Under the hammer

The UAE is a robust market for online and onsite auctions of heavy and moving equipment

Online and onsite auctions in the moving and heavy equipment industry are an important way for companies to reach out to a large number of interested parties and sell their used equipment inventory.

Rough estimates currently place the number of auction websites at 69 million, among which sites that conduct online auctions for the moving and heavy equipment industry figure prominently. Online auctions can save the seller the cost of transportation of a machine to an onsite auction.

WWA Group Inc., onsite and online auctioneers of transportation and industrial equipment, announced record-setting results in 2006 for their UAE operations.

Revenue for last year increased by eight per cent to $17.62 million (about Dh64.84 million) Gross profit increased 29 per cent to $5.52 million (about Dh20.31 million) while net income increased by five per cent to $1.12 million (about Dh4.12 million).

"This is the fourth consecutive annual increase in revenue, gross profit and net income. Despite the restraints on gross auction sales caused by the limited yard space and increasing rent, our high commission rates and the net revenue from our shipping subsidiary added strength to WWA Group's financial results.

"We are moving to a larger auction facility later this year and expect our investments in shipping and mining to deliver additional cash flow in 2007," says Eric Montandon, CEO, WWA Group.

What's on offer?
WWA also offers the BidLive option for buyers wanting to participate in the auction over the Net. WWA's auction in September 2006 generated the highest ever online sales with nine per cent of total sales going to online bidders.

"We are pleased with the record number of online bidders. We sold a record number of items for more value online than at any auction since we first introduced the BIDLive system in 2003.

"This helped push up the prices across most categories, and we expect continued growth in the higher margin in the online business segment," says Montandon.

At WWA's most recent auction at its Dubai facility in June, gross auction sales exceeded $24.15 million (about Dh88.89 million) and involved more than 431 registered bidders from 33 countries.

Equipment consigned by 158 consignors from 18 countries comprised almost 1,300 items and was sold to 247 successful bidders.

The auction generated record gross revenue from auction sales, for the number of successful bidders, for the number of successful internet buyers and for gross revenue from online sales.

"The overall sales volume was our highest ever, but more importantly the number of successful bidders and the overall commission rate were also at historic highs. We expect this trend of increasing revenue to continue with the move to larger premises later this year," says Chris Bettinson, General Manager, Auction Business, WWA Group.

Worldwide presence
Ritchie Bros. Auctioneers, the world's leading industrial equipment auctioneer, has 110 offices spread over 27 countries and 34 permanent auction sites worldwide, including one in the Jebel Ali Free Zone, which currently conducts four auctions annually - in March, June, September and November, spread over two to three days.

"During our last auction, we sold a considerable number of cranes and an outstanding range of late-model and unused equipment, attracting interested buyers from all over the world.

"This ensured that our consignors were able to sell their equipment for global market value," says Mark Grennell, Marketing Manager, Middle East, CIS, Southern Africa and South East Asia, Ritchie Bros. Auctioneers (ME) Limited.

In 2006, over 1,360 bidders from around the world participated in a typical Ritchie Bros. industrial auction in Dubai, purchasing 1,350 lots from approximately 180 consignors, generating in excess of $14 million (about Dh51.52 million).

Approximately 75 per cent came to the auction site in person while 25 per cent participated online at www.rbauction.com.

The geographic diversity of these bidders is reflected in the fact that over 50 per cent of gross auction sales in 2006 went to buyers outside the region in which the auction was held.

"At our last auction in Dubai in early June, we attracted more than 600 registered bidders from 53 countries.

"More than 1,700 items from almost 170 consignors were sold over two days, generating in excess of $24 million (about Dh88.32 million) in gross auction sales. Over 800 items, representing more than 60 per cent of the gross auction sales, went to buyers from outside the UAE," says Grennell.

During 2006, more than 9,600 customers from 76 countries purchased over $440 million (about Dh1,619 million) worth of trucks, equipment and real estate using rbauctionBid-Live, the company's online bidding service, representing 24 per cent of total registered bidders and an increase of more than 57 per cent from 2005.

"Industry analysts quoted in recent reports estimate that current projects in the pipeline run into thousands and are worth approximately $1 trillion (about Dh3.68 trillion).
"These will sustain growth forecasts of 15-20 per cent for the heavy construction equipment market within the GCC, for the next five years.

"And, whilst these percentage forecasts are both impressive and promising, when the actual volumes are examined, annual market demand for used machinery in the GCC for example, represents less than one per cent of global demand.

"Having said that, the Middle East continues to be a very strong, strategic market for Ritchie Bros. Auctioneers," says Grennell.