One of the themes this September at IE magazine has been motor salvage, and in particular how Covid-19 has changed things in the UK market.
So here’s some in-depth comment from Neil Joslin, COO at e2e Total Loss Vehicle Management.
Online auctions now the new normal
Whilst recently online sales of new and used vehicles have largely been driven by the pandemic, online auctions have been the preferred route for the sale and purchase of salvage vehicles in the UK for the last decade, offering bidders the ease of looking at multiple vehicles across multiple locations, at their own convenience. Salvage Market, the auction platform run by e2e Total Loss Vehicle Management [e2e] has been operating since 2009 and auctions over 2,000 vehicles a week, with the added service of matching the vehicles for sale with reclaimed parts availability for the bidder.
There are a number of good salvage auction sites in the UK and it is impossible to say which platform gets the best results as there is no means of analysing the data collectively. It is fair to say that bidders will be using multiple platforms to source their salvage vehicles. In our experience, the things that will enhance a vehicle’s value are the same things that make for a positive customer experience and a returning customer. The ability to ‘buy with confidence’ from an auction site is critical and requires the vehicle seller to operate with robust quality controls and established processes to ensure the bidder knows exactly what they are buying. Similarly, guaranteeing that there will be no hidden charges when the buyer comes to collect their vehicle.
The cleaning, sanitising and removal of personal data from in-car infotainment systems is all part of the process of professionally preparing a salvage vehicle for auction and attention to detail in this respect has always been key, even before COVID-19. At e2e, virus related changes made to ensure the safety of staff and customers have also included contactless processes for vehicle collection with allocated collection times to ensure social distancing on sites. These measures meant bidders were able to safely collect their vehicles throughout lockdown.
Rising prices on written off vehicles
Like others in the salvage market, e2e Total Loss Vehicle Management [e2e] has been seeing the highest auction returns on salvage vehicles during the course of the pandemic. This can be directly linked to supply and demand. Reduced traffic on the roads during lockdown led to less total loss claims and fewer salvage vehicles available. In contrast, demand for CAT N & S salvage vehicles that can be bought, repaired and sold on not only continued but increased, fuelled by economic uncertainty. Similarly we believe concerns and uncertainty around the supply of parts, both Original Equipment Manufacturer [OEM] parts and after market, has driven up demand for salvage. We have also seen strengthening values for ferrous scrap metal.
It remains to be seen what the future holds in terms of auction performance post COVID-19. At e2e we are largely protected from the rapidly approaching Brexit factor impacting our auction performance as 90 % of our bidders are UK based. The combination of Brexit and COVID-19 may create significant challenges for the international collection and/or delivery of salvage vehicles which may affect buying appetites abroad.
Recycled and refurbished parts
Every salvage vehicle has a value, either sold as a whole or broken down into reclaimed parts with the remains put through a crusher and sold as scrap metal. In the UK we are fortunate that insurers have the opportunity to adopt different approaches according to their strategy and market conditions in order to realise maximum salvage value. This is because some salvage partners focus on the resale of vehicles, while others can provide options including resale or, breakdown for reclaimed parts and scrap metal. If the predicted global second wave of COVID-19 hits then vehicle parts supply is going to be further challenged. In this environment breaking the salvage vehicle for reclaimed parts may realise significantly more value than re-selling it – but safe dismantling of vehicles so that parts can be reused without damaging them isn’t an easy or straightforward task.
Because members of the e2e Total Loss Vehicle Management [e2e] network are vehicle professional recyclers, as well as salvage agents, they are equipped and skilled to break a vehicle for reclaimed parts. Through our network, e2e is the largest supplier of reclaimed parts in the UK with stocks of 5M+ quality tested, provenance documented and warranty assured parts available.
The wider effects of COVID-19 has seen many consumers become more focused on their personal finances. It will be interesting to see whether demand increases for reclaimed parts to make the repair of borderline total loss cases economically viable. Public attitude to the use of reclaimed parts by insurers is improving and the ability to choose whether their vehicle is written off or cost effectively repaired with quality checked reclaimed parts could be well received at this time. A reinstated vehicle avoids the inconvenience and potential expense of finding a replacement and the potential virus risks associated with a private sale where a vehicle may not be properly sanitised.