25 Mar 20

COVID-19 forces changes to fleet remarketing channels

Social distancing and business lockdowns due to the coronavirus are having a dramatic impact on the way fleets dispose of vehicles, particularly businesses that relied on physical auctions.

The lively atmosphere of a salesroom is too contagious for COVID-19, forcing auction companies to close their halls and move sales online.

Adesa open for business

Digital sales platform Adesa insists it is still open for business as usual, auctioning cars from all countries online.

“Buying cars is still possible for everyone,” it said, although it cautioned that: “Delivery times are uncertain and might change at any given moment.”

The company’s logistics hub in Belgium has closed, so buyers cannot pick up cars, and there are also restrictions in place at its hubs in Germany. Moreover, all Portuguese and Spanish transporters have stopped international transport, presenting logistics challenges for cross-border purchasers.

CarNext open for tele and online sales

LeasePlan’s in-house sales channel, is currently pursuing different policies in different countries. In the Netherlands its delivery store remains open, although the company has asked customers to respect social distancing. In France and the UK has closed its showroom, although customers can still order cars online for delivery to their domestic addresses. In Spain the company has suspended all operations.

Physical auctions transfer online

In the UK, BCA has cancelled of its physical and Live Online sales, but will offer vehicles for sale through its BCA Buy Now platform, which has more than 20,000 vehicles available. The auction giant has also temporarily suspended all BCA Online buyers’ fees to stimulate demand, and the company is currently working on a solution for buyers to collect any vehicles they buy.

Stuart Pearson, COO UK Remarketing of BCA , said “We remain committed to providing customers with access to our remarketing services, offering buyers the best choice of stock and sellers a range of remarketing platforms to meet their needs. In the current circumstances, we believe this will be best done digitally to prioritise the well-being of customers and our people alike.”

Physical and digital remarketing specialist Aston Barclay is also transferring its sales online, after accepting that the impact of Covid-19 will have a substantial impact on trading. The company reports that its e-Xchange is doing particularly well with dealer and lease companies inspecting and uploading their own vehicles - the portal has over 1,000 vehicles available, and Aston Barclay has removed fees for for buyers to support its remarketing efforts. The only challenge, it said, is getting the logistics side sorted so deliveries and collections work efficiently.

Neil Hodson, CEO Aston Barclay, said: “From today [24 March] all stock that is available for sale will start to be marketed via our online sales platform, e-Xchange. We are reviewing the options to launch additional complimentary digital sales channels.”

The company had already witnessed a substantial reduction in retail trade leading to a decline in buyer confidence and lower prices achieved for those vehicles which did find trade buyers.

Excess supply and low demand

This difficult situation is compounded by car dealers liquidating their stock as the coronavirus undermines demand among retail buyers, and by additional volumes of daily rental vehicles reaching the market as travel bans force lead car hire firms to de-fleet.

Rental cars account for one-in-nine registrations in Germany, so the early termination of holding periods risks undermining values in the sub-one year old market, said Andreas Geilenbrügge, Head of Valuations and Insights at Schwacke, part of the Autovista Group.

“Also, the second half of 2019 represented an all-time high in recent years in terms of tactical registrations (by dealers, manufacturers and rental companies), with more than 700,000 passenger cars. These will soon come through as young used cars, if they have not already. So, returning fleet registrations from 2017 and 2018 look rather moderate in comparison, but still have to find a buyer,” he said. 

At least there is no incentive for dealers to reduce prices when no one can or wants to buy a car, added Geilenbrügge.

Long-term hope?

If there is a silver lining to the current terrible outlook, it is the fact that the reduction of supply in today’s new car market may lead to higher residual values in future, said Derren Martin, Head of Valuations UK cap hpi.

“Our short-term forecasts for the coming months will be worse than otherwise would have been the case, as the effects of COVID-19 continue to be felt,” he said. “At present, our longer-term forecasts for one to five years in the future are likely to remain broadly unchanged, as we wait to see longer-term impacts on new car registrations, especially following plant closures from many manufacturers. A fall in registrations this year could help support used values in the long term, and there are also a great many other factors which could yet influence values in various directions.”

Photo: Shutterstock

Authored by: Jonathan Manning