Fleet News

Avis venture to shake up the fleet disposal market

A new remarketing operation that seeks to correct 'shocking' inefficiencies in the disposal market has been set up by two leading auto industry companies.

AutoCascade - formed as a joint venture by Avis Europe and dealer group Inchcape - claims it will help its customers reap financial savings and increase profits.

AutoCascade says its system can help companies achieve the best possible resale price for a nearly-new car — and hopes this will attract manufacturers, leasing and rental companies which operate large fleets.

Savings are generated, it says, by selling the car as quickly as possible after defleeting, which ensures the best possible residual value price. Selling the car electronically also means there are fewer organisations in the chain and little or no distribution cost. Holding costs are also cut or obliterated, the company says.

AutoCascade estimates these savings could amount to hundreds of euros per vehicle. Although they have always been vital to the European fleet sector, residual values have assumed greater importance since the US terrorist attacks on September 11.

Falling confidence in the leasing and daily rental industries is threatening residuals as companies look to bring forward disposal plans.

AutoCascade claims its electronic system allows customers, which initially will include car manufacturers, leasing and rental companies and - in the long-term - fleet operators, to sell their end-of-life vehicles to a specified customer base, for example to a manufacturer's dealer network or to a fleet's own staff.

The service will initially operate in the United Kingdom but the company has firm plans to be operational in five European countries within the next three years (see story, right).

The man at the helm of the operation is Saad Hammad, former chief executive officer of the Avis on-line operation yourautochoice.com. He has also held a number of senior international positions with companies including Procter and Gamble, Boston Consulting Group, Thorn-EMI, Vision Express and Minit.

Hammad is confident that AutoCascade offers its customers a 'win-win' situation. In fact, he will boldly tell you that they cannot lose.

'We are very excited about this new business and are confident it will be a tremendous success,' he told Fleet News Europe. 'We have identified such a big gap in the remarketing arena, AutoCascade customers cannot lose.'

Hammad says the key to success will be the fact vehicle remarketing is mostly carried out electronically — no doubt a claim that auction house executives will question.

But AutoCascade does recognise the role that auction houses play in remarketing, even if it says it will only sell cars through auctions as a last report.

'Although we believe we will take volume away from auction centres we are also a customer,' Hammad said. 'From an AutoCascade point of view, auction centres will be the last port of call to sell cars. By selling electronically there are no distribution costs to pay — getting cars to a physical auction house for example,' he said.

'If they want to, customers can advertise the car to their chosen audience before they need to defleet it, meaning it could be sold on the day they actually finish with it.'

Hammad declined to show Fleet News Europe the result of a study into the average length of time fleets store a car once they no longer use it but described it as 'shocking'.

'The figures show there is a definite need for our business,' he said. 'Cars sit around for weeks and weeks. Once we get properly up and running in the UK we will expand into the rest of Europe — because the situation will be the same in all countries.'

Europe and the future

Autocascade will initially operate in the United Kingdom but it plans to be in Europe's 'big five' - which includes France, Germany, Italy and Spain - within three years.

'The first wave will be the UK and then Germany and France,' Hammad said. 'We'll then go into Italy and Spain but we will not rush this.'

Hammad said having two well-known parent companies not only provides funding and stability for AutoCascade but also opens doors to potential customers.

'Initially, this system was for Avis,' Hammad said, 'but the company said it should be marketed out to other organisations because it was so good and worthy of a separate business.'

Currently, AutoCascade deals with nearly-new cars but Hammad has not ruled out selling older cars, for example typical three-year-old fleet models, in the future although he declined to predict when this might happen.

'This business is about longevity,' he said, 'and we will not run before we can walk. The board (which comprises Mark McCafferty of Avis Europe and Peter Johnson of Inchcape) is committed to this business and its growth has to be undertaken in the right sequence. The UK market is the toughest so that is where we start.'

'A lot of companies are now realising the status quo is not sustainable — things must improve. And it is not just in the UK as a lot of these companies operate globally. That is why we will extend into Europe — they will want us to help them there.'

Autocascade mission statement

To 'provide state-of-the-art electronic remarketing systems to enable':

  • Fleet owners (car manufacturers and their captive finance houses and leasing and rental companies) to maximise disposal yields (with higher residual values and lower costs)
  • Dealers to 'maximise used car sourcing effectiveness'.
  • To support, where appropriate, Inchcape's newly-formed Business Services division (IBS), in offering total fleet management solutions in conjunction with Eurofleet, which is 49% owned by Inchcape. (December 2001)

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