Fleet News

Guest opinion: back to basics for disposal success

TOM Madden, director, customer affairs at BCA, argues that fleets should concentrate on simplicity in their efforts to maximise success at auction.

'Back to basics, a term hijacked by the political contingent in the last decade as a concept, is long overdue a return to favour.

In remarketing terms, I would suggest it means taking a step back and remembering what everyone in the industry is trying to achieve – to sell vehicles as swiftly as possible for the highest achievable price on the day.

Whatever route you choose to market – physical, electronic or online auction, tender, fixed price sale – you have to weigh up and balance the benefits of speed, cost and return. There are other elements that all come into play such as security of payment, your company profile and objectives, or the type of vehicles being remarketed.

Perhaps the real challenge facing fleets is sorting the wheat from the chaff of the many so-called new routes being brought to the market. While many are as old as the hills and are simply dressed up as new ideas, each has its merits.

What is important in whatever channel you choose is it meets the three main criteria of speed, cost and return:

  • Speed – because cars are depreciating assets and there will be a holding cost associated with every vehicle on your fleet.
  • Cost – because we all have to work to budgets and none of us want to pay more than we need for the services we get. But be careful to balance cost against the return.
  • Return – what any remarketeer worth his or her salt will be judged on. Perhaps the biggest challenge our customers face is to pick the service that suits them best.

    Overwhelmingly, physical auction remains the channel of choice for the majority.

    Why should that be? It's simple. For most vendors physical auction meets the criteria of speed, cost and return very nicely.

    If you've got an 80,000-mile, five-year-old, four-door, two wheeltrim saloon, it's highly unlikely to sell online. It's in standard specification, slightly tired and in white.

    It's the car that CAP Average was made for.

    But at auction, this car has its moment in the spotlight. Look at its good points: it's a one-owner car with a good company name in the logbook. It's got a full service history, V5 and long MoT. It's valued at the cheaper end of the market – where there is always demand – and it would not be too expensive to correct the few faults.

    The truth is, it's very sellable indeed when put before the right audience.

    You also have 20 management 'perk cars', all high spec, in metallic colours and low mileages at two years old. The trader is nearly banging the door down to get at them and is offering you sensible money, today, to take them away.

    Send these to auction and watch them sail past CAP Clean as the trade competes for them and maybe a non-trade buyer comes in and outbids everybody to semi-retail money. That's how an auction works, by concentrating buying power in a competitive environment.

    As the owner of a vehicle, you are entitled to achieve the average market value and not a penny less. The question is: who knows what the average market value is? Do you let an agent tell you what it's worth or do you let the market decide on the day?

    A competitive auction works well to sell virtually anything, whether you are conducting a physical auction or a real- time electronic or online auction. The trick is to get the right buyers competing at the same time. And, as this example shows, we're never quite as clever as we think we are...

    It was reported recently in a national newspaper that an antiques dealer sold a 13th Century Persian pen case for £30,000, making a pleasingly handsome profit of £28,000.

    The new owner promptly put it up for sale with a leading auction house and four weeks later the hammer fell for £1.2 million – six times the guide price. The point is that neither the owners nor the auction house really knew what it was worth, but the marketplace did.

    It's a sobering thought and one no doubt playing on the mind of the original vendor who was happy to receive just £2,000.'

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