Rating Manual section 6 part 3: valuation of all property classes

Section 206: car auctions

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

1.1This section applies to premises constructed for use as car auctions, either converted from a former industrial use or purpose built.

2. List Description and Special Category Code

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. Co-Ordination

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:

  • follow the advice given at all times – Practice Notes are mandatory

  • 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. Survey Requirements

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. Survey Capture

7.1Rating Surveys should be captured on RSA and plans and surveys stored in EDRM.

8. Valuation Approach

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. Valuation Support

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

 

 

Occupier

 

 

 

Address

 

 

 

Location  main road, industrial estate, adjoining industrial premises

 

 

 

Rental details including basis of rental calculation – for example OMV, % build costs etc

 

 

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

 

 

 

Land - Area (excl landscaped)

See Rating Manual section 6 part 3 - section 206

LFH  (m2)

LFG (m2)

 

 

Building External

Built:

Age

 

No. of floors

 

 

Construction

 

 

 

Other points

 

 

Building Internal

 

Refurbished:

 

Fit out including quality:

Viewing Shed

Open sided?

 

Lifts  Type manual/automatic, goods, passenger, staff/ customers, capacity, floors served  Extent and Quality

 

 

 

Cafeteria? Y/N

VIP areas?

 

 

Services. 

Fire Precautions.

Security

 

 

 

 

 

Air Conditioning (age) Cassette or ducted.

Purpose.  Extent of area covered.

Heating. Fuel. System

 

 

Plant and Machinery including age make and output specification

 

 

 

 

 

Client services offered? :

Logistics,

Preparation,

Repairs,

Online,

Stocking Plan,

Warranty offer

Driveaway Insurance

 

 

General Remarks

Eg disabilities unusual features

 

 

 

Date of survey

 

 

Survey by:

 

Practice Note : 2017: Car Auctions

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.