Coronavirus reshaping the used car market

Covid-19 is set to transform the used car market, with more vehicles being sold online at the expense of physical sales.

These traditional sales channels have been closed during the lockdown and social distancing rules will further disrupt them as restrictions are lifted.

The industry almost came to a grinding holt in March, when the Government closed all but essential businesses and asked people to stay at home.

However, some remarketing companies, including BCA and Aston Barclay, were able to remain trading thanks to established online sales channels and available stock.

As restrictions have started to be lifted, allowing vehicles to be moved safely, others have also now begun trading through their online platforms.

Manheim re-started its online auction programme in the past couple of weeks, with stock available through ‘buy now’ events and ‘virtual auctions’.

Its parent company, Cox Automotive, believes online buying whether wholesale or retail is the only way to adapt to the new restrictions and processes.

Indeed, digital auction platform Adesa UK says the way defleeted cars are remarketed will undergo a paradigm shift from physical auctions to online, when lockdown restrictions ease.

It says it has already seen the early signs of the move from physical to digital in new and used car sales, and once businesses start reopening it expects this trend to accelerate.

Jonathan Holland, managing director of Adesa UK, said: “Industry watchers have long talked about a future shift from physical to digital. We have already witnessed the early signs of this in new and used car sales and the high level of consumer activity online during the lockdown.

“Once businesses start reopening, we will see an acceleration of this trend with online remarketing emerging as the default choice of vendors and buyers.”

Jon Mitchell, group sales director at online remarketing firm Autorola UK, also predicts more used cars will be bought and sold online, not just in the short term but longer term too.

“This could be the major turning point for buyers as many more have begun to recognise the benefits of buying online during lockdown and have begun to trust the process more readily,” he said.

“Vendors too are likely to sell a larger percentage of their stock online as part of their overall remarketing strategies.”

Hitachi Capital Vehicle Solutions says it will use the next few weeks to understand what the ‘new normal’ looks like for the used car market.

However, managing director Jon Lawes explained that the vehicle leasing company was selling vehicles online now after adapting its remarketing strategy.

“We implemented a multi-channel remarking strategy last year, significantly increasing our number of channels to sell vehicles, which means we are well prepared to face the challenge,” he said.

GROWING INTEREST IN ONLINE SALES

Neil Hodson, Aston Barclay’s Group CEO, told Fleet News he had seen new account applications increase as buyers saw the benefits of buying through a digital platform, some for the first time.

“As we plan to return to work, we anticipate higher sales volumes as we ramp up our digital sales to replicate our usual nationwide programme,” he said.

More than half (60%) of buyers at Aston Barclay used vehicle auctions said in recent survey that they would continue to buy online.

Typically, through BCA’s Buy Now online channel, up to 15,000 vehicles are available for purchase 24/7, with many repriced daily using real-time market driven intelligence.

However, it also has a “growing programme” of daily virtual sales to cater for buyers who prefer to join live bidding in real-time.

In terms of the longer term, Stuart Pearson, chief operating officer at BCA UK Remarketing, told Fleet News it was an “evolving picture” and there is a long way to go before many businesses get back to “anything like normal”.

But, he added, BCA would continue to look for “innovative ways to support its customers during the months ahead”.

‘SURGE’ IN ONLINE SALES EXPECTED

Adesa UK says online auction companies should be preparing for a surge of used cars to be released into the wholesale market once the Government’s lockdown restrictions permit car retailers to reopen their showrooms.

It says it is already receiving high levels of enquiries from finance and leasing companies as well as fleets, who have been sitting on defleeted stock since the lockdown began.

Holland said: “Many businesses who are keen to liquidate their assets and reduce any further exposure to depreciation are investigating online remarketing for the first time and are beginning to appreciate the expediency and cost savings.

“As an industry we are seeing pent-up supply and demand with vendors and buyers using the lockdown as an opportunity to re-evaluate the way they dispose and acquire assets with online making more sense than ever before.”

For more on the used car market and Covid-19’s impact on residual values, see the May edition of Fleet News.