Reserve values are being automatically set by some fleets at 100% of CAP Clean, regardless of the condition of the vehicle or its mileage.
Instead of adjusting price expectations, fleets are seeing vehicles going unsold and then having to re-auction them, sometimes settling for less than the price than was originally offered.
Fleets have been issued with repeated warnings about this short-sighted approach over the past year, with the latest comments coming from the Retail Motor Industry Federation (RMI).
Alistair Manson, RMI vehicle auctions director, said: ‘Many fleets are chasing unrealistic guide prices that their stock doesn’t warrant.’
He said reserve values were being automatically set by fleets using 100% or more of CAP Clean, without taking into consideration comparisons with last year. Also many vehicles were of poorer quality and had higher mileages as a result of the lengthening replacement cycles.
The trend affects many sellers, including fleet operators, leasing companies, banks and finance houses, he said. As a result, fleets are losing support from professional franchised and non-franchised buyers because they believe their vehicles are over-priced in the current climate.
Manson said: ‘The vehicles do not sell because they are not worth what the fleets are asking. As time passes, depreciation removes more value and the end result is they take less for their vehicles than if they had been more rational and realistic in their initial appraisal and valuation of their stock.’
Manson believes the problem is often caused by the inexperience of those assigned to value the vehicles. He said: ‘Despite the fact that many fleets are auctioning vehicles worth many millions of pounds annually, valuation is in some cases left to relatively junior executives.
‘Fleets must ensure their vehicles are sensibly valued to sell, rather than rely on what a guide book tells them. Auctioneers can offer advice on the marketplace, but if this is ignored the end result can be very costly for the seller.’