Fleet News

Sell to staff to boost residuals

COULD your company car drivers be residual value heroes? They may hold the key to ensuring your ex-fleet vehicles hit their target disposal value by buying the cars themselves.

Affinity marketing schemes are a great asset to any company, yet few firms make the most of them, claims Jim Kerr, managing director of remarketing expert JTK Automotive.

Affinity schemes, or 'privilege purchase schemes', exploit the affinity the fleet operator has with potential used car buyers such as drivers, their friends, family, other employees or business partners.

Kerr said: 'The timely provision of information on offers to potential buyers is a key component of successful affinity schemes.

Company employees and others who have reason to visit their company's website need to be informed of imminently available cars for sale in the same detail available from other consumer car search facilities.'

But companies disposing of end-of-lease cars to employees and associates can and should go further than providing a shop window for their offerings, Kerr insisted.

They could draw other visitors to these web pages via e-mail or direct mail, using the employee, supplier and customer databases at their disposal.

Kerr said: 'They could pre-sell a high proportion of cars as described, before they start incurring expensive refurbishment costs.'

He estimated that on average, fleets remarket all but about 7% of end-of-lease vehicles through auctions or the automotive trade. With the right commitment and resources to match, up to 20% could be sold through affinity programmes.

He added: 'The benefits can far outweigh, for example, the savings available from astute purchasing, maintenance and repairs. The difference between a typical trade margin and a near-retail retained margin on disposal is worth anything up to £700 or more, depending obviously on the car concerned.'

Gary Monaghan, operations director at JTK Automotive, which can offer outsourced affinity programme services, said: 'Multiply per-unit sums of this magnitude by the number of annual disposals from a fleet, and it becomes clear that affinity marketing could be the best tool available to cut the depreciation costs that form the largest risk element.'

Furthermore, he added, it could bring an end to contentious end-of-contract charges.

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