This month contributing editor Steve Banner met up with Duncan Ward, general manager of commercial sales at British Car Auctions.
What is happening in the used van market?
If a customer had come to us two or three years ago and said I’ve got 2,000 vans to sell this year and they’re all the same make, model, specification and colour, then we’d have advised him to filter them into the market very carefully in small numbers. Over the past 15 months, however, vendors with that sort of problem have been able to do the opposite. They’ve been able to pile their vehicles into the market because demand has been so strong. Customers have been buying and buying and buying.
Is that still the case?
No; we’ve recently seen a bit of a turning point in demand. Van dealers are finding that their existing stock is staying with them for longer because retail sales have eased off; and when that happens they don’t come back to us to bid for replacement vehicles for a while. However, I should stress that demand is not on the floor. I think what we may be seeing is simply a return to a normal level of business. And if van values have reached a plateau, at least it is at a high point. However, looking forward, I think van prices are going to be less predictable over the rest of the year.
Although they’re set to improve this year, new van sales collapsed over the past two years. What implications does that have for the used van market in two or three years time given that if a van hasn’t been sold new, it can’t eventually be sold second-hand?
There won’t be the volumes of used vans around to support what is likely to be an increase in demand in 2011, 2012 and 2013 as the economic situation hopefully improves. As it happens we’ve already been seeing a bit of a shortage of vehicles because operators have been extending the leases on the vans they’ve already got and hanging on to them rather than replacing them given the current economic climate. We reckon those vans will now come off contract quite soon; but when they’ve washed through, there’ll be a shortage. Those ex-contract vehicles will of course be just that bit older than what we would usually see from the operators concerned, so over the next six to 12 months the average age and mileage of the vans we sell for them will go up. If we do see a shortage thereafter, then what we may see is one or two organisations disposing of their vans when they’re two years old to fill that gap and get a premium price.
How many vans do you handle annually?
How many sites that sell vans does BCA operate nationwide?
We’ve got 21 auction centres. However, our main sites for selling light commercials are Glasgow, Bellevue in Manchester, Bedford, Measham in Derbyshire and Blackbushe not far from Camberley in Surrey. They all hold weekly sales with an average entry of 350 vehicles.
What’s the typical age of the vans offered for sale at present?
Four-and-a-half years. Most of them come from the big contract hire companies such as LeasePlan, Lex Autolease and Hitachi. We see vehicles entered by fleet operators such as the Royal Mail and BT too as well as by dealers who want to dispose of part-exchanges. Some of the big vendors dispose of large quantities of vans at a time. One entered 120 at a recent sale at Blackbushe while another entered 70-odd. Equally we get lots of people disposing of vehicles in ones and twos too.
Who are the bidders?
A mixture of dealers and end-users — people who buy vans because they’re going to use them themselves rather than sell them. A typical mix of bidders will be 70 per cent dealers and 30 per cent end-users although that can vary from centre to centre.
Which features on vans particularly appeal to used buyers?
Air conditioning is becoming a must-have and that will increasingly be the case over the next couple of years. As things stand, a four-year-old £3,000 ex-contract van — a Vauxhall Combo or a Ford Transit Connect say — will fetch £300 to £400 more if it’s got air con. Air con on vans of that type and age is not all that common of course; hence the price premium. Once they’ve all got air con, then the premium will disappear. The same thing happened to the premium that vans with power steering attracted 10 years ago. More and more buyers are looking for Bluetooth and sat nav too, so vans with those features will sell for a bit more. Remember that used buyers are sharper than ever so they also look for a full service history and full documentation. They’re both musts.
What else is important?
Condition, condition and condition. Clean vans will always sell; the cream always comes to the top. To help we offer a full valeting service. The load area should have been timbered out to protect it from damage and buyers like a van to have a full bulkhead. Metallic colours are popular too.
Do you have to come to a sale to bid on a van?
You do unless you regularly buy light commercials in significant numbers and you’ve got at least a BCA gold loyalty card. If you hold one and you want to apply for a user name and password then you can bid live online from your PC or laptop. When the van appears in front of the rostrum then the auctioneer will take bids from the auction floor and from the internet too. There are cameras at each auction hall so the online bidder can see the vehicle and see people walking around it. He can hear the auctioneer too.
Does online bidding result in higher prices for the vendor?
What other use do you make of the internet?
We provide searchable online catalogues containing a written description of each vehicle being offered for sale, including make, model, age and mileage. What we’re also just starting to do is show six images of each van. The aim is to provide one taken at each corner from a 45° angle plus two further images; one of the load area and one of the cab interior. Within 12 months we could be showing twice that number of images; maybe more.
If I want to sell a van at auction how do I go about it?
Take it to an auction centre. The staff there will give you an idea of what it is worth, advise you on the extent to which it should be prepared before it is entered into the sale and suggest a reserve price. Under our SureSell scheme we charge an entry fee plus commission; the charges vary depending on the value of the vehicle (www.british-car-auctions.co.uk for full details of charges).
What happens if it doesn’t reach the reserve?
We come back to you with the best price that was bid on the day. Then it’s up to you whether you accept it or not. If you decide not to accept it then you can put the vehicle into another sale although there will be a re-entry fee.
If my van sells under the hammer on the day, how soon do I get my money?
Within five working days. Incidentally, we carry out rigorous checks to ensure that vans entered into our sales are not stolen, insurance write-offs or subject to outstanding finance agreements.
What do I do if I want to buy at auction?
Walk in and put your hand up! It’s as simple as that. However, we would recommend that you do a bit of research first — use our web site — and maybe attend two or three sales if you can afford the time and you’ve never previously bought at auction before you make a bid.
What happens if my bid is successful?
You leave a deposit with the rostrum clerk — you can do that using a credit or debit card, cash or a banker’s draft — of £500 or 20 per cent of the hammer price, whichever is the greater. You’re given a receipt which you take to the cashier. You then settle the balance; ideally on the spot, but certainly within 24 hours. Again we can take payment by credit card or debit card, but we won’t take more than £9,000 in cash in any one transaction. You’ll be charged a buyer’s fee, which is calculated on a sliding scale.
If I want to drive my purchase away it will of course have to be taxed, insured and have a valid MoT. So can you deliver it to me?
Yes, we can.
What if there’s something wrong with the van I’ve bought?
If it’s been mis-described — if it turns out to have the 75hp version of an engine rather than the 90hp stated, for instance — then the matter has to be reported to the branch within one hour of the sale finishing. Then there’s a process of negotiation between the vendor and the purchaser over what should happen. It has to be stressed though that this sort of thing is pretty rare.
Are used buyers interested in light commercials that will run on alternative fuels?
We see a few that will run on lpg (liquefied petroleum gas) appearing at our sales. Dealers in the London area have an appetite for them because running an lpg van may enable their customers to avoid the congestion charge. Such vehicles, however, have got to be low mileage. We’re seeing some tired-looking ones that have done 100,000 miles and there’s no real interest in them. The other thing is that they’ve got to be factory-fitted conversions.
What about electric vans?
Very few of them appear at our auctions and I think it will be a long time before we see them in anything like volume. As a consequence if we see a Modec come under the hammer in a couple of years time then it could make a fortune because there’ll probably be somebody out there who can put it to use and will be desperate to get hold if it. Longer term I think there will be a growing appetite for electric vans and those that run on alternative fuels; because the underlying trend in diesel prices is ever upwards.