Car auctions
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
1.1This section applies to premises constructed for use as car auctions, either converted from a former industrial use or purpose built.
2.1List description: Car Auction and premises
SCAT code: 038 SCAT suffix: S Primary Description Code: CX
3. Responsible Teams
3.1Specialists within each Unit will be responsible for the survey, valuation and assessment of Car Auction premises in this specialist class.
3.2For Reval 2017, it is anticipated that each unit will have a named individual responsible for the class.
3.3It is then recommended that each Unit should allocate a named co-ordinator, or Lead Valuer, to act as a point of contact within the Unit. This Lead Valuer will be responsible for assisting in the delivery of the valuation scheme and also for liaising on value and technical issues with other Lead Valuers across adjoining Units.
4.1The Car Auction class co-ordination team has overall responsibility for the co-ordination of this class. The team are responsible for overseeing the approach to valuations of car auction premises. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers have a responsibility to:
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follow the advice given at all times – Practice Notes are mandatory
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not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
5.1 The use for planning purposes is usually sui generis.
6.1Car Auctions should be measured to gross internal area (GIA). An inspection checklist is provided at Appendix 1.
6.2Scale VXWCARAUCT1 must be used.
6.3Internal and external photographs are mandatory and should include images of all main areas including the auction hall(s), offices, workshops, cafe, prep / valet areas, viewing gallery, any P&M and vehicle storage including open sided viewing shed and external land areas.
6.5 Air Conditioning
6.5.1 The approach to air-conditioning remains unchanged for Reval 2017.
6.5.2 Air-conditioned areas need to be identified separately on the survey. Details of Air Conditioning systems should also be noted. Air-conditioning to be added as a 10% addition to the line entry, using an air plus adjustment code. The beacon characteristics for air conditioning should be set to partial if the whole property is not air conditioned.
6.6 Quality
6.6.1 Adjustments should not be made for quality other than in exceptional circumstances. For instance where the auction hall remains original, but the cafe and ancillary parts have been heavily upgraded, rebuilt or renovated - an uplift may be required.
6.7 Viewing Sheds
6.7.1 Where these tend to be open sided, the areas should be captured as CNP. This will attract the appropriate relativity, without further adjustment being required. If enclosed, the area should be captured as WKS.
6.8 Auction Hall
6.8.1 The main auction hall (or halls if more than one) should be captured as RAO to attract the appropriate relativity of 150%. It is normally the case that an area of elevated seating will be evident together with an elevated platform for the auctioneers and associated team. Increasingly, information about the bidding will be displayed on large screens nearby - including where bids are being received from outside the auction hall (e.g. live online bids).
6.9 Office Areas
6.9.1 Offices in car auctions are generally a mix of customer reception / cashier bays, administration offices and meeting rooms. Most office space tends to fall into one category and space is described as ANO ancillary office, attracting a relativity of 125% main space rate. Where there is significantly better quality office / customer space - for example VIP lounge areas, it would be appropriate to capture this as OFF.
6.9.2 Some new auction sites include a viewing area for clients which may be of a similar quality to the office space. This should also be treated as ANO / OFF as appropriate.
6.9.3 If workshop offices (OWK) are simply partitioned from the workshop then they should be captured as part of the workshop GIA.
6.10 Land
6.10.1 Land is a fundamental requirement of any car auction use. This is the main factor which limits the potential throughput of a site. It is required for displaying cars to be auctioned, for holding vehicles in transit prior to preparation, prior to being allocated a lot number for a sale, for holding unsold and sold stock post sale, and for customer and staff parking. The land value is a significant item within any car auction valuation.
6.10.2 All land on site, excluding any landscaped space and net of buildings, should be captured as an Other Addition and valued adopting a price per square metre.
6.11 Car Washes
6.11.1 In the unlikely event that the site possesses a fixed car wash, such the facilities may vary substantially in terms of quality from rollover brush systems, as often seen at petrol filling stations, down to drag through vibrating ‘curtain’ type systems.
6.11.2 Where a separate Car Wash is present it should be recorded. The rateable Plant and Machinery should then be considered in the usual way and recorded as Plant and Machinery. This includes settings and drainage.
6.11.3 Valet bays located in workshop type buildings should normally be captured as WKS.
6.12 Plant & Machinery
6.12.1 Details of any items of Plant and Machinery present should be noted and identified on the survey in the usual way. Air Conditioning and Car Washes are referred to above, but items such as CCTV cameras, fire protection systems, sprinklers, inspection pits and air compressors may also exist. Most auction premises will have CCTV systems and many may have an air compressor/receiver and these should be recorded accurately.
6.12.2 For rateability and valuation, reference should be made to the 2017 cost guide.
7.1Rating Surveys should be captured on RSA and plans and surveys stored in EDRM.
