Putting business on the line
Tuesday, June 4, 2013
Auction houses have embraced the internet, but what are the ins and outs of buying both used and new vans online? Steve Banner speaks to several industry experts to find out.
Tap “buying a van” into an internet search engine and you will be overwhelmed by sites, which is a clear indication of the importance of the worldwide web as a channel for selling or purchasing LCVs.
“These days around 15% of the vans we sell are bought by customers who have bid for them over the internet,” says Alex Wright, MD of Shoreham Vehicle Auctions and chairman of the commercial vehicle committee of the National Association of Motor Auctions. “That figure rises to nearer 25% when the weather is bad.”
Not surprisingly, purchasers would rather bid from the comfort of their own offices – or from the cab of their existing vehicle using a mobile device – than drive what may be some distance on a miserable day.
Once an auction begins online bidders can follow the action and bid whenever they wish. “About 35% of the bids we receive come in online,” says Wright.
Once payment is cleared SVA can arrange delivery or buyers can collect their vehicles themselves.
“More than a third of Manheim’s commercial vehicle stock attracted online bids in 2012 and 20% went on to sell online,” says James Davis, head of commercial vehicles at the auction house. “It is not unusual to see 200 physical buyers in the auction hall and another 150 buyers logging on via our Simulcast online platform to battle it out over 350 vans, and we anticipate the online trend will keep rising.”
Rival auctioneer BCA is making its presence felt on the internet too.
“Sales of light commercials via our Live Online channel accounted for over 30% of our total van sales last year compared with 25% in 2011 and just 5% in 2009,” says Duncan Ward, general manager, commercial vehicles.
BCA has launched BCA Assured, which provides a 30-point mechanical check on vans offered for sale carried out by an independent motoring organisation. The report appears in pre-sale cataloguing on the BCA website and a printed copy is available with the vehicle when it is sold.
Online vehicle remarketing platform Autorola now deals with more than 40 businesses seeking to offload vans, says national business development manager, Simon Wells. “We grew by 40% last year,” he reports.
Users include XBG Fleet, which employs auctions to dispose of second-hand vans sourced from big fleets such as the National Grid and Wales and West Utilities.
The drawback of bidding online is that buyers cannot physically examine the van they intend to bid on prior to the auction. However, Wright says that SVA ensures that eight photos of each vehicle offered for sale appear on the website along with all the key details such as make, model, age and so on.
BCA has trialled online video appraisal at some of its sales sites. “It delivers a two-minute video covering exterior and interior condition plus 360º views as well as multiple still images with zoom capability,” says Ward.
To bid online you usually have to be an account holder and in most cases that will probably mean being a van dealer. Depending on the policy adopted by the auction concerned, however, end-users who buy LCVs because they need them to, say, deliver parcels, may be able to set up an account too. But no matter how you buy a vehicle – online or in the hall – it is sold as seen. As a result, the degree of redress if it turns out to be a pup is more limited than it would be if you bought from a dealer, unless, of course, it turns out to be stolen, subject to an outstanding finance agreement or to have been flagrantly mis-described by the auctioneer.
While Wright does not underestimate the impact of the internet, he does not believe it will spell the demise of conventional auctions.
“Buyers will still want to come to physical auctions because they want the interaction with other bidders as much as they want to see the vehicles,” he says.
However, the proliferation of web-based disposal sites has the advantage of giving vendors more routes to market, says XBG Fleet director, Dave Woods, and lessens the risk that, say, 100 identical ex-fleet vans will be sold off at the same time through the same location, depressing residuals.
“Spreading the volume around should mean better prices and open up our stock to new buyers,” he says.
Not all online sites are auction sites, and many sell new and used vehicles in the same way that other sites sell computers or cameras. Often the new stock has been sourced through franchised dealers at advantageous terms. In some cases the vehicles may have been on the dealer’s books for too long and need to be turned into cash to aid the dealer’s cashflow. In other cases, the dealer is happy to dispose of them through the online vendor at a discount to bump up his own sales figures, triggering a bonus from a manufacturer.
