What SA’s ratings downgrade means for the auction industry

Fanie Bielderman : Aucor Auctions

Johannesburg, 14 June 2017: South Africa’s auctioneering market is poised for a shift as auctions grow in popularity over traditional retail sales platforms against a backdrop of credit ratings downgrades and news that the country has slipped into a recession. While there is a lag effect in the impact of the country’s downgraded status by international agencies, South Africans can expect the maturing auction sector to expand as an accelerated sales platform option. This is according to Fanie Bielderman of Aucor, South Africa’s oldest and largest multi-asset auctioneer.

Economists are predicting greater pressure for consumers if credit becomes more expensive, but given that interest rates have not changed since the downgrade announcements, Aucor has not yet seen a surge in assets available for disposal. In fact, stock levels have remained fairly consistent.

“We believe that a greater range and scope of assets will become available on auction as companies and individuals adapt to changing market conditions. In addition, we are seeing a surge in number of people attending vehicle auctions looking for value purchases - a trend which we predict will translate into greater numbers of qualified and cash buyers at auctions,” says Bielderman.

In cash-scarce times, the speed and finality of auctioneering is a major draw-card for corporates. Auctions offer a market platform with a number of potential buyers bidding for assets at a single point in time. Once the hammer falls, settlement takes place within specified periods and there is no room for any further negotiation by buyers. This much-needed certainty, coupled with greater agility, is an attractive benefit.

For buyers, auctions offer the opportunity to purchase assets at fair value. Auctioneering is the apex between supply and demand, so buyers often find bargains at better prices than retail purchases or private sales.

South Africa’s auction industry has proved to be robust in both economic booms and downturns. This is because corporate asset disposals are initiated for a variety of reasons, including when assets become redundant or there are surplus assets held. In such cases, the role of experienced auctioneers and valuers is pivotal to realising greater value for corporate assets through a simple, transparent and auditable process.

Online auctions are growing in popularity. With 83% share of unpaid online traffic in the market, Aucor’s website attracts over 150 000 hits per month and we anticipate further growth as buyers look for greater convenience.

However, consumers are warned to do their homework in terms of the credibility of auctioneers. Are they CPA compliant, affiliated to professional bodies (Estate Agents Affairs Board and SA Institute of Auctioneers) and are you easily able to view goods on auction at bricks-and-mortar facilities? With a commitment to transparency and corporate governance, an auction through credible auctioneers is a high value/low risk proposition.

Aucor has successfully traded as an auctioneer for almost 50 years and understands the vagaries of changing market conditions across various asset categories. With qualified auctioneers and experienced valuers who are adept at establishing the fair value of assets, the company has a national footprint as well as representation in a number of African territories.

About Fanie Bielderman, Aucor Senior Executive

With training in marketing, finance and management development, Fanie’s deep understanding of the automotive industry was honed at Avis and Imperial, where he served as Divisional Fleet Manager. Fanie later joined Autocor in 2011 as Managing Director with the objective of creating a sustainable business and equity for all shareholders and stakeholders. He was appointed as Senior Executive to Aucor in 2017.