Cox Automotive says May data from its Manheim and Dealer Solutions brands show there are early signs of consumers returning to the new and used vehicle markets.
According to Cox Automotive, many industry pundits were surprised to see the results in May being down by just 35% on the same time last year.
Increased action in Manheim’s digital auction lanes reflects the return of activity to the used vehicle market and also reflects returning new vehicle sales volumes.
Manheim reported OEM’s franchise dealer only digital auctions returned to similar volumes and pricing in May compared to pre COVID-19 levels.
These dealer-only auctions see low km used vehicles make their way from OEM company fleets onto dealer lots, providing stock for used vehicle buyers. The increase in volume and stronger pricing indicates dealers were purchasing with intent; to satisfy the demand they are experiencing.
“Dealer participation in the now 100% digital auctions more than doubled in May compared to March and April. Auction clearance rates are as high as they have been at any time this year, pre-COVID and pricing has also recovered from a sharp dive in April with all segments seeing increases in May,” says Cox Automotive marketing and communications director Matt McAuley.
“The results reflect increased dealer and consumer confidence and there is no doubt the constrained supply of vehicles is assisting the recovery in pricing. The federal government’s increase in the threshold for instant-asset write-offs from $30,000 to $150,000 is the main driver for prices holding up in the light commercial segment which for most part have been unaffected by COVID-19.”
Manheim expects vehicle prices to recover and increase to above average levels in the long run on the back of constrained supply brought on by the shuttering of new car factories around the world. Historically, used car prices have risen when the sale of new cars has fallen in the years following the GFC.
“Anecdotally we are hearing many of our dealer customers reporting record months for used car sales and the wholesale market has also been much more vibrant in May,” McAuley says.
“Public buyers have also found their way into our online sales channels and have been very comfortable buying online whereas in the past they would have needed to visit a Manheim site in order to buy a used car at auction.”
Unique visitors to the Manheim website were up 24.3% in May compared to April and even up 11.5% on May 2019. Website sessions, which were up more than 25% on April and May 2019 and actual page views were up a 53% compared to May 2019.
Dealer Solutions is also in a unique position to see what is happening on the consumer side of buying activity. The brand manages hundreds of dealer websites and publish dealer vehicle data to multiple classified sites, affording it a good perspective on industry wide activity.
While there was a sharp drop in April activity (down 25%) compared to March, there was a 60% per cent increase in unique visitors across the dealer websites they manage, compared to April. The large increase in dealer website visits was reflected in total leads. The number of leads generated from dealer websites directly were up 35.7% in May compared to April.
“A number of factors are at play here, as some dealers have moved on older stock to reduce inventory levels and buyers who have held off for a few months in the depths of the lock down are returning to the market,” McAuley says.
“Some buyers are also worried about public transport use and have elected to purchase affordable and reliable used vehicles. What is also evident from the search trends is the popularity of commercial and 4WDs, which were the most searched vehicle type in May. We believe this trend is linked to the Federal government’s instant asset write off scheme.”
Manheim believes COVID-19 has accelerated the shift towards digital auctions. While all of its auctions were already broadcast online using Simulcast, the company has added many new weekly sales in a channel called BidNow, which is an online only timed auction.
In a recent UK dealer study, 40% of dealers said they have increased their use of digital auction platforms due to lockdowns, with half of those indicating this will be a long-term change.
The recently launched Cox Automotive brand Dealer Auction, which is a digital only sales platform for franchised and independent dealers, has also seen increasing numbers of transactions on its site. As a purely online marketplace it allows franchised dealers to buy and sell in a contactless manner.
COVID-19 has seen the company bring forward their national launch plans as they expand from Queensland into NSW and Victoria in the coming months.
Dealer Solutions can see how social and business restrictions has really hit the fast forward button for digital retailing, which is still in its infancy here in Australia.
OEMs and dealers have rushed to move as much of the traditional sales transaction process online as they can, as consumers have actively embrace buying vehicles digitally.
The company is actively working on a suite of tools to assist OEMs and dealers lead the charge into online retailing in Australia.
Join the conversation