Manufacturers, too, deal directly with online vendors if they have a batch of vans they desperately need to offload, sometimes channelling them through local dealers. One well-known online vendor of new LCVs is Global Van Solutions.
“We can usually offer a saving of several hundred pounds on small vans rising to several thousand pounds on large ones," says director Jonathan Lewis.
It is not just about the money that can be saved, however, Lewis stresses: it’s also about the convenience too.
“The business people we sell to simply don’t have the time to trail around dealerships looking at vans, and if they buy from us they don’t have to,” he says. “We can deliver their chosen vehicle directly to them and take away any part-exchange if they’ve got one."
Their new van is protected by the same warranty as any other new LCV sourced through UK distributors, and Global Van Solutions can help arrange finance. It can arrange for a vehicle to be fitted with ancillary equipment too – a tow-bar, for example – and has forged links with Coolkit to supply chilled and fully frozen refrigerated conversions.
But how much expertise do Lewis and his colleagues actually have when it comes to advising customers? Considerably more than many franchised van dealers do, he contends, especially if their dealership is primarily engaged in selling cars. If that is the case then LCVs are all too often treated as an unimportant add-on, he claims, and the product knowledge of the people selling them is likely to be inadequate. If the sole member of the sales staff who specialises in vans is absent then his colleagues may struggle to cope with any van inquiries.
He concedes his criticisms do not apply to all car and van dealers, some of whom work hard to provide a top-notch service, but they do apply to a worryingly high percentage of them, he believes.
Buy online and there may be concerns as to whether that site will disappear overnight along with your money. One way of protecting yourself, advises Lewis, is to run the vendor's details through an online credit-checking site such as Creditsafe. If it flags up problems, do your buying elsewhere.
Selling online has its limitations as XBG Fleet’s Woods is willing to concede. “Dealers in particular are cautious about purchasing older vehicles online – for the sake of argument, a seven-year-old Peugeot Partner that’s done over 100,000 miles – because they take the view that they cannot be entirely certain about the state the vehicle is really in,” he observes.
Another difficulty, says Woods, is that it is not always easy to spot any accident damage that has not been declared even if lots of photographs are provided. As a consequence, more than 80% of the vans XBG disposes of are still sold through physical auctions.
“The tide is turning in favour of the internet, but in my view it’s turning very slowly,” he says. “Old habits die hard, but we are, of course, now seeing a new generation coming into the industry that wants to use a computer to do everything."
Other drawbacks of buying online include the impossibility of test-driving the vehicle concerned, points out Matt Dale, national light commercial vehicle sales manager at Nissan. Nor can you see just how easy it is in practice to load and unload the items you typically transport. If these issues are concerns, then you can use the internet to track down the van you want at a dealership, go and look at it, and negotiate a deal with one of the van sales staff face-to-face if the vehicle meets your requirements. Many buyers are adopting this approach these days, says Ken Brown, light commercial editor at used vehicle price guide Cap, which means that dealers are being faced with better-informed customers, especially when it comes to price.
“Dealer margins are being squeezed as a result,” he observes.
Renault UK sales director Darren Payne has yet to be convinced that vans can be sold over the internet successfully without the buyer going and talking to a dealer. Visiting a dealership and speaking to the sales staff is vitally important if a customer is going to end up with the right van for the job, he contends, bearing in mind the wide variations of options in load area dimensions, payload capacity, specifications and so on. “The customer has got to get the correct advice,” he says.
Furthermore, buying a van – or a small fleet of vans – involves an element of negotiation, Payne says, and it is easier to negotiate face-to-face than to try to do so with a keyboard and mouse.
“If I were planning to spend £20,000 on a van then I’d want to see the whites of the eyes of the person who was trying to sell it to me,” Dale concludes.