Having no control over the selling of used vehicles could mean many companies are throwing money down the drain, they are being warned.
A new report notes that many fleet executives are prepared to travel a hundred miles to seek out an extra quarter of a percent discount on a new vehicle.
But, it says: ‘Equally, he or she may dispose of a used vehicle as quickly as possible with no thought as to the additional 4-5% incremental price they might be able to achieve through disposing of that same unit using the most appropriate method.’
The study, called Corporate Responsibility for Used Vehicle Disposal, has been produced by Professor Peter Cooke of Nottingham Business School and sponsored by the Fleet Auction Group.
At its launch, Cooke said: ‘Companies don’t have terribly strong used vehicle policies but it is an opportunity for cost reduction. Get it right and you can save money on total vehicle lifecycle. You can reduce costs and enhance shareholder value.’
The study found that a fifth of companies do not have anyone within the organisation monitoring the disposal of end-of-contract cars and that 77% use guides to determine residual values.
It says: ‘The responses to these two questions can only be classed as disturbing. Residual values are, in reality, determined by what will be paid in the marketplace for the used vehicle on the day it is sold – not the figure that is ‘set as the residual value’.
‘The guides are a starting point for residual values but there is controversy as to what they represent and how close they are to reality on the day of disposal.’
Cooke said maximising residual values takes a great degree of skill to identify which route is most suitable for each individual vehicle.
He added: ‘Given the range of issues highlighted, it would appear that many organisations could be classified as ‘amateurish’ at used vehicle disposal monitoring and leave themselves open to being abused by both employees and buyers – failing to achieve the best possible deals for used vehicle disposal.
‘Similarly, one fleet in five would appear to have nobody monitoring used vehicle fleet sales.
There is much talk in the professional and technical press and at conferences that ‘businesses fail to achieve acceptable used vehicle prices’ – little wonder if one in five does not even monitor prices.’