The Seller’s Market – When Demand exceeds Supply
I have fielded many calls over the last few months from disgruntled buyers saying “where are all the cars?” or “I can’t believe how high the prices are!” Well these inquiries are actually a cause and effect phenomena. The pandemic has caused a huge shortage in vehicles and equipment on the market causing prices to skyrocket. If you have something to sell, now is the time!
At North Toronto Auction (NTA), we feel the effect of this as well. For differing reasons, our main consignment sources have been affected by the pandemic causing a trickle-down effect and limiting the number of assets being offered at auction.
One of our main sources of consignment is our many government and fleet contracts. On any given month you will see surplus fleet vehicles from entities such as the Province of Ontario, City of Toronto, Hydro One, Toronto Transit Commission or Metrolinx. All of these fleets trust NTA to sell their consignment in a transparent setting. But the pandemic has caused strain on their fleet management. Staffing issues with closures have affected their operation, auction destined vehicles have been redeployed for emergency use, and the Factories making new cars and equipment were closed; causing delays in receiving their new replacement vehicles. This has led to the fleets having to keep their existing vehicle far longer then normal and sending less to the auction.
Another of our consignment sources is finance repossessions. We work with many institutions to auction assets that have been repossessed due to failure in payment. You might think that in a struggling economy repossession numbers at the auctions would increase. However, many lenders are working with customers through these tough times. Lenders are repossessing less. This has caused a decrease in these volumes, and a strain on supply.
Finally, our thousands of dealers who consign trades and aged inventory on weekly basis have really been affected. Their dealerships have been restricted through government closures; the new car stores haven’t received their 2021 models causing them to lose valuable business. In survival mode, many dealers have been retailing vehicles they would typically send to auction. Again, auction volumes lower and the demand increases.
As we progress in 2021 and things hopefully open back up, volumes will return. We have seen it starting already. But in the meantime, it is no doubt a seller’s market. So, if you have stuff to sell, take advantage. They don’t come around like this very often.Thanks for reading, Matt