The rewarding results of diversifying risks
We recently provided our clients with a general market report for the last two quarters of 2016. What we have found is that sales have been strong over these two quarters. We achieved good results for fixed price retail selling, public and dealer auctions, dealer only auctions, dealer tenders and online auctions.
Vendors have been making moves to diversify their risk, allocating percentages of their inventory to be sold across each of these channels. While there is no "industry benchmark" mix, we regularly work with vendors to determine the right allocations that fit their risk portfolio and achieve their desired return.
That said, returns has been strong, with varying factors at play, including:
- Low supply of good-quality used vehicles. Returns from fleet managers (FMOs) and Governments have been low due to lease extensions and longer lease terms.
- Lease extensions in general continue to be pushed out, from averages of 2-3 years to averages of 4-5 years.
- Low interest rates mean easy access to money for buyers.
- There is strong dealer demand - dealers are seeing fewer trade-ins as more people sell their cars privately on various platforms.
- At Pickles, our Fixed Price channel consistently delivers higher returns than Auction.
We expect this market to hold up until April, when there is historically a dip in returns due to increased vehicle volumes and a dropoff in demand.