2011 is now well and truly behind us and it’s worth looking back at the last 12 months, and at the same time, try to glean what 2012 will hold for the auction industry.  There’s a good and bad side to everything.  Last year showed us a bit of both, as did 2010, and there’s no doubt that this year will be no different.  On the bad side, we predicted almost two years ago,  being realistic rather than pessimistic, that the outlook would remain gloomy, as evidenced by October’s liquidation and insolvency reports. 

The number of business liquidations has risen consistently since June, indicating that businesses are clearly struggling to cope in the current economic climate.  Threats of global recession will impact on the domestic economic activity going into 2012, and signs indicate that the total number of liquidations will rise.The downside of this is obvious, but there is an upside. 

 It brings stock onto the market at prices which allow small entrepreneurial businesses to get off the ground or to augment their existing equipment, at prices which they generally wouldn’t be able to match elsewhere.   It’s gratifying to see the excitement from buyers who are bidding for stock, especially return buyers whose businesses are showing great results.

As the saying goes, what goes up must come down and the converse also holds true.  While some sectors performed particularly well, others declined.  Thanks to our diversification we see the swings and roundabouts balancing out for each division - while certain divisions peaked last year, others will certainly have their turn in time.

Across all divisions we saw a key trend of buyers looking for quality rather than quantity.  This is specifically prevalent in trucking where buyers for long range truck tractors request very precise specifications on units that they buy.  Another factor for this is defleeting, as over the last couple of years with effects of the economic downturn becoming more apparent, large fleet companies have extended the life of their fleets and are releasing older year models with higher mileage onto the marketplace. 

 A very similar trend has made itself seen on the construction and yellow metal side - holding onto units for longer, working them harder.  We’ve seen consistency in smaller delivery type trucks where price points have been relatively good for sellers.Motor vehicles have ridden the decline as the volume of repossessions has clearly come down with banks working with closely with clients on repayment plans and debt reviews. 

Again, there has been good consistency on the fleet side, both from a volume and quality perspective, specifically through the Debis fleet, where we are still seeing strong demand.  Supercars still very much category leaders.  There has been a decrease in price points which can be noted not only on the auction floor but in the trade arena, which is 10 to 15% down on the previous year’s prices. 

Obviously certain desirable units still attract strong interest, and always will, where the price point remains strong.  We’ve also seen a new trend coming into play where individuals in possession of supercar- type vehicles are utilizing these assets for liquidity.   We believe this trend will continue.  Liquidations or repossessions should be seen as a last resort, and cash flow issues at both individual and company level will result in liquidation of high-end assets, giving a cash-flow injection which may very well result in a financial turnaround.If we have to drill down into our sectors, the biggest spike has been in woodworking. 

In today’s economy, furniture is considered more of a luxury item, and consumers are holding onto their furniture for longer rather than upgrading it.  The volume of stock that retailers are pushing is not as high so the furniture manufacturing industry has taken a hit, and coupled with recent strikes in the metalworking sector, has had a clear detrimental effect on the market at large.

Engineering and processing falls within the same category as woodworking, and we’ve seen a clear decrease in the asset value of metalworking equipment, which is down by 20 to 25%.  We imagine there will be a number of closures and liquidations in this sector in the new year, but again, every cloud has a silver lining.Our catering and hospitality division has seen a number of assets from restaurants and smaller take- away players coming to the auction floor.  This favours buyers attending these sales as they are acquiring assets at low price points. 

Demand for brand name equipment is still very keen, pointing again to buyers seeking quality rather than quantity.  Our mining division has seen an exponential growth in the number of auctions held in 2011 compared to the year before.  A large quantity of crushing and plant equipment came to market, which from an auction market value saw great returns.  Sales of surplus and redundant machinery and equipment were also robust - buyers understand that to replace a piece of equipment today could be multiplied three or four times over on the open market. 

At times we found feverish bidding for redundant scrap on the mines but this was very dependent on the scrap metal market price at the time.However, with the bad comes the good, and for us, the good has been great.  On the property side, our acquisition of a 50% stake in The High St Auction Co. saw the merger of Aucor’s property division with The High St Auction Co. 

Thanks to the substantial expertise and experience that both parties bring, we envisage this venture bringing a powerhouse to the auction market that will take property auctions to heights never seen before, and to ensure the long term commercial sustainability and profit of the business in this sector.Our strategy internally has been focussed on finding and securing leading industry specialists who have an in-depth knowledge and understanding of the sectors in which we work. 

 In line with the growth and development focus of Aucor’s new shareholders, our future strategy will bring companies with specialised industry knowledge into the Aucor fold, either via mergers or acquisitions. Our sponsorship of golfer Jaco van Zyl is paying dividends.  His world ranking has skyrocketed from 402 at the beginning of 2011 to 105 by the end of the year, and we’re watching his progress keenly.   

The recent Star Reader’s Choice awards voted us as the number one auction company in Gauteng, so we’re clearly doing something right.  This public recognition is a great vote of confidence in our owners, management and staff and it’s a gratifying way to end off the year.  

We anticipate that 2012 will be a demanding year, however we’ve had several enquiries in recent months regarding sizable corporate restructurings planned for the new year, which should bear fruit for us.  From the buyers’ viewpoint, it gives them greater access to a large variety of stock.  From our viewpoint it gives us a two-pronged growth track - organically and via acquisitions.  Watch this space!