Auction sellers in the UK may be hit with higher charges as a
result of unprecedented cost increases when selling through van and
car auction houses due to fuel price rises, warned the RMI Society
of Motor Auctions (SMA).
The cost of delivering cars to auction houses, combined with
utility bill price increases are forcing up the amount auctioneers
have to fork out.
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This additional burden – increasingly a Europe-wide phenomenon –
is likely to also push up prices for light commercial vehicle, van
and car lessors at sale time.
This comes in the context of economic pressures, most pressingly
the 50 percent increase in the cost of fuel since December, that
are having a huge impact on profit margins and which are
threatening to raise selling charges.
Louise Wallis, head of the SMA, predicted that auction houses
may have to pass on these costs to their customers:
“The vehicle remarketing industry is a low-margin, high-turnover
business, which is only sustainable from a low cost base,” Wallis
said.
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By GlobalDataIn the past, many auction houses were able to hold or even lower
selling charges by absorbing cost increases, improving efficiencies
and reducing margins. The current economic climate, however, is
placing considerable strain on finances in motor auction
houses.
Auction house BCA’s managing director, Andrew Hulme, said: “The
unprecedented scale, nature and frequency of cost increases are
impacting on most businesses in the UK.
“The most obvious example for the auction and re-marketing
industry is the increase in fuel prices which have been impacting
on the cost of vehicle movements. We have already been passing
these through to our sellers.”
He continued: “With recent increased energy costs and other
business costs forecast to continue to rise, most industries in the
current economic climate have little option but to review their
charges and pass them through where appropriate. In this climate,
few will be able to absorb them.
“We will continue to monitor the situation on an ongoing
basis.”
A fleet industry source commented on the report, saying his
company is yet to feel any knock-on effects apart from collection
costs, which are linked to the recent increase in fuel prices.
Hulme added: “The competition between the major auction houses,
Manheim and BCA, is keeping the rates lower.”
If auction sellers are faced with dramatically higher charges,
the source predicts sellers will look to other remarketing
methods.
Hulme said: “I think that people will be looking at new avenues
to sell vehicles, in conjunction with the traditional auction
methods. There will be some movement towards [the internet], but I
think it will take time.
“There will be a filtering as time goes on.”
