Fleet News

Mixed reception to Motability remarketing plans

REMARKETING and disposal experts are divided over the impact on residual values of Motability Finance Ltd's plans to take responsibility for selling end-of-contract vehicles. Under the current system original supplying dealers are obliged to buy back Motability cars for a pre-agreed sum. But MFL proposes to take the residual value risk on its 360,000-strong fleet in order to maximise disposal proceeds and add greater flexibility to the scheme.

This has worried motor manufacturers who fear that MFL risks undermining the used car market by disposing from a central point of 120,000 cars a year, all of a similar size, specification, age and mileage profile. Ford, Peugeot and Rover have all refused to sign up to MFL's new proposals, citing their desire to retain control of their products' residual values as the prime reason.

Roger Woodward, managing director of fleet remarketing company Cars Direct, believes the manufacturers are right to fear a plummet in residuals. 'It's frightening the impact the Motability cars could have on the market if they are not disposed of in the right way or simply in too great numbers,' he said. But Global Remarketing is disposing of about five Motability cars a day through a network of 50 dealers. Jim Kerr, Global's managing director, believes such remarketing schemes will stop ex-MFL cars hitting the open used car market and damaging residuals.

Remarketing giant British Car Auctions is more bullish about the residual value prospects for MFL's fleet under its new system. BCA customer affairs director Tom Madden said: 'This new scheme allows MFL the flexibility to continue to remarket vehicles according to prevailing conditions within the used car market. The benefits of this new arrangement will go back into the Motability scheme.'

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