1 Disposal channels
Auctions are still the biggest sales channel, but franchised dealers, car supermarkets and other retail channels should be considered. Leasing companies tend to use a blended approach.
ING Car Lease, for instance, disposes of 80% of returned vehicles at auction and the remaining 20% through retail channels, whereas for Hitachi Capital Vehicle Solutions the split is 60:40.
Some leasing companies have their own retail channel.
A physical auction with vehicles offered online at the same time is “the best of all worlds”, according to Simon Henstock, UK operations director at BCA.
“It combines the immediacy of sale with the broadest number of buyers in a competitive arena.”
Duncan Metcalfe, head of remarketing and logistics at ING Car Lease, agrees: “If you are interested in offering vehicles directly to the trade/retailers I believe there is not a better route to market than this.”
Fleet managers could also explore the idea of selling direct to the driver although it doesn’t offer the same element of competition as an auction.
Tim Bowden, head of operations at Hitachi Capital Vehicle Solutions, says: “Fleet managers should not overlook the benefits of encouraging the purchase of vehicles at the end of the contracts by their drivers, which is generally supported by the leasing company as a remarketing option and provides a ‘high value/low cost’ HR benefit.”
2 Choosing the right colour
Car colour is an important consideration for fleets, regardless of whether they lease or outright purchase.
“Although the leasing company takes the hit you might find you are paying a higher rental for an exotic colour,” Tim Hudson, managing director at Aston Barclay, warns.
“Cars need to be in the right colours and finish to make them desirable,” according to Henstock.
“Small cars can – generally – get away with fun and fashionable colour schemes that would be inappropriate on an executive or MPV model.
"Generally, volume product should be safe and reserved, not bold or brash. And where possible specify metallic finishes – they age better.”
Silver, blue, grey and black are the most popular colours by volume at BCA.
Black is the biggest seller among ex-fleet and lease cars, representing 30% of all cars sold from those sources.
Companies should also consider the mix of their fleet.
“If you have a large block of vehicles going through auction, say 50 white and 50 black, it will have limited appeal to buyers,” Craig Mailey, marketing director at Manheim says.
3 Optional extras that add value
Whether optional extras improve RVs is debateable. Hitachi Capital Vehicle Solutions says it will set a more favourable RV for vehicles with a desirable specification – which in turn produces a more attractive rental – but CAP’s Black Book editor Tim Bearder says: “Options themselves have very low residual values and are best seen as a way of making the car stand out from those who don’t have the same level of specification rather than ‘improving RVs’.”
In general, sat nav, leather upholstery, alloy wheel upgrades, Bluetooth and parking sensors will increase a vehicle’s attractiveness, according to CAP.
Guy Pearce, sales director at The Fleet Auction Group (FLAG), suggests anything that can’t be retrofitted such as air conditioning or ESP is vital.
He also points out that the level of specification a buyer expects varies depending on the segment.
Auto is important for executive cars as manual BMWs and Mercedes-Benzs tend to be difficult to sell, according to Daren Wiseman, general manager valuation services at Manheim.
“Specification generally rises over time and today’s optional extras become tomorrow’s standard fitting,” says Henstock.
In the commercial vehicle market, buyers want side-loading doors, bulkheads and solid rear doors.
But, as Wiseman points out, fleet managers need to remember that even if they ‘add value’ they have the cost at the front end of putting the option on new.
4 Action before de-fleet
A pre-return inspection should be carried out – ALD recommends a month to six weeks before the vehicle is returned, allowing time for repairs.
However, regular inspections should take place throughout the contract or vehicle ownership.
Marie Jarrold, BCA’s fleet manager, advises inspecting vehicles for damage and wear and tear on a quarterly basis and keeping a record.
Details of servicing and mileage should also be kept up to date.
If there’s an option for drivers to purchase, this should be looked at about a month before too.
The removal of cherished number plates also needs to be considered.
Promotion can take place ahead of the vehicle going to auction. Aston Barclay, for instance, publishes its sale catalogue on the internet and contacts existing and prospective buyers, while SMA Group is inspecting cars up to six weeks before they come off fleet to pre-sell online in advance.
5 Damage – to repair or not to repair
It’s dangerous to adopt a ‘blanket policy’ regarding repairs according to Hudson. “It depends on the state of the market.
"At the moment very clean, good condition vehicles achieve a good price. Anything with real damage that takes a long time to repair is less attractive.”
Wiseman suggests that each car should be taken on its own merits. For instance, a bumper scuff matters more on an executive car than on a Ford Mondeo that has lots of miles on the clock.
Auction houses can carry out inspections and recommend what should be repaired.
Fleet managers can also use the BVRLA’s Fair Wear and Tear guide as a reference for what should or shouldn’t be repaired.
“We recommend doing smart repairs where possible as it doesn’t slow down the speed of the sale,” Mailey says.
“If a vehicle has to go to the bodyshop it potentially delays it by a week.”
Accurate condition reporting is paramount when selling vehicles online, according to Autorola.
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