Fleet News

Vehicle remarketing: Higher sales need not be bad news for RVs

Duncan Metcalfe, head of remarketing, Alphabet

It’s usually possible to find a cloud in every silver lining and rising forecasts for new car registrations have sparked a degree of disquiet in the fleet market.

The SMMT’s latest forecast suggests that new car sales for 2013 will reach 2.2 million units, an 8.4% improvement on last year.

With sales rising across all sectors – private, fleet and business –there is understandable concern that residual values will potentially be hit further down the road, with a consequent need for an uplift in leasing rates.

But those concerns tend to discount the capacity of both contract hire companies and fleets to mitigate predictable risks from falling resale values.

We should also recognise the positive economic implications of strongly-rising new car sales.

The fact that fleet and business customers are taking on more units implies renewed growth in the business sector.

The old saying that a rising tide lifts all ships certainly applies to the car market – it would be very unusual if the factors behind higher new sales did not also boost demand for used vehicles.

As an industry, therefore, it is important that the fleet sector keeps a close eye on what is happening in both the retail and wholesale markets.

While the boost to new car sales from manufacturer deals and finance offers does have the potential to drive down RVs if not handled properly, organisations with robust remarketing strategies should be able to mitigate the risks and continue to achieve strong residual values from disposals through either trade sales and/or direct-to-consumer remarketing channels.

Inevitably, the increased volume of registrations in 2013 will have an impact on values in three years’ time.

However, by investing in a proactive and dynamic remarketing strategy, contract hire companies should be able to support residual values and therefore minimise the impact on leasing rates.

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