8.1The rental method is the appropriate method to be adopted. There is rental evidence available and once adjusted such evidence can be analysed on a £/m2 basis. The relevant rental adjustment practice note in the Rating Manual, Section 4: Part 1 provides guidance on rental adjustment.
9.1Valuations for car auctions are made on the rentals comparison basis where the comparator is area (in m2). All valuations should be carried out using the Rating Support Application (RSA).
Appendix 1
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CAR AUCTION - INSPECTION CHECKLIST
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Occupier |
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Address |
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Location main road, industrial estate, adjoining industrial premises |
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Rental details including basis of rental calculation – for example OMV, % build costs etc |
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Car Auction Type See PN Rating Manual section 6 part 3 - section 206 1 Type 1 - Main operator modern purpose built facility. 2 Type 2 - Independent refurbished / converted facility. 3 Type 3 - Small Independent |
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Land - Area (excl landscaped) See Rating Manual section 6 part 3 - section 206 LFH (m2) LFG (m2) |
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Building External |
Built: Age |
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No. of floors |
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Construction |
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Other points
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Building Internal
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Refurbished: |
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Fit out including quality: |
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Viewing Shed Open sided? |
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Lifts Type manual/automatic, goods, passenger, staff/ customers, capacity, floors served Extent and Quality |
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Cafeteria? Y/N VIP areas? |
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Services. Fire Precautions. Security |
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Air Conditioning (age) Cassette or ducted. Purpose. Extent of area covered. Heating. Fuel. System |
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Plant and Machinery including age make and output specification |
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Client services offered? : Logistics, Preparation, Repairs, Online, Stocking Plan, Warranty offer Driveaway Insurance
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General Remarks Eg disabilities unusual features |
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Date of survey |
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Survey by: |
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1. Market Appraisal
1.1 Since 2015 the car auction market has continued to adapt and mature, with significant investment in new large sites and facilities, together with continued acquisitions and consolidation amongst the operators in the market. Smaller operators in the market have also continued to expand, also forming partnerships with established car supermarket operators.
1.2 Market reports published by car auction operators in Q2 2021 indicate a significant increase in remarketing activity, sales volumes and competitive bidding across all sales platforms, in comparison to Q2 2020. The expectation for continued growth in the market in 2021 has seen car supermarket and dealerships particularly competing strongly for vehicle stock, to ensure pent up demand is met.
1.3 Operators continue to innovate and adapt utilising technology in the market, with live market data and valuation tools changing how the businesses engage with their customers. This includes click and collect tools, self-appraisal tools and robotic process automation. Operators have also begun partnering with mainstream lenders and introducing new payment services using online and mobile technology, enabling seamless and faster transactions for purchasers, making purchasing easier.
1.4 Equally there has been significant investment in drawing together the digital offer with physical sites, with adaptations to hereditaments to help customers engage digitally whilst on site, including adding digital pods to auction halls.
1.5 Operators are also still busy trying to attract increasing numbers of public and trade clients with improved facilities such as on-site restaurants and gyms, whilst constantly looking to identify new sources of vehicle supply from dealer groups, fleet operators and private individuals. Operators have also seen substantial contracts renewed in the business leasing arena, incorporating a range of services provided such as vehicle remarketing, inspect and collect services and fleet management.
2. Changes From The Last Practice Note
2.1 The market appraisal and valuation scheme sections have been updated.
3. Ratepayer Discussions
3.1 At the time of writing no revaluation specific discussions have taken place.
4. Valuation Scheme
4.1 There is no formally agreed scheme for 2023. Car Auctions are valued in accordance with the Rating Manual: Section 6 – Part 3: Section 206 – Car Auctions.
4.2 The Transport Class Coordination Team (CCT) provides the following valuation guidance in respect of car auctions. This guidance does not replace market evidence and does not take account of local conditions. Each valuation and case should be considered based on its own individual circumstances.
4.3 Revaluation 2023 valuations should generally be calculated utilising the local industrial tone for buildings of a similar age and size, with the published car auction relativities then applied to reflect the auction mode and category of use. Land is to be valued as Other Additions, as advised in the Rating Manual.
4.4 If directly comparable rental evidence of car auctions is available, then it is pertinent to consider that evidence. Caution must be applied as rents may be geared to the volume of car auction sales (derived from complex financial arrangements), comprise sale and leaseback transactions, or be founded upon a mix of office and industrial values from the locality. There are, however, several open market rental value transactions.
4.5 Land is a significant enabling factor in the use of property such as a car auction. Site coverage at car auctions is typically much lower in comparison to standard industrial hereditaments. This is usually due to the amount of land required and therefore, where possible, it is appropriate to move away from local land values, which are usually ancillary to industrial buildings. It is prudent to source evidence of the same mode or category of occupation.
