RETAIL: Car Auctions Thriving
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Auction houses used to be associated with cheap cars and their customers were thought to be not very well off or cheap. It doesn't seem like the case anymore. Auction houses around the country are becoming a bit of a who’s who of the business world, as more people have started to realise the value for money that can be gained at car auctions.
According to Darryl Jacobson, managing director of Burchmores, the company has taken a distinct step upmarket. “We have noticed a massive opportunity that exists within the market and we’re capitalising on it,” he says.
Jacobson points out that, given the recession, a number of high-end used car dealerships have closed down. “They have been a casualty of the economic climate,” he notes. “However, while they have closed their doors, demand still exists for expensive cars.”
And there are auction houses intent on satisfying that demand, and have started sourcing the likes of Mercedes-Benz SL500s and Aston Martins.
Auction house's that accept trade-ins have been especially successful in this sector in recent times. “Buyers in this sector almost always have a trade-in. In the past, they have enjoyed the idea of buying on auction – because of the obvious price benefits – but they have been put off by the fact that they could not trade in their old car. Now these well-heeled buyers have the best of both worlds.” explains Jacobson.
According to the Burchmore’s MD, 95% of the customers purchasing a car in the over-R400 000 price category have a trade-in.
Burchmore’s only took the decision to focus on the executive market two months ago, and it’s already seeing tangible results. “Three months ago, approximately 3% of the cars that we sold had a price-tag exceeding R400 000. That’s already risen to 9%,” he reveals.
Businesses has also been bolstered by the ease of financing. Companies selling at wholesale prices find the banks are more willing to finance the transaction because there is more equity in the deal.
While the wealthy are flocking to Burchmore’s in their droves, there are also spin-offs in terms of other buyer profiles too. “When the executive car buyers become cognizant of the value for money that we offer, they often buy cars for their family members and their staff. We even sold a car to a CEO recently but it wasn’t an executive car. It was a well priced cheapie and it was for his butler!” Jacobson reveals.
Business News Sector Tags: Retail|