The UK auction market restarted, in a very limited capacity, in April and continued to grow in May. A more “conventional” programme is being offered by most of the providers, although it remains exclusively online. Buyers appear to be adapting to this, with values and conversion rates improving helped by the recent reopening of retail sites.
Overall sale volumes are still low – around 25% of the pre-lockdown level – but are rising as the number of auctions increases and it is likely that we will see something close to a full auction programme by the end of June. However, these will be online only sales and it will be some time before the traditional physical auctions reopen. Buyers need to get used to a different kind of buying experience quickly whilst trusting the accuracy of inspections provided by the auction companies, as bidders will be unable to inspect cars prior to sales relying on the photographs and grading provided in online catalogues.
Unlike the wholesale market, the used car retail market has only recently restarted with sites able to open from the June 1. There was some online selling throughout lockdown but true indications of market activity will be confirmed when the results are analysed. Glass’s Live Retail pricing tool measures key retail metrics including the time a car spends on a retail forecourt before sale and the discount required to achieve that sale. Unsurprisingly, the Days to Sell report shows a steep increase in recent weeks, rising from an average of 40 days in March (pre-lockdown) to almost 80 days in May.
Whilst fossil fuelled cars are very similar to each other, it is interesting to see that alternatively fuelled vehicles (AFVs) have fared worse, with AFVs averaging 86.6 days and Electric Vehicles (EVs) 97.2 days. It is similar with the average discount report, with AFVs and EVs requiring higher levels of discount. This may well be attributed to the inability of potential buyers to test drive prior to buying – many buyers of this kind of car are doing so for the first time and will want to “try before they buy”.
Early indications for June are that the reopening of retail sites has helped to rejuvenate activity. The auction market has become much busier with marked improvements to conversion rates and values. It can be a little varied, however, with some vendors already appearing to be holding out for pre-lockdown values. This may be a little premature as volumes are also climbing and with all sales being online, unlike with physical sales it is very easy to jump from one sale to another if a bidder perceives too many “realistic” bids are going provisional.