Fleet News

RVs hit as makers ‘push’ basic cars

CAR manufacturers are pushing residual values down by forcing too many basic specification nearly-new vehicles on to the market.

According to independent research, around 600,000 cars annually – about 24% of the new car market – are nearly-new cars which are used either as dealer cars, company cars for manufacturers and in rental. And because these cars are not as well equipped as those which a private or fleet buyer would choose, they are pushing down residuals.

The research, put together by the International Car Distribution Programme, claims the fleet market, in its various forms, represents the vast majority of annual sales, with traditional retail sales only accounting for 22% of overall volume, flying in the face of the official line from the Society of Motor Manufacturers and Traders, which claims retail sales account for 45%. It suggests that the fleet industry is in fact much larger at nearly 60% when rental, Motability, public sector and business fleets are grouped together, with manufacturer and dealer cars accounting for the rest.

According to John Kiff, director of the International Car Distribution Programme, the push to sell short-term cars is having an effect on fleets and leasing companies.

Effectively, persuading retail buyers to take on nearly new ex-dealer demonstrators and ex-rental cars means that they are not buying the new, higher specced cars they would otherwise go for, which means that eventually less desirable vehicles are coming back on the used market, lowering residual values across the board.

Kiff, speaking at the Fleet News Challenge, Change and the Customer conference, believes that manufacturers also need to pool their information to look at trends and to better serve leasing companies and fleets, both small and large.

By being secretive about their business, and where and to whom their cars are sold, it is impossible to properly gauge the size and structure of the market.

But manufacturers hit back. One senior fleet boss said: ‘Of course we know who is buying our cars – we do massive research into it and have people working on it full time.’

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