-users; small business people and the self-employed in other words. They buy using their own cash — not money they’ve borrowed — and they won’t spend more than they’ve got in their pocket.
Who else comes to sales?
Although private buyers attend our auctions, many of the people who bid are independent dealers and I think they can be divided into two camps; old school and new school. When it comes to retailing vehicles, the latter are very sharp and making full use of the internet. The former aren’t doing so and are going to get left behind. The internet has introduced a whole new dynamic into the market — one that wasn’t there during the last recession — and has helped to keep things flowing. However, independent dealers are not generally willing to bid more than £3,500 for a light commercial at present; a decline on the ceiling they set themselves previously. They might occasionally be prepared to pay £4,500 for a big van — particularly if they know somebody who wants one — but usually they won’t pay more than £3,000 for a car-derived model.
Presumably they’re worried that if they take more expensive vehicles into stock, they won’t be able to sell them; especially if certain manufacturers start offering such heavy discounts that a new one starts to look cheaper than a used one. So are franchised dealers adopting a different policy?
At present they’re buying very little at auction because many of them are trying to get their vehicle stocks down. They will only bid if they’ve got a customer for a particular van and tend to bid via the internet.
The sales volume rise you referred to earlier suggests that plenty of second-hand light commercials are being offered for sale at Manheim auctions around the country at present. Is that correct?
Yes. At a typical van sale at our Colchester centre, for instance, you’ll see more than 400 entries and a wide cross-section of models and prices. They’ll be put through two lanes working flat out. We also hold regular van sales at our centres in Glasgow, Gloucester, Haydock, Leeds, Mansfield and Washington.
What percentage of light commercials offered for sale at your auctions are finding buyers?
It’s averaging 65 per cent compared with more in the region of over 75 per cent during 2007. Having said that we’re still achieving 75 to 80 per cent at some sales, but the buyer has got the power at the moment and he knows it.
How plentiful is the supply of used vans coming onto the market going to be during the coming months?
I think we’re going to see a growing shortage of examples that are around three years old with about 60,000 miles recorded. Many fleets are starting to extend the leases on their existing vehicles because they’re reluctant to commit themselves to acquiring new ones, so those vehicles aren’t being disposed of. So far as the leasing companies are concerned they don’t want to be put in a position of selling those vans off just yet because they’re worried they won’t get the prices they need to achieve. As a consequence they’re willing to see leases lengthened to perhaps four years/80,000 miles, five years/100,000 miles; so when those light commercials do eventually appear on the market, they’ll appear with a higher mileage. The other reason why I think there will be a shortage is that there aren’t so many part-exchanges around because sales of new vans have fallen. Remember too that because of this sales fall, there won’t be quite so many three-year/60,000-mile vans coming onto the market in 2011/2012.
How do I set about buying a van at auction?
Visit one or two auctions before you bid to get used to the environment and the prices vans fetch. You can inspect vehicles before you bid for them and each one carries a description. A catalogue is issued in advance of each sale. When you come to bid, signal your intention clearly to the auctioneer and don’t blow all your cash. Remember that you are buying a vehicle at trade price that may have been working the week or even the day before and may need some money spent on it. Don’t forget that VAT may be added to the hammer price or that you will have to pay a buyer’s premium. It’s dependent on the price of the vehicle and covers a variety of checks into its background; to ensure that it has not been stolen, for example.
Then what do I do?
If your bid is successful, then you will be expected to put down a deposit — Maestro, Delta and cash are all acceptable — and provide your name, address and telephone number. You may also be asked for some form of identification; your driving licence, for instance. The balance must be paid by 5.00pm on the next working day.
Can I bid over the internet?
Yes, but you have to open an account with us.If I want to sell a van at auction, how do I go about it?
Talk to one of our auctioneers. He’ll give you an idea as to what he thinks it will fetch and you can agree a reserve price with him; the minimum price you are willing to accept. Make sure you have the log book ready to hand, a current MoT certificate if applicable, a full service history and the spare set of keys. Any outstanding finance has to be declared and we can arrange for that to be settled out of the sale proceeds if you so wish.What happens next?
The van will be entered in the next sale. You can either drive it to the auction yourself or we can arrange to have it collected, although there is a charge for that service. If the best bid does not quite meet the reserve, then it will be classed as a provisional bid and the auctioneer will negotiate between yourself and the prospective buyer so that a price can be agreed on.What do you charge?
We generally charge an entry fee of £45 plus a commission of 8 per cent with a minimum of £80. But if you are looking to dispose of a low-value vehicle then discuss the cost with the auctioneer.How soon before I get my money?
Five working days after full payment for the van has been received by Manheim, which is usually within 24 hours of its being sold. The cheque will come direct from us.Of course the vehicle may not sell first time round; possibly because the reserve has been set too high, possibly because the van concerned looks a bit tatty. Might it make sense to refurbish it in the hope that it will attract buyers and fetch more money?
That can be a double-edged sword. There’s little point, for example, in repainting older vans, but getting some of the dents taken out of later-registered examples can certainly help. So can ‘mopping’ — using a machine-operated polisher to bring up the paintwork of newer examples in order to improve their appearance. Anything else that can be done?
A full valet of the cab interior should definitely be considered if the seats are heavily soiled. Seat covers should of course be used to prevent such soiling in the first place — in fact they’re vitally important and by no means expensive — and the load area should always be ply-lined when you first acquire your new van. It prevents the area from being dented if cargo shifts. I know of one operator who always insisted that the plastic covers on the interior door trims weren’t removed when he bought a new van. That kept the trims clean and was good news so far as the second-hand value was concerned.What colour should you opt for when you buy a new van if it’s going to realise a good price second-hand?
If it’s a working vehicle that’s going to be with you for four or five years and is bound to collect a few dents along the way, then go for white. However, if it’s a lifestyle vehicle — a Volkswagen Transporter Sportline, for instance — then it must be a metallic. Should I remove any signwriting on my van before I sell it?
Take it off. We will only allow a vehicle with signwriting still on it to be entered in one of our sales if the owner is prepared to sign a written agreement to the effect that Manheim will not be held responsible for the consequences. It’s because we’re concerned about a signwritten van being used in the commission of a crime or an act of terrorism. Once they’ve read the letter, which is pretty strictly worded, vendors almost invariably have a rethink; and get the signwriting removed.