Although they have been piloting the new concept with a handful of manufacturers for some time, the bulk of the vehicles will all now be returned to Motability to be sold.
Until now they have either been returned to the manufacturer or dealer, or some to other parties including leasing companies. There are many misconceptions around in the industry as to how the system will work and how effective it will be. Some people from the leasing industry think it will have a serious effect on their disposals.
Dealers are confused as to how the system will work, despite training being given and numerous handbooks being distributed.
The fact is that there will be just as many cars in the marketplace, but they will be going to market in a different way. The cars should be in a better condition at the end of the lease and in most cases, ready to retail.
The number of cars to be sold direct is over 100,000 and to many this is a substantial amount. Indeed for one company it is, but to put it in context, over seven million used cars are sold in the UK every year so a hundred thousand is a tiny proportion. And if Motability gets the stock management right, as those who understand the system believe it will, this could actually create a better route to market. It should not upset the industry and create a downward movement of values, but prices could be more realistic and acceptable to dealers than some of the unhealthily high prices that are given on buy-backs.
Many believe that the system is doomed to failure but it should be given a chance to prove itself. No doubt there will be some hiccups and temporary blips but there should be enough safety nets in place to stop a disaster happening.
Leasing companies are reporting a slow down in some prestige models, particularly late ones that are on early terminations. A build up of some new ones in dealer stocks is having a knock-on effect with nearly new. But three year old ones with all the spec continue to sell. The 4x4 and MPV markets are doing well and virtually anything with sensible mileage is sold first time. Volkswagen Passat and Peugeot 406 diesels and estates are all good news regardless of mileage and it is the belief that many are heading over the water to Northern Ireland where they are in short supply.
Another sought after car is the good old Ford Escort Diesel. This is because there are very few around as it has been out of production for some time, but plenty of people out there still swear by them. As they begin to fizzle out, the question is will they take to the Focus instead? Probably!
Citroen Xantias seem to be around in numbers and prices are suffering as a consequence. Rover 75 diesels, particularly the Club, are doing well as are Vauxhall Corsas. The 1.2 in Envoy trim is creating loads of demand. Ford's Cougar has never really caught the imagination in the Coupe market and this is reflected in the used market. Many leasing companies report that it has little attraction from the trade and retailers have little success with the private buyer.
There seems to be no end to the ingenuity of those looking for new ways to do business in the disposals arena. The latest I picked up on this week is an internet company offering to advertise ex-lease cars on their site. They get a list of vehicles expected back at the leasing company in the next fourteen days and offer them for sale for up to seven days after the car has been returned. Customers can then buy via the website or visit the compound to check their intended vehicle over. Whether or not such a proposition is suitable for all disposers the number of routes to market now available shows no sign of slowing.