Fleet News

Marketwatch: Take action to minimise losses, fleets told

FLEETS will have to work harder to obtain good prices for defleeted cars this year as prices in the used market fall, experts have warned.

Residual value forecaster EurotaxGlass’s warned last week that a fall in new car sales and an increase in nearly-new vehicles supplied to the market could result in a fall in values of three-year-old end-of-contract cars.

It suggested that price falls for used cars are likely as a result of an oversupply of new vehicles, where excess stock is registered and then retailed as ‘used’ stock after three months.

Rob Barr, group communications and planning director at Manheim, said: ‘We agree with Glass’s view of some tough times to come. This year will see a number of factors coming together, the likely result being real pressure on used car values.

‘Disappointing new car sales in 2005 have left certain manufacturers with excess stock which really needs to be into the market before the numerous new models for 2006 are launched.

‘Given this scenario, they may well have to be marketed as nearly-new used cars, as opposed to brand new and this will certainly create downward pressure on prices.’

The company said fleets should not rely on the traditional two to three-month surge in demand and resulting price uplifts at the beginning of a new year. Instead, they should offer ‘sensibly priced’, well-prepared vehicles with full documentation and work with remarketing companies that offer a broad range of services and a choice of sales channels.

Tom Madden, director of customer affairs at BCA, said the strongest area of the used car market during 2005 was the fleet and lease sector – a trend he expects to continue throughout the year.

He said: ‘With fewer part-exchange vehicles coming into the mix, and no evidence that manufacturers and rental fleets were churning nearly new stock into the market, this meant supply and demand was well balanced.

BCA also saw plenty of demand for late- year stock, with prices increasing through 2005, as our figures show.

‘At this point in time there is nothing to suggest that this situation is going to change and if the private buyer keeps out of the new market, then the nearly-new one may continue to benefit, pulling up the three-year-old market in its wake as our analysis shows in 2005.

‘You can’t ‘drive’ the market, so fleet managers should focus on what they can do – ensure their stock is properly presented and remarketed in an orderly fashion.

‘They should pay particular attention to the length of time vehicles take to sell and not just be hidebound by their performance against notional guide prices.’

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