Manheim said franchise dealer-only digital auctions returned to similar volumes and pricing in May compared to pre COVID-19 levels.
Manheim reports that these dealer-only auctions see low kilometre, excellent quality used vehicles make their way from OEM company fleets onto dealer lots, providing desirable stock for returning used car buyers as well as fresh used vehicle buyers.
The increase in volume and stronger pricing indicates dealers were purchasing with intent and to satisfy the demand they are experiencing online and in their dealerships.
Cox Automotive director of marketing and communications, Matt McAuley, said the trend had also carried over to the open Manheim auction channels.
“Dealer participation in the now 100 per cent digital auctions more than doubled in May compared to March and April,” he said.
“Auction clearance rates are as high as they have been at any time this year and pricing has also recovered from a sharp dive in April with all segments seeing increases in May.
“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 economic impacts.”
Mr McAuley said it was obvious that the increased inquiry and lead activity flowed through to the new-car sales figures in May, as well as the rising used-car sales monitored via dealer online listings.
“A number of factors are at play. Some dealers have moved on older stock to reduce inventory levels and (there are) buyers who have held off for a few months in the depths of the lockdown who are returning to the market,” he said.
“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 vehicles 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.”
In the longer-term outlook of the pandemic, Manheim believes COVID-19 has accelerated the shift towards digital auctions.
While all their auctions were already broadcast online using Simulcast, the company has added many new weekly sales in a channel called BidNow, which is essentially an online only timed auction.
Mr McAuley said that in a recent UK dealer study, 40 per cent 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.
“Half of the dealers who responded were using online platforms prior to COVID-19. But there’s no doubt the lockdown has brought forward adoption amongst those yet to embrace digital auctions,” he said.
“For a sizable portion, the survey indicates that this usage will continue to become the ‘new normal’,” he said.
Cox Automotive recently launched the Dealer Auction brand, which is a digital-only sales platform for franchised and independent dealers.
“This has also seen increasing numbers of transactions on its site,” Mr McAuley said.
“As a purely online marketplace it allows franchised dealers to buy and sell in a contactless manner, in a fast and convenient digital format.
“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.
Mr McAuley said that Dealer Solutions, which manages dealer websites and publishes dealer vehicle data to multiple classified sites, had seen how social and business restrictions have “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 embraced buying vehicles digitally.”
Dealer Solutions, reported a 60 per cent increase in May 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 was up 35.7 per cent in May compared to April.
Cox Automotive is now actively working on a suite of tools to assist OEMs and dealers lead the charge into online retailing in Australia.
By Neil Dowling