Vendors told to do more research when setting used car reserves
In fact, the firm says that conversion rates of between 35-45% have been typical over the past few weeks as reserves are often a few hundred pounds higher than the market is prepared to pay for ex-fleet stock.
'We are doing more homework than ever to help vendors set realistic reserves on cars and enhance conversion rates. Recently we identified a two-year-old Network Q approved Astra sitting on a dealer's forecourt at the same price a vendor was expecting a trader to pay at auction for an identical car. Such examples are not uncommon. The auction reserve was a few hundred pounds too high and the car didn't sell,' explained Barry Watts, operations director of Aston Barclay Group.
Aston Barclay says that this shows the danger of just using a single source of market intelligence, such as CAP, and instead the firm is recommending vendors also check out other sources of used price information such as Auto Trader and manufacturer used car price websites.
'CAP should only ever be used as a guide and in a falling market two or three other sources of used car prices help determine a reserve price that gives a vendor a strong chance of selling their car on its first entry into the auction. Too many vendors are using CAP in isolation. When the guide is inaccurate then the price the car is expected to achieve at auction becomes inaccurate,' said Mr Watts.
He also urged the industry to price vehicles in accordance with their condition and specification. This will result in many cars, currently reserved at CAP clean, being reserved at CAP average or below, a much more accurate guide to their value.
'A buyer will obviously consider condition and specification as well as market demand when determining how much to pay for a car, vendors should take these points into account when setting reserves. If a vendor's reserve reflects this then the car stands more chance of selling first time, every time, and for more money,' he added.For more of the latest industry news, click here.