7:30 am, October 6, 2024
If you’re tired of making small profits, perhaps it’s time to go big.
Motorhomes offer dealers much greater profit margins than cars, but there are bigger risks too. In addition to all the mechanical parts which can go wrong with any vehicle, you also have many of the risks you’d get when buying a house. That includes boilers, bathrooms and the biggest issue – damp.
These potential problems put off many dealers, and they are especially unlikely to buy ‘blind’ from an auction.
This has led to one company developing a way to make it easier to trade in motorhomes using a unique way of wholesaling – complete, unvarnished honesty.
CMS Auctions has been trading since 2007 and sources its stock online. It now sells around 800 motorhomes every year exclusively through BCA.
The company does not sell directly to the public at all and is geared to quick turnaround with 99% of the lots sell first time.
Buying stock in this way means there are inevitably some lemons among the peaches, but potential buyers are left in no doubt which they are biting into.
CMS’ managing director Shane Malpass explained his unusual strategy: ‘The big change for us as a business came when COVID hit and we were forced to go online only. I realised that I would be very nervous about buying a motorhome myself from the auction, blind.
‘I’d been reading a book by a guy called Marcus Sheriden which said that if you can build trust with a customer they will keep coming back, so I decided we’d do transparent reports and detailed walkaround videos of all our stock.’
The videos are typically around two minutes long and aim to show the layout and specification along with every ding, dent and damp patch. They are accompanied by a written report with pictures.
The method worked well and has continued to be popular even though the physical auctions are now back.
‘The prices went crazy in lockdown but we knew it wouldn’t last forever so we wanted to do a degree of futureproofing. I needed to make sure we had a healthy business when it all got back to normal,’ Malpass added.
‘We had three staff pre-Covid and were trading 12 to 15 vehicles a month. We now have more than 30 employees and sell more than 80 a month at moment.’
Shane Malpass
Malpass says that his policy of being 100% honest with buyers does have a negative influence on the prices, with traders naturally adjusting downwards to make up for any repairs needed.
However, this is often offset because dealers will pay more for a vehicle, they know has had a transparent description. Then, with more buyers becoming confident of buying ‘blind’, more bidders will compete for the motorhomes.
Malpass added: ‘We took a bit of a hit at first but soon the dealers learned that they could trust us and now our prices are noticeably higher than the other motorhomes in the same sale.
‘There are some dealers who will now only buy our stock.’
Traders who still want to physically see the stock are encouraged to come along to the viewings which are held on the Friday before the sales, which are every two weeks at BCA’s Nottingham site.
A typical sale will have between 165 and 200 bidding remotely with a lot of people seemingly prepared to trust the CMS reports.
Malpass said: ‘We used to have the dealers complaining when they couldn’t physically see the stock. Now we have trouble persuading them to leave the office!’
How do the margins compare?
When it comes to selling motorhomes, the margins are certainly attractive. In fact, it’s not uncommon to double your money, especially on the older stock.
A 2006 Compass Suntor 150 recently sold for £9,900 at the auction and two comparable versions on Auto Trader are currently advertised at £19,995 and £21,999.
Newer models seem to command a £10,000+ margin on average. For example, a 2013 Bessacarr E464 sold for £26,800 while a dealer is asking £39,995 for an identical example.
Similarly, an Auto-Sleeper Fairford sold at £52,400 and can be found online for £68,995.
As you might expect, the market is seasonal, peaking in the spring and before big music festivals.
‘It starts to pick up from January and gets stronger as the year goes on,’ says Malpass. ‘You get to October and then you are done for two or three months.
‘It even gets slow for us buying. Everyone seems to park them up and then think about selling in the new year.’
What do you need to know?
For car dealers making the switch, there is a whole new world of information to absorb.
Most of the motorhomes in the sales are ‘coachbuilt’, meaning they have a recognisable van’s cab with a habitation area mounted on the rear chassis.
There are also campervans which use a converted body of a panel van, and ‘Type As’, which have an entirely new body built onto a commercial vehicle chassis.
There are also desirable options such as bike racks, gas points and self-levelling, plus different interior layouts which affect the desirability.
Weights are also important. Drivers who passed their test after 1997 will need to take another test to drive a motorhome which is over 3500kg.
Anyone over 70 will need to have a medical to have the entitlement renewed. This means stock which is below this threshold is popular with buyers.
Brands are important too. Just like with cars, they differ in quality, with the Germans generally building them better. This can be crucial as it means they won’t leak, even after a few years of flexing as they are driven.
Once damp has got into the wooden structure of a motorhome it can cost thousands to put right. The tell-tale signs are ‘pimpling’ or blue staining of the interior surfaces, or soft areas of rotten wood.
As this is not of the faint-hearted, Malpass recommends beginners should try a few larger campervans first, as these have very few damp problems, espically from brands approved by the National Caravan Council.
The Volkswagen Transporter based models are the most common, but the unofficial conversions are difficult to price as there are many ‘homemade’ examples with an infinite number of accessories and modifications.
Even so, that’s a tidy profit which most dealers could only dream of making on a car.
And there’s an added advantage of trading in motorhomes – you can sit inside your stock and make a cuppa…
