Fleet News

Marketwatch: Hanging on may cost fleets dear

Fleets should look carefully before extending the life of cars from three to four years, after research found that prices for the average four-year-old car are more than £1,200 less than those at three years – a full 10% less of the average new value.

According to the latest Manheim Auctions’ quarterly Market Analysis report, the average sale price of a three-year-old vehicle was £4,800 (33% of cost new), while the average price of a four-year-old vehicle was £3,532 (23% of cost new) – albeit with a higher original cost.

Rob Barr, Manheim Europe’s group director of marketing and planning, said: ‘It’s difficult to recommend key replacement cycle times without looking at wholelife costs, but a lot of the impact on residual values of extensions comes through mileage.

‘As a general rule, if a three-year-old car has done 50,000 miles and is likely to do 10,000 more in the fourth year, then that’s a sensible extension. The same goes for 60-70,000 miles but the main impact on residual values comes in the higher mileages, such as 80-90,000 miles.

‘There’s likely to be more maintenance costs at that age, and the big used dealers such as the car supermarkets are interested in the lower mileages. At the higher mileages, there are more independent buyers just looking for a cheap car. Prices are much less predictable and fleets will just have to accept what the car gets.’

Manheim has analysed more than 500,000 cars sold across its UK operations, claiming its report is the most comprehensive ongoing used car survey of its kind ever undertaken.

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