Fleet News

Disposal nightmare as model ranges expand

THE proliferation of new car models and specifications is storing up major residual value problems for the secondhand car market in three years time, according to used car pricing specialist Glass's Guide.

It says fleet decision-makers already face a bewildering array of new cars with ever more variants and trim variations vying for positions on their fleets.

Trade buyers and main dealers will have also to learn rapidly about all these new models if they are to buy their used stock successfully and meet demand from secondhand car buyers.

Research by Glass's Guide reveals that new car buyers in September 1997 had a choice of 3,200 models from which to choose. By September 2002 this had increased by an astonishing 46% to 4,600 models.

'Dealers are often as confused as customers by the number of models available. What aggravates this problem further is the huge choice of options and trim combinations that were not available five years ago,' said Glass's.

It believes these changing patterns in the new car market will directly influence the composition of the future used car market, and that the 'problems that are experienced are not dissimilar'.

'More dealers and traders alike find themselves being presented with unfamiliar models to appraise and value,' said Glass's. 'When there is an element of doubt, the tendency is to place a value equal to a lower specification that they are more familiar with.'

The danger for fleets is that this will have a negative impact on residual values, and Glass's says the only solution is to select manufacturers whose brands have a presence in the used car market. The used car pricing specialist claims that build quality and reliability no longer distinguish used cars, and that brand perception (which must still take into account issues like reliability) dictates residual values.

'High specifications or extended manufacturers' warranties do little to redress the balance,' said Glass's.

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