Fleet News

Remarketing: Get smart about preparing fleet vehicles for auction

First impressions count.

Experts say it takes only between 90 seconds and four minutes to make up our minds whether we fancy someone.

And similar logic can be applied to the ex-fleet car going through the auction hall.

As Guy Pearce, sales director at the Fleet Auction Group (FLAG), says: “You never get a second chance to make a first impression. The key is: does the car look nice and bright when it’s sold?”

This view is backed up by research from BCA, which looked at the main factors that influence price in the used car market.

Professional motor trade buyers rated specification top, but the second biggest influence on price was standard of presentation.

Tough market

Vehicle presentation becomes even more important when you factor in the current state of the used car market.

It’s no secret that used car values are falling and that there’s plenty of stock about.

“Vehicles in poor condition are much harder to sell at auction and there is not the buyer appetite to take them into stock, unless the prices reflect it,” says Mike Pilkington, managing director of Manheim Auctions and Remarketing.

“As the tough market continues and buyers have an increasing choice of vehicles at auction, only the best and cleanest cars will attract the highest bids.”

And BCA suggests that preparation may mean the difference between a vehicle selling and remaining unsold.

Tony Gannon, BCA’s communications director, says: “When competition for the buyers’ attention is high, sellers should ensure their vehicles stand out from the crowd.

“With residuals under pressure in 2008, professional buyers are understandably cautious about buying for stock and may avoid any vehicle that requires repair or refurbishment if better examples are still available.”

Ready to retail

The importance buyers attach to having a car that is in ‘ready to retail’ condition should not be underestimated.

As BCA’s survey of professional motor trade buyers shows, they rate the standard of presentation above documentation (including service history) and ownership history.

This might seem surprising but Mr Gannon explains that buyers value having the vehicle ready to retail because it means they won’t have to spend time and money on preparation work before being able to place it before retail buyers.

There’s a time benefit for the fleet manager or leasing company selling at auction, too.

Preparing vehicles properly means they are more likely to sell first time.

And that means they are not running the risk of their vehicles depreciating further while they wait for them to sell.

Another benefit of investing in preparation is that it will improve a fleet’s reputation among buyers. And, again, that could mean faster sales.

Making a car ready to retail is more than just putting vehicles through the car wash, though.

As Mr Gannon says: “If a fleet car is to realise its potential at remarketing time, then fleet managers should be considering every tool in the remarketing preparation box.

"That might mean repair to trim and paint, dent removal and a machine operated polish.”

Mr Pearce even recommends deodorising a vehicle before sale, particularly if there has been a dog in it.

Of course this doesn’t add value, but it helps when creating that all-important first impression.

Achieving the best bid

Essentially, preparation is about maximising what the fleet manager gets for the
sale of their vehicle, and the money they invest in repairs and refurbishment
should, ideally, be repaid by an increased sale price.

Mr Pilkington says vendors need to consider the effect that damage can have on the value of a vehicle. He suggests:

  • A damaged windscreen can devalue a car by between £100 and £300.
  • Cracked headlights could knock £75 to £150 off the value.
  • Damaged alloy wheels could equate to £50 to £150 per wheel.
  • Minor accident damage could affect the value by up to £250 per panel.
  • Carpets and seat upholstery which are in poor condition could affect values by £100 to £350.

Repairing damage doesn’t necessarily mean a trip to the bodyshop.

Much of the damage fleet vehicles incur can be repaired at the point of sale using ‘smart’ (small to medium area repair techniques) repairs.

“‘Smart’ repair is a combination of things like paintless dent removal and localised repairs, such as alloy wheel refurbishment, interior trim repairs, windscreen chip repairs and bumper corner repairs,” explains Mr Pearce.

The advantage of using ‘smart’ repair on minor damage is that a whole panel doesn’t have to be repainted or replaced.

"This brings the cost of repairs down (it could be half the price of taking the vehicle to a bodyshop) and means a faster turnaround.

BCA’s research into the most common types of damage that cars have when they enter the remarketing chain shows that 47% of all vehicles they inspected fall within ‘smart’ repair criteria.

The most common damage is scuffs and scratches to corner bumpers, followed by car park dents, stone chips and scratches to paintwork, alloy wheel refurbishment, and interior trim repairs.

Fleets have started to get wise to the benefits of ‘smart’ repairs. Ben Powell, a paint technician from Fleets Ahead which carries out ‘smart’ repairs for FLAG, says: “People are just starting to realise that you can get paint and polish work done via ‘smart’, you don’t have to leave your vehicle in a body shop where it will be off the road for two or three days.”

Smart or not?

Smart repair is by no means a ‘catch all solution’ though.

Mr Pearce points out that body work, panel replacement and repainting require a bodyshop and that accessibility is a key issue.

For instance, if there is accident damage adjacent to the side impact bars it may need to be repaired at a bodyshop.

He says FLAG does not use drilling to get access to a difficult spot as this may invalidate the anti-corrosion warrantee.

Tony Hodgson, a technician from Fleets Ahead, adds: “People think you’re a mobile bodyshop; they over-estimate what can be done with ‘smart’.

"We haven’t got ovens, for instance, and we haven’t got eight hours. It’s a fast turnaround.”

The advice from Mr Pearce is to consider repairs on a case-by-case basis.

And, as Mr Gannon points out, if there is heavy damage on one panel it might be more expedient to replace the panel rather than repair it.

It’s also worth bearing in mind that botched ‘smart’ repairs, such as using a touch-up pen on a vehicle door, can do more harm than good.

Smart repair work needs to be carried out by professionals.

Less is more

The key to success is inspection at the point of defleet, according to Mr Pearce.

Hand-held devices can provide ‘chapter and verse’ of damage, and can be used not only to support a recharge process but also to generate a ‘smart’ repair programme.

When inspections are carried out, auction groups can advise vendors which vehicles are most appropriate for which standard of preparation.

And vendors may discover that it is not worth spending large amounts fixing every piece of damage.

Manheim says that carrying out £150 of selective reconditioning may be more worthwhile than a more comprehensive recondition costing £300.

For instance, it is worth spending money on refurbishing alloy wheels as they can enhance resale value, particularly on luxury models.

Mr Pearce suggests that scraped wheels give the impression that the owner has not looked after the car properly.

“Any repairs have got to be sympathetic to the cost,” he says.

“The question is ‘will the fleet manager get a high percentage back?’”

So, the message is to invest in preparation to create that important first impression and help a vehicle sell first time, but spend wisely.

Price influences (in order of importance):

  • Specification (non-standard, equipment, colour).
  • Standard of presentation.
  • Documentation (including service history).
  • Ownership history.

Courtesy of BCA

 

Is SMART repair right for you?

“Sometimes you think damage can be repaired using ‘smart’ and it can’t.

Conversely, sometimes you think it’s a bodyshop repair and it’s not,” says Guy Pearce, of FLAG.

The examples pictured illustrate which types of damage can be ‘smart’ repaired.

 

Yes

No



SMART repair with FLAG

To see the results of ‘smart’ first-hand, the Fleet Auction Group (FLAG) invited Fleet News to have some repair work done on two long-term test cars (a Nissan Qashqai and a Peugeot 308).

Both vehicles had been the victims of minor car park incidents with the Qashqai suffering a scrape to the nearside front bumper and the Peugeot having a ding in the driver’s door.

The time the repairs took was impressive.

‘Smart’ repair specialist Tony Hodgson spotted the ding in the Peugeot and tapped it out in no time at all, while his colleague Ben Powell worked on the Qashqai’s scratches.

He did the filler and preparation, painting, drying (with the aid of a heated lamp), and polishing all within a couple of hours.
 

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