Fleet News

Choosing the right sales route

MIKE Pilkington, managing director of Vehicle Remarketing Solutions, warns fleets to think carefully about their disposal routes to achieve success in an increasingly crowded market.

'Seasonal fluctuations in demand for vehicles in the used car market and their consequent effect on prices are familiar to most fleet operators. But many have yet to consider the impact of nearly 2.6 million new vehicles sold last year reaching the used market in the future.

In a crowded used market place, fleet operators must increasingly seek a more targeted approach to remarketing their vehicles.

There are more methods of fleet disposal than ever before, which give operators the option to choose where to place their stock for the best residual values and ultimately minimise the wholelife cost of the vehicle.

Used vehicles under two years old and 40,000 miles and older vehicles are increasingly being sold by discreet remarketing methods. There is a growing trend for dealers to purchase slightly older quality vehicles through this method, which sits side-by-side with traditional remarketing channels such as auctions.

The economic effects of supply and demand can wreak havoc on prices. Fleet decision-makers should think carefully about their disposal strategies to minimise the impact of these fluctuations. Increased oversupply in the future will serve to exaggerate these shifts in used values.

The way used vehicles are supplied to the market can exert pressure on the dynamics of pricing and supply, particularly where large volumes of similar products are available.

Remarketing companies provide a discreet route of remarketing that protects the quantity and similarity of vehicles and hence residual values. Obtaining premium prices for vehicles will become more difficult as competition for the dealers' share of the wallet increases. By putting vehicles in front of dealers first and guaranteeing refurbishment standards, the chances of getting premium prices are increased.

A well-balanced mix of routes to market is essential in today's marketplace but the mix needs management as the choices become increasingly diverse. There are auctions, the internet and, of course, the new option of selling remotely through remarketers, who provide a managed solution to remarketing and pick the most effective route and market for your stock.

By providing a unique service that uses single site refurbishment and remarketing to offer dealers the fastest route to quality vehicles, residual values can be maximised for the seller.

All these channels have value, but the operator must get the right mix of routes to market. The aim should be to avoid over- exposing stock and so maximise residual values.

Fleet operators will see significant benefits if they have flexible remarketing strategies that allow them to select the most appropriate sales channels in any given circumstances.

In our experience, most manufacturers and large leasing companies have sales channels that work well when markets are good, but lack the flexibility to pursue alternatives when prices come under pressure.

The infrastructure is now available which will allow companies to remarket large volumes of vehicles quietly and discreetly to as many different motor retailers as possible, helping both to support residuals and protect brand values.'

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