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REMARKETING: Location, location, location

Date: 18 May 2012

Does postcode really make a difference when it comes to selling certain types of vehicles? Jack Carfrae looks into the geography of defleeting

There has always been a theory that it is better to sell certain types of used car in certain areas of the country. By 'better' we mean you're more likely to see greater demand and stronger prices for the right car in the right place at the right time.

The sweeping statement about remarketing has always been that convertibles are easier to sell and make more money down south and 4x4s are stronger up north - weather conditions and lifestyles being the thinking behind the theory.

This may have been very much the case in previous years, but the rise of online remarketing has turned once-traditional regional traits on their head, as Tony Gannon, BCA's communications director, explains: "Regional price hotspots are very much a myth of the motor industry and hark back to a time when buyers had to travel to bid in person using a transport network that was nowhere near as comprehensive as it is today.

"Seasonality and the prevailing weather conditions have a much stronger effect on demand, particularly for 4x4s and convertibles. Prices for 4x4s rose sharply during the worst of the winter weather in 2011, for example, and any time there are severe icy conditions, 4x4 prices tend to rise. For many motorists - particularly those living in rural or remote areas - a 4x4 is becoming a necessity in winter rather than a luxury."

Alex Wright, managing director of Shoreham Vehicle Auctions, agrees that the strength of the internet and online selling has caused regional selling prices to diminish, but claims buyers will still travel "hundreds of miles" to save a few hundred pounds, such is the state of the economy.

He adds that very low-cost used vehicles are still subject to old-fashioned local characteristics, though: "The bracket that is still largely regional is the sub-£1500 bracket, and [buyers in] Wales and the West Country, who have always loved their 4x4s, are now searching the country for the best deal." He also states that nearly-new 4x4s in the £10,000-plus bracket still maintain price strongholds in rural counties such as Suffolk and Norfolk, although specialist buyers are in the habit of searching up and down the country for the best prices.

Off-roaders seem the most susceptible category of vehicle to valuation changes between areas, and each remarketing specialist has its own view on where and why the valuation changes occur. Manheim's group auctioneer, Andy Conde, believes that the south of the country has now caught up with the north due to the number of lifestyle-orientated 4x4s in London and the surrounding vicinity: "The 4x4 market has traditionally been stronger in the north, but because of the growing demand, especially in London and the south-east for Range Rover Sports, Audi Q7s and BMW X5s etc the gap has virtually closed.

"In the 4x4 market [for Manheim's non-manufacturer sales over the past 12 months] 50% of all vehicles were again destined for the south of England, thus supporting the view that the traditionally rural vehicle is equally now at home in the south. Here there is little difference between the stock profile across the country and only 0.1% difference in price achieved."

Conde also points out that the general condition of second-hand vehicles can vary depending on the area from which they're sourced, which could also be taken into consideration by buyers: "The UK is a small place and with so much information now available on the price of vehicles, moving cars around the country to seek premium prices is rarely viable. It should also be remembered that the harsher climate and poorer roads mean that cars operated in Scotland tend to have higher levels of wear and tear."

In addition to the popularity of internet selling, Manheim also blames the used car market's shortage of stock within post-recession registered vehicles for the largely diminishing variance in local area values. "Due to the lack of vehicles available this year, buyers have had to travel the length and breadth of the country or become a convert to our online bidding facility to source stock, and therefore prices have been consistent wherever the vehicles are sold," says Conde.

Despite BCA's view that regional variations in values are generally regarded as dying out, the firm still believes that certain used vehicles are affected by the geography of their sale, most notably because of local traffic laws, particularly the London Low Emission Zone for commercial vehicles. Gannon comments: "There is a slightly different scenario with commercial vehicles. The London LEZ had a distinct affect earlier this year as southern-based buyers sought to upgrade from older pre-Euro3 LCVs to LEZ-compliant vehicles that can operate within the London LEZ. Most of the activity was focused on low-cost replacement vehicles, particularly larger panel vans that complied with the new rules that came into force on 3 January 2012. This was particularly noticeable at BCA Blackbushe, which stages a large weekly LCV sale, but was diffused across a range of vehicles."

BCA also saw a small but noticeable improvement in the performance of cars that emit less than 100g/km in and around London because of their ability to dodge the city's congestion charge. "Cars that emit 100g/km or less of CO2 and electric-powered vehicles that benefit from reduced London congestion charging may perform marginally better in London and the home counties than elsewhere in the country, but evidence is no more than anecdotal because the volumes are so low," says Gannon.

Shoreham's Alex Wright notes that the introduction of the London LEZ caused a huge spike in the values of older vehicles within the region that would dodge the regulations on their introduction: "While the prediction was that good-quality younger vans would appreciate in value, it was in fact the older damaged vans that appreciated instead. Sales of high-mileage/high-damage vans went through the roof in the capital city and home counties, with some vans appreciating by as much as 50%. Buyers were basically lapping up anything cheap and that enabled them to adhere to the new standards."

Wright believes that the last four to five years have marked the biggest shift in regional valuations as buyers and sellers have become increasingly more comfortable with online auctions, while the swell of additional tools to supplement internet selling has only furthered the cause: "[Buyers] are able to research such things as fuel efficiency, reviews and prices across the country, so that they can figure out how much the vehicle will cost them once they have made the purchase. Mobile applications, such as the Auto Trader app is another technology being used more and more in physical auctions, and empowers buyers to see what price a vehicle should be.

"Online trading is changing auctions and remarketing in a massive way and unless you're utilising online now, you've missed the boat."