'We'll have our first unreserved auction in India in 2008'
— Sameer Malhotra, Country Manager (Asia
Subcontinent), Ritchie Bros. Auctioneers
Ritchie Bros. Auctioneers, the world's largest industrial
auctioneer, sells used and unused industrial equipment and other assets to major
industries. Sameer Malhotra speaks to Harish Rao about the
company's plans for India.
Tell us about your India operations. What is gross auction
sales revenue and at what rate is it growing?
Ritchie Bros. Auctioneers was established in 1958 in Canada. Today it is the
world's largest auctioneer of industrial equipment, selling more than $3.18
billion of trucks and equipment at over 350 unreserved auctions around the world
in 2007 alone. We have offices in 27 countries and 38 auction sites worldwide.
There is a great need for construction equipment as a result of the
infrastructure boom currently taking place. With increasing demand for equipment
causing the price of new machines to rise, many people in the industry are
looking for a reliable source of good quality, used machines at fair market
prices. We offer one of the best sources of used and unused equipment in the
world, which is why we attract an increasing number of bidders to our auctions
each year. In 2007, we sold more than 261,000 equipment items and processed more
than 254,000 bidder registrations.
An average Ritchie auction features more than 1,400 equipment items for the
construction, transportation and other industries. At our unreserved auctions
every item sells to the highest bidder on auction day, regardless of price.
There is a great need for this type of fair, transparent system for buying and
selling equipment in India, which is why we're looking forward to introducing
our unreserved auction methods here.
How many unreserved auctions you have conducted in India so far? How is the
Ritchie Bros. has not yet conducted an auction in India, but we are looking
forward to conducting our first unreserved auction here before the end of 2008.
For many years we have been welcoming bidders from the Indian subcontinent to
our auctions around the world (especially to our auctions in the US, Dubai and
Singapore). Many of our Indian customers choose to travel to the auction site to
bid in person; others bid over the internet using our real-time internet bidding
service, rbauctionBid-Live. We now have thousands of customers in India, and
were excited to establish an office in New Delhi in 2007 to better serve their
Why are you concentrating only on unreserved auctions? Whether this type of
auction is useful to find fair market value for new machineries?
We have conducted almost 3,800 auctions since it was established in 1958 - and
every single one has been strictly unreserved. That means there are no minimum
bids and no reserve prices on any item in the auction; everything sells to the
highest bidders on auction day, regardless of price. We also forbid owners from
bidding on or buying back their own equipment in the auction, which means that
every item is sold to a new owner on auction day.
Our commitment to strictly unreserved auctions, with no bid-ins or buy-backs,
ensures that the bidders set the prices at our auctions - not the owners or
Ritchie Bros. As a result, our customers know that they are paying fair market
value for the equipment they buy at our unreserved auctions. We sell both used
and unused equipment and trucks at our auctions - and even the new machines are
sold unreserved, which means the market sets the price, not the manufacturer.
Have you set any minimum quality standard for equipment to be auctioned? How
can a prospective buyer ensure that equipment offered is of good quality and
free from encumbrances?
Every item in every Ritchie Bros. auction is sold "as is, where is." We make no
guarantees about the condition of the equipment, but we do make any information
we have about the machines available to prospective buyers. We post photos and
details of every item we sell on our website, www.rbauction.com. We also display
the equipment at our auction sites for weeks, sometimes months in advance of an
auction and we encourage our customers to visit the auction site to inspect,
test and compare the items before the auction day.
Our customers are free to bring their mechanic to the auction site, climb in the
machine, turn it on and use the controls. Allowing our customers to see and test
the equipment helps them determine exactly how much they are willing to pay,
which makes them more comfortable when it's time to bid on auction day. Ritchie
Bros. also has a dedicated title search department. We guarantee clear title on
every item we sell: if it doesn't have clear title, the buyer will get their
Ritchie Bros believes that growth from the company will come mainly from USA
and Western Europe. What needs to be done for India and China to occupy this
We have been serving customers in Asia, including India and China, for many
years, establishing our offices in New Delhi in 2007 and Beijing in 2004. We
have not yet held an auction in either country, although we are planning to
conduct our first unreserved auction in India before the end of 2008.
The size and scale of our operations in India and China are much like our
operations in the US in the late 1960s and in Europe in the 1980s, when we were
first establishing our presence there. When we enter a new region, whether it's
USA or India, we spend a lot of time educating our new customers. Most of our
customers start as bidders and buyers at our auctions; when they are familiar
and comfortable with our auction processes, they often choose to sell equipment
at our auctions. After a period of time in a new region we will conduct an
offsite auction, later establishing our own auction site.
We have been conducting unreserved auctions in US and Western Europe for a long
time; people in those areas are familiar with our auctions. Every year we
attract more bidders to our auctions in those areas, which encourages more
people to sell at our auctions, which bring in more equipment consignments,
which brings in more bidders. As a result, we find that we grow quite rapidly
after we become established in a region. We believe this type of rapid growth is
likely to happen in countries like India, after we have been established here
for a number of years. We are ready to conduct our first unreserved auction here
- and we are looking forward to growing our operations here, as we have
elsewhere in the world.
With material price is increasing cost of new equipment is galloping. Also,
demand for equipment is increasing due to booming construction activities in
India, China and Gulf. Keeping these points in mind how do you foresee market
for used equipment in coming days?
In our experience, demand for used equipment increases during boom construction
periods. When prices for new machines rise and demand outpaces supply, many
people choose to purchase good quality used equipment instead of new machinery.
Ritchie Bros. sells more used equipment than anyone else in the world - more
than 261,000 items in 2007 alone - making our unreserved public auctions one of
the best sources of good quality used equipment in the world.
But in our experience, demand for used equipment remains strong during tougher
economic times. Many people will choose used equipment over new in an effort to
control their business costs - and an increasing number of people will have idle
equipment that they choose to sell, which keeps supply strong.
Will climbing inflation and domestic interest rate have an impact on your
Inflation and rising interest rates definitely impact our customers, reducing
their spending power. Rather than paying interest on machines that are idle or
underutilised, many people will choose to sell—which brings more equipment to
our unreserved auctions. At the same time, an increasing number of people in the
construction industry will buy used equipment rather than new. As a result, we
tend to see more equipment consignments and more bidders at our auctions when
rising interest rates put pressure on businesses.
[May 19-25, 2008]