4.6 Whilst it is critical to source directly comparable evidence to comply with the rating hypothesis, it is appropriate to consider and establish local land rental values. This is in respect of land of a similar size and quality in order to understand backstop and minimum levels of value achievable. If directly comparable evidence indicates a higher level of value is achievable for the car auction use, then this evidence should be fully considered and investigated.
4.7 Where particularly poor areas of land exist, such as where the surface is unmade (for example, rough surfaced fenced land) it will usually be appropriate to adopt a lower price per acre / per sq. m. but not one that is below local industrial storage land values of similar quality. Values ascribed must always be evidence-led.
4.8 Land areas of significant size are not expected to attract quantum allowances. It is generally considered that the more land, the greater the potential throughput and greater the potential income of a car auction site, notwithstanding any particular operator’s business model.
4.9 In terms of survey capture for land, it is essential to identify the full extent of the site being valued (gross land area). It is also crucial to identify the different surface types and the extent of those surface types in respect of each site. From the gross land area, the ground floor footprint only of buildings on site should be deducted. Unusable and landscaped areas should also be deducted. If utilising local evidence to inform an opinion of value, then it is critical to understand how each local Regional Valuation Unit (RVU) devalues relevant comparable evidence; this is required to ensure that values are ascribed as per the devaluation of relevant evidence. This is particularly important when considering the base rate adopted on buildings at car auction sites, as local building values may, inherently reflect a level of value associated with land – for example, customer and/or staff parking and circulation space.
1. Market Appraisal
1.1 The car auction market has been progressively maturing over the last 10 years. The business is becoming increasingly professionalised and “remarketing” (car auction operations) are attracting increasing numbers of public and trade clients with improved facilities. This is partly driven by warranty /assurance products included as standard on some of the vehicles sold.
1.2 NAMA, (the National Association of Motor Auctions) who are the primary trade body for this business activity, have recently been quoted as saying, “UK motor auctions sell 1.4 million vehicles per year. NAMA members sell approximately 90% of all vehicles wholesaled in the UK.” and this figure is increasing.
1.3 There has been significant property investment in the remarketing industry, not just by the established largest players, (e.g. Manheim and BCA) but also by some of the large independent operations
1.4 Scottish operator SMA also recently started operating from its new, purpose built facilities in the Midlands at Bilston in 2011 - another notable investment in auction facilities.
1.5 The sector is also growing due to the change in the channels which feed the auction market. Previously stock came from dealers and fleet in the main, but a rapidly changing digital environment has altered the business model.
1.6 As auction houses increasingly adapt to a “quasi digital” environment, where live online bids are received for vehicles which are physically moving through the refurbished auction halls, the small scale independent auctions are becoming much less evident in the market. Add to that the suite of services and products available via the larger sites (logistics, inspections, repairs etc.) and it becomes clear that the number of smaller auction facilities will continue to reduce.
1.7 Manheim UK chief executive Michael Buxton told Motor Trader, “we gained a controlling stake in wewantanycar.com in 2013 to help push more cars through its auctions. Wewantanycar.com contributed about 20,000 cars to our auctions in 2014. We will probably grow this by 50% to 30,000 in 2015. It is another customer segment for us.”Buxton added, “Our online sales channels represent one in three cars sold today. Even if you look at January and February this year compared to last year our online sales are up 34% year on year”.
1.8 Notably, Manheim rival, BCA, recently bought the market leading webuyanycar.com to boost its auction volumes. Webuyanycar.com acquired 120,000 vehicles for BCA 2013.Operating from more than 200 locations across Europe, BCA claims to be more than two-and-a-half times the size of its nearest competitor. It said last autumn that over the three-year period to the end of 2013, BCA saw revenues rise 74% to £442.3m, with adjusted pre-tax profit growing by 27% to £62.5m.
1.9 More than 900,000 vehicles were sold using BCA in 2013, with 37% of those transactions taking place online, highlighting the growing importance of digital channels in the sector. [£486 revenue per vehicle]
1.10 As at June 2015, BCA confirmed that it has bought SMA. The group had physical centres in Kinross, Edinburgh, Birmingham, Newcastle and Leeds and owned property valued at £20m, (Source: Motortrader.com article 1/6/2015). Such acquisitions will further alter the profile of the car auction sector and is another sign of the industry maturing.
2. Changes From Last Practice Note
2.1 This is the first practice note for the class. However, following previous discussions with a small number of agents, a basis was formulated for the 2010 List and this practice note simply consolidates current practice.
3. Ratepayer Discussions
3.1 None
4. Valuation Scheme
4.1 There is no formally agreed scheme for 2017. Car Auctions are valued in accordance with the main RM section at Rating Manual section 6 part 3 - section 206.