Vehicle disposal
Vehicles rarely appreciate in value, so it is critical for a company to remove them from their books as soon as possible to minimise the effects of depreciation.
Holding out for a better price may seem appealing but is usually counter-productive with fleets paying the price with increased holding costs and a slower return of funds.
Additionally, professional buyers at auction will vote with their feet and actively discriminate between the desirable, saleable vendor brands and those that are perceived to over value their vehicles or be inflexible when it comes to provisional bids. In short, according to the National Association of Motor Auctions, cars average a higher price when they are sold the first time they are offered.
Consequently, as Tony Gannon, director of communications at auction giant BCA, says: “Sellers that consistently respond to the changing market conditions and value their stock in line with market conditions generally enjoy healthy conversions and fast churn as a result.
“It is good practice for sellers to evaluate their stock realistically and fairly – the age, condition, mileage and specification are critical to successful de-fleeting.
“Independent inspection can help with this task and will provide the data that allows sellers to price their vehicles in line with market expectations – which may or may not coincide with guide values.”
Gannon adds: “The fleet sector has a particular issue as it is saddled with projected residual values calculated three or more years ago. While that should not influence hard decisions that have to be made in the post-recessionary marketplace, it can be a difficult pill to swallow when there is a considerable gap between the expectation and the reality. The situation is exacerbated where contracts have been extended, resulting in older, higher mileage and often poorly presented vehicles entering the marketplace.”
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