Two years after being written off, physical auctions are now being operated again by all the main vehicle remarketing providers, reports Shoreham Vehicle Auctions (SVA).
It said online-only auction operators succumbed to pressure from both vendors and buyers during Q4 2023 to operate physical auctions to create market confidence and deal with the challenge of multiple price realignments.
“Even those companies that have been running ‘online only’ auctions since 2020 are now investing in refurbishing facilities and re-employing staff to get back to physical,” it noted.
SVA said it was one of the first auction companies to return to physical auctions post pandemic.
Managing director Alex Wright said he has always believed that vehicles being driven through the auction halls in front of physical buyers brings confidence to the used market, particularly when trading conditions are tough.
“In Q4 prices changed daily as the market realigned itself to respond to a rise in new car production, improved used car supply and high interest rates that were impacting consumer demand. Buyers were so uneasy they stopped buying vehicles which made vendors anxious which caused market distress,” said Wright.
During Q4, buyers continued to attend physical auction to gauge market sentiment including online buyers who rarely make a physical trip to Shoreham.
“Vendors joined the buyers in visiting auctions in person to gauge market conditions for themselves. Together the used market realised the pain in Q4 was a short-term blip and that the 2024 market was still strong,” he said.
During the tough Q4 used market online only auction providers received huge pressure from vendors to start trading physically again because they were often achieving lower conversion rates and prices than auctions trading in a hybrid physical/online capacity.
According to Wright, this pressure has been worth it: “The return to physical by all the major providers helped provide additional market confidence in January which has translated into healthy conversion rates and prices.
“Even the online buyers are bidding on and buying more cars as they can see physical buyers in the halls. Reassurance is a big part of the used market, and it is there in bucket loads now the entire industry has gone physical again.”