Fleet News

MFL moves to quell residual value fears

A FOUR-point vehicle disposal battle plan has been drawn up by Europe's largest fleet to safeguard against creating the second residual value crisis within a year. Motability Finance Limited, the business arm of disabled charity Motability, which runs a fleet of about 370,000 vehicles, is using the plan as part of a massive operation which is gearing up to dispose of up to 130,000 vehicles a year through one department.

The plan identifies four steps to market that MFL will take to dispose of vehicles that could be returning at the rate of nearly 11,000 a month - firstly to dealerships which have been maintaining the vehicles; secondly a wider pool of dealerships; third to all MFL approved customers and finally through auction. Robert MacKenzie, vehicle remarketing director, added: 'We reserve the right to sell vehicles by any route that we believe will produce the highest value.'

MFL announced it was taking residual value and maintenance risk in-house in 1999 and will take the financial risk on the entire fleet during 2002, which will also include responsibility for finding the right remarketing channel. Before the move in-house, MFL vehicles were supplied under buy-back arrangements. Now, remarketing and disposal experts are divided over the impact the move could have on residual values. Some players fear that disposing of more than 100,000 cars a year, all of a similar size, specification age and mileage from a central point could undermine the used car market.

But MacKenzie said: 'The MFL product differs from other fleets in that the vehicles are generally much lower mileage and therefore offers the dealers an alternative product to market on their forecourt. Like the majority of other contract hire companies, we will be trying to get the best price we can for our vehicles in the prevailing market conditions.'

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