Picture a physical car auction and you don’t conjure up an image of a cutting-edge sales process.
Granted, your average auction house will contain more examples of the time-honoured way of selling used vehicles, but behind the traditional halls lies a series of more sophisticated ways of defleeting cars and vans.
As is the case with the wider fleet industry (and anyone present at the BVRLA’s technology conference earlier this month will now be well versed in this), big data is now threatening to shake up used vehicle circles and is set to refine the defleeting process.
“Large-scale data collection across multiple touch points will become more commonplace, but it is the way that data is analysed and used that will make the difference,” says BCA’s operations director, Simon Henstock.
“In simple remarketing terms there are obvious benefits to precisely targeting the right vehicles to the right buyers at the right time and in the right channel. But beyond this, remarketers will be looking at a wider range of data to inform reserve price setting, such as daily, condition-adjusted vehicle valuations, buyer demand data, and consumer data such as retail market pricing and demand information.”
He continues: “Take this a step further, and big data could lead to predicting future hotspots of demand or oversupply, which could be fed back up the remarketing chain to assist volume vendors.
“There is also data around the benefits of vehicle preparation, mechanical checks, vehicle movements and other activities in the remarketing process. These factors are all gaining importance with vendors who seek to differentiate their vehicles in the market and ensure their vehicles are sold as quickly as possible.”
Away from the data scene, it’s now accepted that online selling is no longer a new thing, and it’s pretty well ingrained within the trade and fleet communities.
Operators are spreading their wings and using the different tools that web sales offer to their advantage, although, as managing director of Shoreham Vehicle Auctions, Alex Wright, explains: “We can now distribute catalogues instantly to a targeted audience of buyers who can bid from anywhere in the world. They can also monitor the auction via live video stream and see in-depth appraisals.”
The proportion of used vehicles sold through digital channels is still on the rise, but it isn’t as meteoric an increase as the remarketing companies experienced earlier on in the technology’s existence, according to some. Wright believes there’s a plateau happening now: “Last Christmas (2013) 20% of all purchases were made online. At present we forecast this to remain at this level.”
He adds that the ability to sell cars overseas has been one of the biggest technological assets to the used car business: “The biggest change we have seen in our remarking industry is the ability to target specific buyers for specific lots across the world; with this huge, targeted audience we are riding one of the highest markets, with lots achieving the highest values seen to date. This increase has been brought on by buyers embracing the use of technology to buy and sell vehicles.”
Jon Mitchell, sales director of Autorola, itself an online remarketing specialist, says digital used car sales are continuing to account for a bigger chunk of the used car market, despite Wright’s suggestion that they’re levelling off.
“Online will continue to grow over the next five years, eroding away at physical auctions. Our business in the UK continues to grow at 30% per year.”
The only real drawback to more trade buyers leaning on remote and online methods is that they’re more considered with their purchases, and less prone to getting caught in the flurry of the auction hall, as Wright explains: “The auction hall is a theatre. People gain confidence from seeing others bidding – we are social animals. With this atmosphere, buyers often spend more money than they would online. Recent research has proven that buyers spend far less when shopping online as they are detracted from the emotion and environment of the sales floor where sales can often be implosive.”
The remarketing business is also keeping apace with the rest of the world with platforms for mobile and tablet. Henstock explains: “The rise of mobile and tablet computing continues to change the way customers interact with the remarketing sector, as it has done with every sector of business. The availability of data, pre-, during and post-sale has grown enormously recently, and with this, an ever-increasing demand for more and more analysis.
“Dealer buyers are more and more aware of the benefits of marketing themselves to their customers online, and specifically via mobile devices, and expect the same ability when they are purchasing in the wholesale sector. iPads are increasingly seen on the auction floor as a working tool for buyers.”
Mitchell says it’s worth buying into the mobile side of things, but adds that not all remarketing technology is digital: “New apps and handheld vehicle inspection technologies should all be considered, but non-IT technologies like smart repair have also transformed defleet processes, many of which are now being embraced as they speed up the sale process.”
Further down the line, initiatives that speed up the defleeting process and simply get cars sold faster are likely to come into force.
Henstock says: “There is an ongoing desire to shorten the remarketing chain and use data to proactively predict where buyer demand will grow. Online volumes will continue to increase, underpinned by accurate and rich data, but also needing the physical infrastructure to support this growth. Indeed, the requirement for physical remarketing, vehicle storage and attendant logistics will grow as the volume returns to the marketplace.”
The residual value expert’s view
According to Rupert Pontin, chief car editor at Glass’s, the online side of used sales is progressing to the point where physical auctions could dry up within the next 10 years.
“It is not beyond the realms of possibility that physical auctions will all but disappear in the next decade becoming defleet and fulfilment centres,” he says.
The nearer future will be less dramatic, though: “In the short to mid term there will be little change. Sales will continue to migrate to online platforms for cost reasons and the volume sold in the physical environment will decrease. Fully integrated defleet-to-sale programmes are already available and some of the major companies use them but tend to add other channels as part of a best-practice process to ensure they are doing the best they can for their inventory.”
Pontin continues: “Online sales during a physical sale now account for around 60% of total sales overall. This tends to vary depending on the type of product on offer and the vendor. Some closed manufacturer sales will sell around 80% of cars online whereas a part-exchange physical sale may see just 15% of cars sold online due to condition.
“Fixed-price platforms enhance these numbers but there are very few vendors if any who would rely on electronic remarketing entirely. It is likely that this number will increase further, although it is unlikely to move above 80% in the next five years in our opinion.”
