Dan Boakes, Head of Buyer Experience at Cox Automotive UK, considers how independent dealers have adapted to the changed wholesale marketplace.
Up until just six months ago, attending an auction was a week in, week out part of most dealers’ working life. Of course, Covid-19 has changed all of that.
There’s much to mourn about this sudden shift in our existence. For many, auctions represented a social occasion, not just a working one; a chance to get on the road, catch up with industry friends and indulge in a bacon roll or two.
But is there an upside too? I think the experience has taught us there is.
It’s a popular misconception that dealers weren’t digitally savvy pre-Covid-19, but that’s simply not true. It’s no secret our sector has been slow to adopt digital channels in comparison to others, but the popularity of online auctions has been steadily increasing for many years and plenty of dealers have been adopting digital channels, whether virtual versions of a physical event through platforms like Manheim’s Simulcast, or digital-only marketplaces such as Dealer Auction.
We polled our dealer base earlier this summer and over half confirmed they were already regular users of digital auctions. In fact, only 4% said they’d not bought stock online before Covid-19 (though a further and presumably stoic 7% said they never would come what may!).
Nevertheless, for a sizeable proportion of independent dealers, this pandemic has forced a sudden switch and a steep digital learning curve. We swiftly pulled our buyers' services team off furlough and back into the business to help with this transition, and I can look back with pride now that we made that call. Doing the right thing has been our guiding principle throughout the crisis and it’s stood us well.
Now it seems even the most reluctant buyers have warmed to this new way of working.
I enjoyed listening to Andy Conde, our head auctioneer chat about his experience on our new Fuel/talk interview video earlier this week. He cites a handful of longstanding Manheim buyers who were adamantly anti-digital prior to the pandemic, but have come to respect – and even enjoy – the format.
I really recommend you watch or listen to this interview – Andy gives a really interesting and honest account of Manheim’s return to the rostrum and how he and his team have adapted to keep delivering for our vendors and buyers.
So, this leads me neatly to the point of this blog: what have we learnt from the last few months of digital-only sales?
Firstly, it’s shown just how agile and resilient independent dealers are. Yes, I know they’ve had no choice, but genuinely, it’s been an inspiration to see our buyer base roll up their sleeves, ask for help where it’s needed, and just crack on. It’s not been easy for everyone, and we’re far from through this crisis yet, but dealers have made the very best of the situation.
This is all the more admirable when you factor in the craziness of the market over the last few months. We’ve documented the numbers in our Market Tracker so I won’t go over them again here, but my point is this learning curve has coincided with the demand for stock driving record prices, leading to a super-competitive marketplace. It’s not been a gentle return by any stretch!
My next observation is perhaps linked to this: in this new digital-only world, buyers are frequenting more auctions than they were prior to Coronavirus.
Up until March, the average independent dealer buying from Manheim bought stock from 1.6 auction centres a year. Since auctions restarted in May, that number has shot up to 3.4 centres. To put that in context, that means over 5,000 Manheim buyers have experienced a new auction centre and therefore a new sale for the first time since May.
Obviously, they’re visiting these additional auction sites virtually and not physically, but it’s a fascinating insight that indicates buyers are becoming increasingly comfortable at spreading their wings and expanding their stock hunting grounds. Will this continue when we reopen our physical sales? I think it will for no other reason than it exposes buyers to more choice.
What’s also proved interesting is the number of dealers who’ve fast become very adept at ‘attending’ several auctions at the same time. So not only are buyers going more auctions, they’re doing it simultaneously. This requires some dexterity but my auctioneer colleagues tell me it’s a trick many have mastered well and I think it’s great to see.
This level of multitasking just isn’t possible for most independent dealers if only attending physical auctions. Quite literally, you can’t be in two places at once – especially if you’re a sole trader or the only buyer in your business.
This goes some way to explaining the sheer volume of buyers many of our weekly sales are now attracting, something else Andy Conde touched on in his latest ‘The Gavel’ blog. The more sales you can be at, the more vehicles you have to pick from, and the less chance of you getting caught up in a bidding battle, as can so commonly happen when you’re fishing from the same pool week in week out.
And then there’s the time-saving. Not just the travel time, but the time spent post-sale dealing with admin and logistics. I’ve had so many conversations with customers and colleagues over the last few months about time and most find it hard to believe how we found it so normal, and so acceptable, to spend a significant proportion of our working days travelling back and forth. We’ve suddenly discovered that this is time that can be put to better use, whether that’s work, family or even just ‘me time’.
All that said, I for one can’t wait for the day I can be in amongst our customers at a busy sale. There’s a buzz at physical auctions that can’t be beaten and the social nature of a busy sale plays an important emotional role for many of us. Plus there will always be certain types of vehicle that buyers just want to see for themselves before bidding.
But we must look at the positives of the last six months too. For many, it’s broken ingrained habits, forced a fresh think and proved we can do things differently. So I think the future of auctions is a truly blended one, with dealers mixing it up, taking advantage of the numerous benefits of online sales and while maintaining a presence in the halls, albeit a less frequent one.