Fleet News

Marketwatch: What a difference a year can make

FLEETS operating four-year replacement cycles for vehicles could be taking an unnecessary depreciation hit as used car buyers look for newer, higher-quality used cars.

According to the latest issue of CAP Black Book, used car values in August are down by 3.3%, but a large part of the reduction is down to the performance of four-year-old and older cars with 80,000-plus miles on the clock.

CAP says the relatively low trade demand for four-year-plus, high-mileage vehicles also reflects reluctance to take on the higher risks associated with cars that are likely to be out of their manufacturer-backed warranty, even if they are in CAP Clean condition.

It means companies defleeting four-year-old cars could face disproportionately higher depreciation than those trading in three-year-old models.

Dealers are reporting a relatively quiet summer compared with 2003 in terms of showroom traffic, but with higher conversion rates indicating that customers are thoroughly researching choices and availability before setting foot in a dealership.

The primary source of information for these customers appears to be the internet, according to Black Book, and it has been confirmed by franchise dealers reporting customers using manufacturer websites and used car locators.

The relatively quiet summer – compared with the rest of the year – has also given the trade a chance to manage supply which should indicate that September’s new 54 plate should not be accompanied by a ‘crisis’ of oversupply.

Meanwhile, small cars are becoming more popular with traders as CAP claims there is a slowing in the reduction in prices for superminis up to three years old, stating that they have now reached a price where they are viewed as less of a financial risk and an attractive proposition for retail stock.

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