Hewden's use of auctions

17 March 2008

UK rental company Hewden's experiences of auctions presents a good argument for keeping rental equipment in good condition. “We get a 10 to 15% premium [at auction] because of Hewden's reputation for maintaining its fleet well,” says Alan Huddart, general manager of product and pricing, who leads Hewden's fleet buying and selling activities.

Hewden now uses auctions as the sole means to sell off its old fleet, although it started using auctions when it had a very particular situation. “We have built it up almost by accident”, says Mr Huddart, “We acquired five years ago a company with fleet that didn't fit, and we decided to auction it off.”

Back then the company took over Hertfordshire County Fair ground for the auction. Since then, activity has expanded to become two annual events run for the company by specialist auction firms Thimblebee & Shorland in Reading and Thompson Auctions in Barnsley.

This year, for example, a 3000-lot sale in the summer brought in £5,3 (€7,6) million, and a 500 item sale in October brought in £2,3 (€3,3) million.

The two auction firms each handle all the activities, and make it clear in their Web and trade journal advertising that only Hewden equipment is for sale. As a result, says Mr Huddart, “Auction is a smooth way for us to get rid of a large amount of equipment in a short time.”

Mr Huddard declined to disclose the commission Hewden pays the firms, but he did say they are part of a package. “It is certainly competitive, certainly cheaper than those of the bigger [auction] houses.”

Initially Hewden feared its rental customers would buy at its auction and then reduce their rental business. Mr Huddart says, “They have not done that any great extent.” In fact, “We have built a good following of international buyers.” 65% of the items last auctioned in Redbourne went outside the UK.

The company does nothing extraordinary to prepare equipment for auction. “It's not worth it,” said Mr Huddart. Because Hewden keeps its fleet “rental ready”, auction buyers know what they are buying. Another benefit is that depots can keep assets, and rent them, up to the day they ship them off to the auction sites.

Helping to keep auction prices and proceeds up, too, is another operating strategy. Mr Huddart told IRN that Hewden's fleet age is now about 4½ years. Consequently, as he said, “Our auctioned equipment is getting younger and younger.”

Of course, Hewden is owned by Caterpillar dealer, Finning, and this relationship helps, says Mr Huddart, because Hewden can offer a three month guarantee on auctioned Cat equipment if it remains in the UK.

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