A chronic lack of expertise in remarketing is leaving fleets exposed in the uncertain economic climate, experts have warned.
The move to outsource has meant fewer fleet managers have the defleet skills - such as balancing the cost of reconditioning and sale price, or judging when and where to sell – they need to ensure their cars fetch the highest price at auction.
And the need for leasing companies to move huge volumes quickly means many are sending cars to auction poorly prepared, further exacerbating the current oversupply problems.
“In current market the price gap between the best and the worse condition cars will widen.
"Therefore the cost of not preparing them to ready to retail standard gets greater,” warned Martin Keighley, director of Vehicle Information Publishing.
"In the last few years, when trading conditions have been good and supply and demand have been nicely balanced it hasn't mattered so much but now, with conditions becoming more difficult, it could become a real issue, both for outright purchase fleets and leasing companies.
"The problem is that so many cars are badly presented that fleets can only hope to achieve 85% of the usual industry guide prices.
"Yet with a small amount of work those same cars could be made ready to retail and would fetch more than 100%.
"From the work we do consulting with firms on remarketing, we’ve had the fleet managers of major leasing companies asking us ‘what state are our cars in at auction?’ because they just don't see them. Imagine the money this lack of attention is costing the industry."
Andrew Walker, CEO of Fleet Auction Group, agreed: “There is definitely a lack of remarketing expertise in the industry, and more so recently.
"The move to outsourcing has certainly affected this knowledge base.
"It used to be the case that the fleet manager was a jack of all trades: he bought, ran and sold cars, but much of this is now run for fleets by leasing companies.
“As a result, when leasing companies are defleeting cars, they’re dealing with such huge volumes that most aren’t able, or possibly willing, to get them to a desirable standard.
"They just take the hit on a car’s resale price, which could be hundreds of pounds.
“This can be done when the market is strong, but once things start to slide, those without the expertise really struggle, compared to those who can do it.”
Mr Keighley acknowledged there were skills in the market, with auction houses and remarketing firms proving useful partners and but added that they can't physically cover the whole market.
"If fleets want to keep costs under control, and manage the high volumes during this potentially difficult period, they need to reinvest in remarketing skills," he said.