The supply of salvage vehicles is likely to be reduced through the coming quarters as COVID-19 lockdowns keep people off the roads and reduce vehicle accidents.
This is expected to affect recovered parts supplies in Australia in line with falling supply seen in other markets.
Manheim Australia head of ANZ Salvage, Jonothan Ellerton, said customers in other markets report that the impact of COVID-19 lockdowns across North Asia had severely restricted the demand for imported new and parallel parts.
“Depending on the extent of COVID-19 restrictions in terms of both their severity and length of implementation, the advice we have received is that the volume of new vehicle write-offs we should expect to receive may reduce by anywhere between 30 and 50 per cent, at least in the short term,” said Mr Ellerton.
However, Manheim said that there was an unexpected demand for salvage vehicles in the first three months of 2020 in Australia. This reflected the increased volume attributed to the national bushfires, Canberra hailstorm, and floods in New South Wales and Queensland.
Manheim reported continued strength for damaged and salvaged vehicles which saw values rising by up to five per cent compared with the first quarter of 2019.
But buyer demand for these vehicles is expected to be curtailed by the economic and social slowdown caused by regulations surrounding COVID-19.
“There was an expectation that with the increased volume in the market as well as uncertainty surrounding the impact of COVID-19 that both prices and clearance rates would suffer. So far this hasn’t materialised,” Mr Ellerton said about the first quarter.
“Based on quarter-one results and the activity we have seen in the market during April we’re now anticipating a much less severe decline in returns and clearance rates over the coming two quarters,” he said.
Manheim has continued with the all-online salvage auctions it implemented in 2018 and other than migrating staff to a ‘work from home’ environment where possible, implementing appropriate social distancing and PPE measures for vehicle delivery and collections, there has been little impact to the company’s daily salvage sales.
By Neil Dowling