INSIGHT
What SA’s ratings downgrade
means for the auction industry
As South Africa’s downgrade by international rating agencies sinks in, Aucor senior executive
Fanie Bielderman spells out the anticipated impact for auctioneers.
S
outh 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.
Economists are predicting greater pressure for
consumers if credit becomes more expensive, but given
that interest rates have not changed since the downgrade
announcements, we have 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 the number of people attending vehicle
auctions looking for value purchases — a trend that we
predict will translate into greater numbers of qualified and
cash buyers at auctions.
In cash-scarce times, the speed and finality of
auctioneering is a major drawcard 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, because
corporate asset disposals are initiated for a variety
of reasons, including when assets become redundant
or surplus assets are 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 an
83% share of unpaid online traffic in the market, Aucor’s
website attracts over 150 000 hits each month and we
anticipate further growth as buyers look for greater
convenience.
Auctions through credible auctioneers are a high value/
low risk proposition. However, consumers must do their
homework when it comes to the credibility of auctioneers.
It is important to know whether they are CPA compliant or
affiliated to professional bodies such as the South African
Institute of Auctioneers. You should also check whether you
can easily view goods on auction at bricks and mortar facilities.
About the author
Fanie Bielderman has training in marketing, finance,
and management development, and joined Aucor
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.
Aucor is a 100% black-owned auctioneer with
almost five decades of experience in the industry. It
has five permanent auction sites in South Africa and
a footprint in 13 territories in southern Africa. The
company holds regular auctions across the vehicles;
trucks, mining and construction; warehouse/loose
assets; property; and online markets. n
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AUGUST 2017