Fleet News

Fleets return after freeze on disposals

A FLEET industry freeze on disposals before the second Gulf War is thawing as companies return to structured replacement cycles – but companies may pay the price for delaying sales.

Leading industry experts say the delaying tactics may have been a false economy, as they have missed an important window of opportunity for getting the best value from their ex-fleet vehicles at sale time.

Amid economic uncertainty caused by the approaching conflict in the Gulf, many fleets decided to extend holding rather than commit to new vehicles for the long-term until their financial outlook was more clear.

After holding on to vehicles for up to six months longer than planned, and with the economy seemingly on a more steady footing, companies are now more willing to sign up to new vehicles for holding periods of up to three years.

But industry experts say the cost of the freeze is all too clear when examining returned vehicles, with many approaching 100,000 miles and showing signs of their extra use.

Andrew Shepherd, Manheim Auctions' chief auctioneer, said: 'The build-up to war made many companies panic and extend contracts on their current vehicles, some without thinking about the residual value consequences.

'CAP Average should be used to help value these cars, rather than CAP Clean, to help sell them quickly. The difference between Average and Clean condition is normally a few hundred pounds. Vendors who ignore this advice and continue to hold out for the prices that were being achieved in January and April and finding that vehicles are not selling and their values are dropping on a weekly basis.'

However, there is a silver lining around the residual value cloud, according to Manheim, with vehicles including seven-seat diesel MPVs, top-spec BMW 3-series, Mercedes-Benz 220 diesels, Vauxhall Astra 1.7 diesel and SRi models and Volkswagen Golf and Passat TDIs all doing well at auction.

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