Insurance Edge wanted to find out how the post-lockdown increase in demand for cars, new and used, plus the return of traffic jams to UK roads, has affected the salvage market. Who better to chat to than Jane Pocock, UK & Ireland MD at Copart.
IE: Let’s start with salvage car values, what’s the latest trend across the UK?
JP: During the lockdown it was a turbulent time, some breakers and repairers closed, while some others, including many of our members, had more time to complete car repair projects. With the UK roads experiencing less traffic there was inevitably less accidents and therefore supply reduced and demand increased. More people also had more time to join the auctions, and to pre-plan their purchases, so it has been a very busy time for us.
There has also been a national preference to buy less new cars and opting for nearly new cars instead, this market has been really strong for both traders and consumers. That demand has a knock-on effect on salvage values of course, so although brand new cars lose a big percentage in value in say the first 18 months, the value that a repairable example might have has generally increased as used car prices have risen.
IE: Has there been a trend towards, for example, prices on prestige vehicles rising rapidly?
JP: It’s across the board. All cars are making strong money. Even relatively modest family saloons have been fetching high prices, depending on the mileage, category of repair and so on. One thing we have noticed is that some people are thinking `if not now, when will I buy my dream project car?’ So yes, there is a little bit of that happening right now.
IE: Has the transition for Copart from in-person auctions to online been quite a smooth one?
JP: Unlike other auction houses, Copart has only ever been an online auction, so this is one area where fortunately we were not impacted. We have been running a digital auction for a decade now so our technology in this area is well established and constantly evolving. Our vehicles are available to view for some time before the auctions commence, with many HD quality images and a comprehensive vehicle description, so physical viewing is no longer necessary. The sophisticated member portal allows buyers to search, view and add to their watch list whilst narrowing down exactly what it is they want in terms of car spec, features, extras, trim levels etc. and research it – then they bid. Followed by booking a slot for “click and collect” or arranging a delivery. We spend much more time delivering cars to customers now. That’s a service which has really taken off and thanks to having ownership of a large transporter fleet we can quickly adjust to mixing vehicle collections and deliveries.
IE: So, do you think this will eventually to lead to more delivery drop-off and storage facilities across the UK?
JP: Yes inevitably, through necessity, Covid has created a culture of deliveries to both homes and workplaces and therefore I see this service being maintained indefinitely. All areas within the automotive industry will be adapting to new protocols and I do think that people don’t want to spend time travelling long distances to collect cars, so more regional collection points, where contactless handovers can be carried out, are very much the way ahead. Like I said before, Copart have already considered these eventualities and have adapted their fleet to cater for this. Expansion of existing and completely new operation centres is also on the agenda.
IE: What is the one thing that’s really shortened the salvage auction process this year?
JP: In the US we have video viewings. A walk-around video with a smartphone, with a quick look inside and under the bonnet really tells its own story. That has increased our number of bidders overall, and gone some way towards driving prices up, as there is more competition for in-demand cars. Serious buyers watch the video and then bid – they don’t hang about! This functionality is being tested in the UK now.
IE: How can insurers and brokers tell a more positive story on green parts, because this is a way to save resources?
JP: This is a complex area, lots of factors at play around prevenance, inventory management, timely availability, courier services and fitment times versus new parts. All are being constantly evaluated and the opportunity is improving all the time. However, the opportunity is still very limited to non-safety related parts and very timely to this conversation, a more specific parts replacement guide has recently been published by Thatcham. It is definitely an interesting concept as everyone wants to behave in a more responsible and greener manner, but there is a balancing act with safety, policy holder approval, future liability and keeping on top of the manufacturers over the continuous evolution of in-car technology and post-accident calibration. Once provenance is resolved and sales sites have integrity checks on their sellers, ensuring they are not trading stolen parts, then more opportunity exists.
Where we have seen a growing requirement for green parts is in the fleet market and where the vehicles are owned by a commercial entity, there is a large carpark of identical vehicles which are often liveried and the ability to plug and play with parts is much more easily manageable. Copart has definitely seen an upturn in demand this summer, increased by the fact that normal parts supply chains have suffered various Covid-related problems.
IE: Interesting stuff, thanks for your time.