Fleet News

FNE Conference: Breakout session - used car market

Selling defleeted vehicles across Europe presents massive opportunities for lease companies to capitalise on the demands of different markets and, ultimately, to get the highest price for their vehicles.

Resellers such as BCA, which is the largest on the continent and is expanding its operations, especially into central and eastern Europe, offer the simplest route to market.

As Paul Bradbury, managing director of BCA Europe, told delegates at the Fleet News Europe Conference held in Brussels recently, prices on the used car market have remained stable. “We have seen some worrying signs, but nothing too dramatic has happened to prices.”

There are many issues that are effecting demand and ultimately used car prices – a lot of vehicles are being sold to eastern European markets for example, which do not mind high mileage cars as much as the west, where repair and parts costs are higher.

On the other hand, Algeria, which took a lot of French cars, has stopped importing used cars and when it allows them in again, it will probably only allow cars aged three years or under.

Then there are regulatory changes in Germany, or the cost of changing ownership in Spain – all these issues affect used car prices.

But despite regional differences, the trend is only going one way – towards a single market for used cars in Europe – says Mr Bradbury.

Defleeting is expensive and can cost as much as 10% of the value of a used car. Therefore, clever use of technology, such as e-selling and targeting specific markets, can help reduce or offset some of these costs.

For example selling high mileage cars into eastern Europe, or appreciating that while a car’s colour will not be popular in one country, it may be sought after in another. In France yellow is not popular but in Serbia it is.

Indeed, up to 10% of a car’s residual value can be wiped out because it is an unpopular colour.

As a result lease companies were advised to penalise drivers who opt for colours that have a poor resale attraction.

LeasePlan even advised that silver – the most popular new car colour – will soon attract a penalty as auctions fill with thousands of the same coloured cars.

Lease companies were also advised that, while selling direct to the consumer (or driver in many cases) is attractive, offloading too many vehicles this way will not pay dividends in the long run.

Selling direct to the consumer is expensive and cars will be cherry-picked, making the remaining fleet of cars difficult to sell delegates were warned.
 

 

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