Diving Deeper into Factors Impacting the Auto Auction Industry

The life of a marketing professional is more than brainstorming campaigns, managing projects and reporting on analytics. Although those are certainly critical elements of marketing, there’s another aspect of a marketer’s role that’s often overlooked: keeping up with trends affecting the industry.

In the world of auto auctions, for example, we routinely monitor scrap metal pricing to better understand the purchasing behavior of our business buyers.

Other outside factors we assess, besides scrap metal pricing and crushed auto bodies, relate to increased auction supply. They fall into two categories:

  1. Higher Accident Frequency

With the average gas price hovering around $2.28 per gallon and the unemployment rate having dropped to an eight-year low of 4.9 percent (according to The Bureau of Labor Statistics), more people are hitting the roads.

Low fuel prices and increased employment levels are, for the average person, nothing to complain about – except when you consider that this combination means more miles being driven, leading to more auto accidents.

  1. Higher Repair Costs

It goes without saying that older vehicles are often more costly to repair than they’re worth. With the percentage of 12+ year old vehicles on the road having increased year over year – and projected to increase by 15 percent by 2020 – there will continue to be an increase in total losses, and therefore, more units available for auction.

In addition to the increased percentage of older units on the road, there’s also been an increase in the percentage of 1 to 5 year old vehicles on the road. Why is this significant? The greater complexity of new cars from exotic and lightweight construction, sensors, cameras and other electronics push vehicles past their repairable levels. As with the older vehicles, the newest vehicles become so costly to repair that they’re deemed totaled and go to auction.

In summary, accident frequency (due to more miles driven) and repair costs (due to the types of vehicles driven), are two of the many factors that my Marketing Team and I investigate when analyzing the market’s impact on our inventory volume, average sales prices of units, and ultimately, returns.

Food for thought: What are two factors that impact your business or industry that you haven’t yet had a chance to dive into? This week, I encourage you to set aside time to research those factors and their impact on supply, demand and your bottom line. You might be surprised what you find!

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