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Manheim: Market shortage makes sub-par used cars acceptable

Date: 28 August 2012   |   Author: Jack Carfrae

Bosses at auction house Manheim are claiming the shortage of cars on the used market has created a culture where buyers accept defleeted vehicles in poorer than average condition.

General manager for valuation services, Daren Wiseman, said: "You can get away with extra damage with the market the way it is, but not if it changes. Average damage has gone up from fleet sector vehicles by around £100 [to fix] from this time last year."

Although it was too early to assess the impact, Wiseman went on to say that based on the minimal impact of this summer's Euro 2012 football competition, it was expected that the London Olympics would have a negligible affect on trading conditions.

He confirmed demand remained strong for the majority of used vehicles due largely to market shortages, with particular interest in "lifestyle vehicles - the Mini, Mercedes SLK and so on. We had people buying cars - convertibles - in February for seasonally strong money."

"The first half of the year has been stable. We don't really anticipate any great change in the short term. There is no change in fleet vehicles planned and no prospect of increased supply."

Manheim's chief strategy officer, Mike Pilkington, reported there had been a consolidation between rental firms and leasing companies to effectively remarket defleeted vehicles: "Fleets are increasingly demanding the ability to put cars in front of a franchised dealer who may or may not turn up.

"We've seen a lot of consolidation between leasing and rental firms to dispose of cars."

Pilkington also predicted the new car market would continue to struggle until mid-way through the decade.

Speaking exclusively to BusinessCar, he suggested that Manheim was exploring ways of reducing costs and improving the speed of its services for vendors as well as looking into new ways of bringing defleeted cars to the used car market.

"We are looking to try and take the cost out and speed up the disposal process," he said.

"No one has magic answers but there is still the attraction of online selling due to the cost that's taken out of it, and there's an attraction to get into retail. The shop model is successful now.

"I think people would like to see more ways of getting cars to consumers today."

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