Executive Hire News › Archives › April 2009 › Forum : Auction helps to cleanse Speedy fleet

Forum : Auction helps to cleanse Speedy fleet

Having viewed the shiny new equipment, smartly laid out inside the bright yellow carpet at the great-looking Ricoh Arena at the Executive Hire Show, a visit in early March to The Great Speedy Sale was an altogether different, although no less significant, industry event. Held outdoors at the Leicestershire County Show Ground in Melton Mowbray over three days, Speedy’s first ever auction was organised on a massive scale.

The sheer size of the event was jaw-dropping. The equipment on offer covered an area a mile in length and comprised a huge array of general plant and tools, as well as specialist products. As you entered the Show Ground, row upon row of Speedy red generators and compressors stood to attention to greet you. To your right, were dozens and dozens of lighting towers, heads bowed seemingly in some form of apology. Two large marquees had been built, each with a fenced external compound, to house the vast array of tools and small equipment to be auctioned. Between the two marquee areas stood many hundred items of contractors’ plant – principally mini excavators, dumpers, rollers, backed up by trailers, bowsers and some telescopic handlers. Here, the yellow Hewden machines competed with a number of other different coloured brands acquired by Speedy over the years. A staggering fact of this auction is that the equipment on sale represented only 2.5% - 3% of the Speedy fleet in monetary value.

Obvious rationale for sale

Speedy’s rationale for the Sale is obvious. Having closed over 60 outlets since the downturn took hold last autumn, the company was left with excess stock, which was costing it depreciation and interest charges. Having become a liability, Speedy took the decision to convert this excess fleet to cash. In addition, the company chose to cleanse its fleet of some of the Hewden kit it acquired last year, principally Caterpillar mini excavators and rollers, as well as dumpers.

Not surprisingly, the first day of the auction attracted a good number of interested hirers, as well many manufacturers' reps, resplendent in their branded jackets. All were eagerly awaiting the disposal prices of the vast array of compact plant - hirers to bookmark sale prices against their own fleet items and manufacturers' reps concerned at the continued effect on new equipment sales. Both were also acutely aware of the inevitable impact this amount of second-hand kit would have if it stayed in the UK.

Speedy Chief Executive Steve Corcoran is adamant that this is not the case. “The majority of the contractors’ plant was sold to agents, brokers and buyers for the overseas market. We even had complaints from UK dealers, saying that they could not afford to compete with overseas buyers on this equipment.” Interestingly, a number of Speedy customers were also buying certain items - a situation that did not concern Steve Corcoran. By foregoing future hire revenue from these customers on this equipment, it suggests that Speedy will not re-stock these product groups when demand picks up.

Taking a hit on generators

In this month’s lead News over the page, we detail some of the sale prices achieved. Contractors’ plant, lighting towers and small tools sold well, achieving surprisingly high prices on many lots. The sale of a large volume of generators and compressors undoubtedly fared less well. Steve Corcoran admits, “we offered far too much stock of generators and compressors, and it was in variable condition. Buyers were able to ‘cherry pick’ the machines they wanted. Inadvertently, we had taken the competitive price out of the deal. If you offer the wrong stock and have the wrong buyers, then you will take a hit and we did.”

The auction raised over £5m and brings Speedy’s total of fleet disposals to about £10m. And whilst it lost out against asset value on certain products, overall the hirer will achieve break even against written down values. The timing of the Great Speedy Sale was also significant on two counts. It enables the hirer to get money in before its financial year end on 31 March. Furthermore, with Hewden and A-Plant both holding their auctions in late March, Speedy has jumped the queue.

Generally, an auction is a good route for anyone to get rid of unwanted stock and turn it into cash. However, the need for such an event also vividly highlighted the problem of excess supply that currently besets our industry. Let’s hope that this was a one-off event. Any repeat would be bad news indeed.