With a run on the auction – Newspaper Kommersant No. 228 (7429) dated 12/08/2022
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Used cars in 2022 have become more often sold and bought at auctions. Interest grew amid a shortage of new offers – the used car segment declined by only 20% against the backdrop of a 60% drop in new car sales. Auction sites speak of a growing interest in buying cars from dealers to replace the trade-in channel. At the same time, the surge in supply was ensured by the massive sales of corporate fleets and the desire of individuals to quickly sell the car. Analysts note that these two factors are situational, and taking into account the practice of levying VAT on transactions between legal entities, the market will slow down in 2023.
In 2022, the used car auction market in Russia grew by 40%, according to the Carlink auction site. The largest growth was recorded in the segment of passenger cars – by 20%, or 3.3 thousand units, as well as commercial vehicles – by 15%, or 900 units. The number of auctions for trucks and special equipment increased by 5%, or by 135. The company believes that the market development drivers include the shortage of new cars.
According to the results of ten months, the market for used passenger cars decreased by 21%, to 3.9 million cars, follows from the data of Avtostat. At the same time, the dynamics in the segment are much better than in the new car market, the rate of decline of which exceeds 60%, and sales for the year will amount to about 666 thousand units (see Kommersant of December 7).
“Against the backdrop of a drop in trade-in, which has always been the most attractive source of used cars for a dealer, the share of auctions is growing,” says CarPrice Development Director Kirill Ivanov. He notes that dealers cut their buyouts at the beginning of the crisis. “In March, everyone invested in iron at the peak of the course, then for several months they did not know what to do with cheaper iron,” Mr. Ivanov explains. “All this was intensified by the mass exits of Western manufacturers, which paralyzed official dealers for a long time. But since the summer, demand has been recovering, and although the mobilization gave a new shake-up, it did not significantly affect the market dynamics, and the recovery continues.”
Director of Avilon. Used cars” Nikolai Baskakov notes that auctions are one of the ways to replenish stocks. “In the car market, it is now used an order of magnitude more often than a year ago. And it’s not about the bankruptcy auction, which involves a small number of dealers. The main auctions are from leasing companies, from Avito, Avto.ru, importers and others,” he explains.
From January to October 2022, sales of used cars by individuals decreased by about 10%, and car dealers are looking for new ways to replenish their warehouses, Anton Muschinsky, head of the Auction division at Fresh Auto, said. Most of them become participants in popular auctions or organize their own. “Before the events of February 2022, the trade-in program was the main channel, but after the majority of foreign automakers left the Russian market, there was a shortage of new cars, so the owners are in no hurry to part with their existing cars, as they are not sure that they will be able to purchase a new car due to regular price increases. Until this year, about 10–20% of dealers took part in auctions, now it is up to 60–70%,” concludes Mr. Muschinsky.
One of the drivers of the auction market was also the sale of vehicles of retired foreign companies. “Many fleet companies have revised their transport policies. Some reduce the number of vehicles in use by switching to corporate taxis, others reduce their business, and still others leave the market,” Carlink notes. However, park owners with stable businesses are in no hurry to renovate outdated parks.
But CarPrice says they do not see an influx of cars through this channel. The company talks about the growth of individual customers selling the car “because they need money”: “Even during the pandemic, this was not the case.” In addition, against the backdrop of mobilization, they recorded an increase in the share of the premium segment – more than 3 million rubles, says Kirill Ivanov: “This is understandable, because people were leaving in a hurry. The most stable was the segment worth up to 1.5 million – it was not affected at all by the news. “In 2023, we expect continued growth in transactions in our segment,” says Carlink CEO Denis Remizov.
Sergey Udalov from Avtostat notes that in 2022, the growth of interest in auctions was facilitated by both the desire of some individuals to quickly sell the car, and the massive sales of corporate fleets. Both factors are situational, he notes. In Russia, one of the problems for the stable growth of interest in auctions remains the collection of VAT on transactions between legal entities, the analyst says. We are talking about the fact that the second legal entity must pay VAT on the full cost of the car, and VAT is charged only on the difference between prices (see Kommersant dated July 5, 2018). “Continued active growth in sales at auctions in 2023 is possible only at the expense of individuals, but it will no longer be massive without a new “trigger,” concludes Mr. Udalov.
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