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EX-FLEET VEHICLES CLOGGING UP AUCTION MARKET

Wed, 16 May 2007
(News Release from Society of Motor Auctions)

Ex-fleet vehicles are not selling at auction because many fleet operators insist on inappropriately high reserve prices, according to the RMI Society of Motor Auctions (SMA), a part of the Retail Motor Industry Federation (RMIF).

SMA members are reporting that some fleet operators demand ‘clean’ reserve prices for cars in below average condition. Some stock has remained on their books for over 100 days, despite being repeatedly offered for sale.

Alistair Manson, SMA director, said: This is both unrealistic and uneconomical as unsold vehicles often sell for less than the first bid many weeks later.’

In the first quarter of 2007, vehicles sold at auction were being sold well above the reserve prices, but this was partly due to a shortage of stock. Since Easter the market has become more competitive.

Manson continues: ‘Fleet operators need to face the reality of a changing market and ensure that vehicles are realistically valued when entered into the remarketing and auction arena.’

The SMA has issued the following action points for vendors:

* Ensure vehicles are accurately appraised and valued in line with market sentiment
* Preparation and presentation are critical
* V5s, MOTs, service histories, spare keys must be present at the time of sale
* Vendors should immediately review their inventory and take positive action on any vehicle that has been in stock for 30 days or more.

Manson adds: ‘With increased volumes from March registrations and a general weakening in market conditions, it is vital for fleet owners to appreciate that conditions have changed, demand has slackened, values are falling and unsold inventory is building.’

Additional Comment
Mark Hankey, Sales Director, British Car Auctions (BCA)
‘Demand had become increasingly selective and polarised. The best cars continue to be sought after and are continuing to attract good prices relative to their condition, specification and mileage but high mileage cars that require costly reconditioning will not attract CAP clean prices. Vendors will have to be increasingly more realistic if they wish to achieve the fastest return of cash to bank.’

Mike Pilkington, CEO, Manheim
‘The most successful sellers in the current climate are those that move with the market and maintain the active support of professional buyers for their product. Buyers are increasingly avoiding some vendors sales as they do not have confidence that the stock is priced to reflect condition and the changing market. There are clear signs that stock will stagnate unless it is priced accurately.’

Keith Elliot, Premier Motorauctions Leeds
‘The trade only have eyes at the moment for the prime ready for retail stock - with competition being strong for this currently limited product. However with a lot of auction stock reflecting the "true" life style of vehicles i.e. high mileage and average condition, those examples find new homes difficult to come across. Stock must be valued in relation to vehicle and market conditions, not according to so called guide publications which are firstly, usually some months behind the times in a market which is changing daily and secondly relate to a clean well specified vehicle, which sadly on many occasions bears no relation to the product being offered.’

David Scarborough, Managing Director, Chelmsford Car Auctions
‘Vehicle appraisal is paramount to a successful sale. Most vendors think that there is a limited market for substandard vehicles, but this is in fact not the case. There is demand for all products regardless of condition and specification. However there is some reluctance from vendors to accept a vehicles true value, adjusted for condition and specification, as this will need to be significantly less than the guide price. This in turn drives good buyers away from this product and therefore unnecessarily it remains unsold. It will eventually sell some weeks later following a book drop at below the original asking price. Specification has a far greater impact on vehicle values than either guide book represents thus adding to a vendor’s dilemma. Vendors need to understand the Guide books criteria for both “Trade and Clean conditions” as many are not aware or choose to ignore this.’

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