Auction sellers may be hit with higher
charges as a result of an unprecedented cost increase when selling
through motor auction houses due to fuel price rises, warned the
RMI Society of Motor Auctions (SMA) – compounding the misery for
fleets, as prices achieved for stock at auction tumble (see
article, above).

Auction sellers may be hit with higher charges as a result of an
unprecedented cost increase when selling through motor auction
houses due to fuel price rises, warned the RMI Society of Motor
Auctions (SMA) – compounding the misery for fleets, as prices
achieved for stock at auction tumble (see article, above).

Economic pressures, most pressingly the fifty per cent increase
in the cost of fuel since December, are having a huge impact on
profit margins and threaten 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.”

In 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 has 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.

“The competition between the major auction houses, Manheim and
BCA, is keeping the rates lower,” he added.

If auction sellers are faced with dramatically higher charges,
the source predicts sellers will look to other remarketing methods:
“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.”

 

Motor Finance Issue: 45 – July 08
Published for the web: August 13 08 11:40
Last Updated: August 13 08 11:42