Fleet News

Residual value slide will continue, claims expert

THE downward spiral of residual values is unstoppable in the fleet industry's medium sector vehicle heartland and will force decision-makers to look for ways to recoup their losses, according to a leading fleet figure.

Addressing key fleet service providers at Overdrive's annual Strategic Briefing, director of customer service, James Langley, a fellow of the Institute of Car Fleet Management, warned: 'Residual values are not going to recover any time soon.'

He said fleets and their service providers would need to look for costs that can be reduced to offset greater than expected losses on vehicle sales.

Service companies will be forced to develop new products to create additional revenue streams from services such as fuel provision and rental. He added: 'Fleet service providers need to recognise the diminishing market for medium sector cars and develop marketing tactics to develop the profile of their inventory to minimise their exposure.'

Langley told the audience that record new car registrations and a finite number of buyers have led to less demand for traditional fleet cars in the second-hand market.

He went on: 'Short of a steep rise in prices or a squeeze on disposable incomes, the flow of vehicles into the secondhand market is likely to move even further ahead of demand.'

The popularity of the medium sector is being affected by a current trend towards downsizing by consumers, and fleet managers need to be monitoring that trend and reacting, Langley claimed.

He said: 'If it is a permanent shift towards those compact cars then the outlook for fleet residuals is even worse. This is because at present fleet buyers continue to focus on medium segment models against the wider market trend towards downsized cars.'

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