BCA and Manheim have had the UK remarketing sector largely sewn up over the past decade, but their dominance could come under threat by a relative newcomer.

Scottish Motor Auctions (SMA) might only have four centres, compared to the big two’s 37 UK sites, but it has lofty ambitions for growth over the next five years.

It’s even indicated an interest in buying BCA should current owner Montagu put the business up for sale (Fleet News, September 10).

When SMA’s joint owners Bob Anderson and Kevin Bann talk about expansion it’s worth paying attention.

The two – Anderson an Australian, Bann a Scot – first came together as partners with the launch of sub-prime finance provider Direct Car Finance more than 12 years ago.

DCF grew into the UK’s largest sub-prime finance provider, selling 30,000 cars at peak across 22 sites and employing 650 staff.

The pair sold the business in 2002 (within 10 months, mis-management saw it collapse).

With more than 60 years’ experience between them, a return to the industry looked certain. But it took a little longer than expected.

Anderson says: “We’d been in South Africa looking at the sub-prime opportunities, but we decided not to shift there. We were sitting in Johannesburg departure lounge wondering what to do next. With no prior thought, planning or research we decided to get into the auction business.”

Once back in the UK, Anderson made the call to Douglas Flynn, owner of SMA. A deal for the four-site group was swiftly struck.

That was in April 2007. SMA had budgeted to auction 49,000 cars that year but was already 5,000 behind target. By the end of the year, under new ownership, the business sold 54,000.

“The next year we said we should sell 60,000 – the staff were up in arms telling us we didn’t understand the business,” says Anderson. “We exceeded it.”

This year the group will sell 120,000-130,000 cars from four sites.

 

Since they acquired SMA, the two partners have sold a joint venture business in Glasgow to Manheim, retaining ownership of the site, offloaded the Aberdeen centre and bought Premier Motorauctions in Leeds.

They’ve had a similar impact at Premier, snatched from the jaws of administration at the end of last year. Its run rate last year was around 850 cars a week with a best ever performance of 1,000.

A few weeks back it topped 1,200.

“We took an aggressive approach to chasing business and it is paying benefits,” says Anderson.

Bann adds: “We changed the mindset of the people and created an environment that was challenging and rewarding. We brought more of a retail approach to the auction business.”

The two have also invested heavily on training (£100,000 in the past 12 months) and put the emphasis squarely on customer service.

“We treat buyers and sellers like they are coming to a five-star hotel,” says Anderson.

The strategy now is to spread down the spine of the country via major conurbations. The target is eight-10 centres within three to five years.

Three sites have already been identified (Midlands, Bristol and east London); SMA is confident that two will come off – possibly within 18 months. It is also looking at west London.

Each will meet a basic blueprint of auction centre and refurbishment/PDI facilities on a minimum of 10 acres.

“We’ve approached almost every independent auction business to buy,” says Anderson. “We’ve found that we will have to do brownfield building.”

With six centres, he predicts SMA will sell around 200,000 vehicles a year. Ten centres should get the group close to 300,000 – not far off Manheim’s volumes but on half the sites.

“With this many sites we can compete for national contracts,” Anderson says.

“Most big vendors – fleets and leasing companies – are looking for a credible third alternative to the big two. That alternative is SMA." 

Cash is king

The speed with which SMA promises to pay sellers has attracted new business.

“Vendors see the benefit of selling cars as soon as possible to get the money into their pocket. We aim to pay them within a matter of days,” says Bob Anderson. “Our turnaround time is much quicker now we’ve added more sales to our programme.”

Kevin Bann adds: “We market the cars at no cost to the vendor and we valet, clean and prepare them – and we don’t always charge, depending on the customer.

“It’s all about utilisation and turning the car into cash quickly. Cash has always been king but, as somebody recently said, nowadays cash has been promoted to God.”