I read your post on LinkedIn on May 7 that Pickles had its best trade day in seven weeks? Can you tell us about that day? How many vehicles you sold, and how that compared with pre-COVID-19 times?
We sold about 490 cars that day, and since then we have had even better weeks and sold over 670 cars. We have a lot more buyers with dealers coming back in the marketplace because they have inquiries coming in on their end. There’s also more private buyers feeling more at ease. We also have the government stimulus like the JobKeeper package kicking in and probably helping people feel a bit more confident to go out and buy a car. What we have seen during COVID, is we’ve actually had double the amount of private buyers versus pre-COVID.
Let’s go back to the start of the year 2020. How were you feeling about the year ahead, what was your outlook for your business and vehicle sales in Australia?
We had a good outlook. We’d come off a reasonably strong 2019; we felt 2020 was going to be quite strong. We typically find the used car industry is strong when the new car market is having challenges.
To let us understand your business model better, can you tell us about the vendors, where you get your assets from?
Most of the vendors that we are selling on behalf of are the major fleet companies and government entities. They make up about 60 percent of our assets for sale. We also sell for financiers — their repossession lots, and have lots of not-for-profits and corporate clients among our vendors. We typically sell to a mix of trade and private buyers and that creates a healthy competition on the assets and therefore a good sale price for our vendors. Trade buyers are dealers buying vehicles for their car sales lots and private buyers range from mums and dads buying an SUV to a tradie updating his van or ute.
What can you tell us about how fleet owners are reacting in this COVID-19 period? Are fleet owners hanging onto vehicles that they might otherwise have sold?
A number of fleet companies are working with their customers to extend out their leases — even customers that haven’t been sure what direction they need to take have been inclined to extend leases out for three to six months. A number have been saying, ‘I don’t need these vehicles anymore; I just want to free up my cash and return the car.’
When did you first start to notice business drifting off or changing amid the early signs of COVID-19?
The last two weeks of March is when we saw a significant shift in appetite among buyers. Consumers were all of a sudden very focussed on staying healthy, staying indoors and buying a car wasn’t top of mind. Halfway through, April we started to see better signs in the auction and in our fixed price sales online.
What did you do as a business in response to the lockdowns?
The PM said auctions couldn’t continue. We were lucky that we already had very strong online offerings. All of our auctions have been online for many, many years; we livestream auctions and every auction and every vehicle is broadcast live on the internet. We also have eBay-style auctions where you bid incrementally, and fixed price sales. Having good online systems has been really important to us all the way through.
You have also just released some results of a survey you did among clients indicating demand for vehicles is unlikely to get back to pre-COVID levels anytime soon. Can you tell us the main findings of the survey?
We got feedback from 80 dealers across Australia and most indicated their inquiry level was down 60 percent from the pre-COVID period. However, 70 percent of respondents said that in the last two weeks (first two weeks of May) they’ve seen an increase in inquiries which is really positive and which goes hand-in-glove with the increases we have seen in attendance and buyer activity in our auctions. What the survey also indicated is that buyers are inquiring on cheaper type assets — those priced between $5,000 and $20,000 — rather than assets that might be 40-60k. Most of the respondents said they’ll be back buying again in the next 14 days but at half the volume of the pre-COVID levels.
I see also published results of a survey recently. It showed consumer demand among non-car-owners has shifted dramatically, with 38 percent saying they will definitely consider buying a car now. Does that sort of information ring true with what you are hearing or seeing?
Absolutely, the dealers are telling us that the demand and even the most popular assets we’ve been selling are those are those under 15K. I think that’s what is ringing true is consumers are looking to buy a cheaper vehicle to move around in rather than relying on public transport. Maybe that’s a short term thing, but it certainly seems to line up with the popular purchasing segment, which for us is under $15,000. Prices have started climbing. The market’s bouncing back but it’s going to take a little bit of time to climb back to pre-COVID levels.