Ask the expert

At grs we know that hidden costs can have a significant effect on your overall de-fleet strategy.
However, there are some simple steps that you can take to make sure you’re de-fleeting in the most cost-effective and efficient manner.

Firstly, you need to understand your current remarketing performance, whether that’s the number of days to sell from the day of de-fleet to the day cash is in the bank or the average percentage of CAP achieved at time of de-fleet. 

You also need to make sure that you fully understand your current remarketing costs per vehicle – and that includes areas like logistics (transport, inspection, storage, valet and refurbishment) auction fees and people. 

Secondly, define your strategy. What is your preferred remarketing route? Is it fully in-house, fully outsourced or hybrid? 

And what are your preferred remarketing channels: auction, direct sales or an alternative discrete sales channel? 

In most cases it might be more effective to use a combination of these. Thirdly, monitor your current process. What management information do you currently receive related to your remarketing activities? 

How does this affect the choices you make when de-fleeting? And what is your de-fleet mix (age, make, models, mileage). Is this providing you with the best return on your investment?

Your choice of remarketing partner is all important. Depending upon your chosen strategy, it may be that you decide to de-fleet your vehicles through several different, but complementary channels. 

But whatever your strategy, one question is key. Does your potential partner offer the range of services, experience and systems expertise that facilitate a fully structured remarketing service?

Whether it’s de-fleet, vehicle inspection and appraisal, refurbishment or vehicle sales, your remarketing partner should work with you to define your requirements and provide a relevant solution in each of these areas. Any partner should have the facilities and systems in place to be able to handle the de-fleet process efficiently, but what else can they offer? 

For instance, how is the transition of a car throughout all phases of the de-fleet process monitored? And how is this information reported to you? 

What alternative sales options are they able to offer you? Can they act as your agent or underwrite your residual values? And are they able to buy your vehicles outright? How do they present your vehicles to the market? Is it through a discreet channel, managed to ensure that residual values are protected?

The answer to each of these questions can have a significant effect on your balance sheet, which is why choosing the right remarketing partner is absolutely crucial to your business.

You’re right to be looking at your remarketing strategy during this challenging time.
Now is a good time to make sure that you are utilising all the available remarketing options to make sure that cash is pouring into your business rather than sitting outside in your car parks waiting to be converted. 

Typically we find that our customers use a range of remarketing options which include auctions, staff sales and one of the three main options we offer: outright purchase of vehicles, residual value underwriting, and acting as a sales agent.

A combination of remarketing options means that a fully integrated de-fleeting strategy improves the bottom line by reducing the ‘hidden costs’ of vehicle de-fleeting such as depreciation and refurbishment. 

By utilising a range of remarketing routes, the modern fleet manager is able to maximise return for minimum effort.

You may also be being challenged on the efficiency of your remarketing programme. 

When choosing your remarketing partners, make sure that they offer an in-depth analysis of your remarketing programme including sales’ timescales, average percentage of CAP achieved at time of de-fleet, remarketing costs including transport, inspection, storage, refurbishment costs and auction fees, direct sales costs, funding costs for fleet on a balance sheet and personnel costs.

Despite the complexity of used business car remarketing, many people in the fleet industry would agree that most of their management fire-power is focused on acquisition and less attention is paid to the processes and true costs of disposal – except for a keen interest in the single issue of residual value. 

Analysing the performance of your remarketing channels allows you to ensure that you are getting the best value for money and fastest sales from each route. Without any sound, evidence-based management information any industry is unable to measure its own success and move forward on the basis of common best practice. 

The types of questions each remarketing partner should be asked include:

• What are your average sales’ timescales?
• What is the average percentage of CAP achieved at time of de-fleet?
• What remarketing costs do you charge? These can include transport, inspection, storage, refurbishment costs and auction fees
• What time and financial input is needed from my company on a monthly basis? This can include direct sales costs, funding costs for fleet on a balance sheet and personnel costs.

Being able to manage fleet costs is a challenge, especially for the areas where you have less control such as during the “in-life” period. 

Clear and transparent return standards are essential, so drivers know and understand what levels of wear and tear are both acceptable and permissible. 

However, as refurbishment costs present a greater level of control, this is the area which managers can more readily tackle to make significant savings. 

There are three key considerations:

• Firstly, linking up with an expert partner. An expert partner should be able to offer economies of scale with refurbishment costs which you cannot achieve alone.
• Secondly, they should also be able to speed up the whole refurbishment process, again creating a cost benefit as vehicles can be sold faster.
• Finally they should be able to offer refurbishment and repair on one site to save both money and time, in addition to providing advice about which repairs are worth undertaking to add value to the vehicle in relation to their cost.

Over half of the industry uses the percentage of book value achieved and a third measure turn-around time. But while these two methods provide information, they also have some limitations. 

Specifically your results will vary depending on how you measure turnaround time and whether all the remarketing costs are included – many operators exclude refurbishment costs and staff time for example. Also when is the residual value on the vehicle assessed? On the day it was de-fleeted? Or the day it was actually sold? In reality, this difference can be over a month.

Best practice should incorporate two key tenets: true wholelife costs and a multi-channel approach. 

This has two advantages. Firstly, it enables you to maximise the value of each of the vehicles you wish to de-fleet, rather than using just one channel which could actually depress the price by giving the semblance of “flooding” the market. But more importantly this more strategic approach includes controllable success measures and management information about the true cost of remarketing.

By focusing on measurements you can control, lower management of costs are achievable, as well as greater certainty and speed of sale. 

For more information you can download a new report based on independent research entitled Best Practice in Fleet Remarketing at www.grs.co.uk/best-practice-report.aspx.

There are three options to helping you speed up the sale of your vehicles. Firstly, consider using a remarketing partner or agent. There are clear advantages to linking with this type of partner. 

Firstly, they will have dedicated sales teams who will proactively target and sell your vehicles to their extensive customer networks. They can even start finding buyers for your vehicles prior to de-fleet. 

This reduces turnaround time and helps to minimise any depreciation from point of de-fleeting to final sale. 

Refurbishment is the second area where time can be lost. Does every vehicle need to be refurbished to the same standard? Factors such as high mileage and specific model supply and demand can impact residual values more significantly than the odd dent.
Taking a strategic approach to cutting time at the bodyshop can help speed up sales without impacting value.

Thirdly, recent research published in the grs Best Practice in Fleet Remarketing report revealed that while auctions are the single most dominant channel for the industry, a multi-channel approach should be considered to help combat the industry’s two key frustrations – speed and certainty of sale. 

The tactical use of other channels, including a specialist remarketing company, internet sales or sales to employees, along side auctions can help to speed up sales of vehicles at de-fleeting.