Vehicle auctioneer Manheim Remarketing is
reporting a doubling in the attendance of used car dealers from
manufacturer-franchised showrooms between January 2011 and January
2012.

Manheim attributes the rise to the decline in
viable stock of second-hand vehicles. For a vehicle to be
considered retail quality; it must be around three of four years
old, meaning the used car market is now trading cars, or the lack
of them, bought new in 2008.

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Mike Pilkington, managing director of Manheim
Remarketing said: “The increase in the numbers of franchised
dealers attending Manheim’s open auctions has been evident since
the beginning of 2010 but last year saw a significant jump in
attendees.”

Both CAP and the Vehicle Remarketing
Association reported
used values holding higher than expected across winter, forcing
dealers to hang on to more of their part-exchange vehicles and
pushing up the auction conversion rate for five- and six-year-old
vehicles to 75%.

“It seems that franchised dealers may have
realigned their age/mileage policies to justify attending open
auctions in such numbers in an attempt to source stock to meet
increased demand for used cars,” said Pilkington.

The news confirms previous surveys by credit
checker
Experian and
Manheim itself which reported stock supply will be the dominant
worry for dealers in 2012. Added to the lack of vehicles, many
dealers are worried taking on used cars bought during the recession
will increase the risk of taking on cars with outstanding
finance.

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In particular, a CAP survey of over 100
dealers found that 59% of franchised dealers, who would have first
pick of manufacturers’ used stock, were having difficulty sourcing
retail-quality vehicles.

“If the numbers of franchised dealers
attending open auctions continues to grow at this rate,” added
Pilkington, “then independent dealers will find they are facing
more competition in the auction hall and online.”

richard.brown@vrlfinancialnews.com