There’s no avoiding it – the used vehicle market is having a rough time right now.
The number of unsold cars and vans is rising, and continuing to depreciate.
The good news is that vehicles that are well prepared and presented with retail quality specifications are still selling.
And whatever your chosen resale method, whether you plan to auction vehicles, route them back through a dealer or sell them to staff, all fleet operators need to understand and exercise the basics when it comes to remarketing.
Good remarketing skills are imperative for selling a fleet that is owned outright but fleet managers who lease should still keep an eye on their vehicles’ prospects and not simply rely on a leasing company to sort out any mess come the end of contract.
“When it comes to selling at auctions, fleet managers need a number of skills in their arsenal,” says Simon Henstock, UK network operations manager at BCA.
“On top of all their management skills they need remarketing knowledge.
They need to do research on the market and really consider the vehicles they’ve got and when they are going to come to the end of their life.”
Back to basics
Operators should be thinking about residual values even before they sign on the dotted line for any new fleet additions.
“When it comes to specifying options, it’s best to avoid the Christmas-tree syndrome – you don’t want to end up putting more money into the vehicle where the cost of the options could actually detract from the resale value,” advises Tim Bowden, head of operations at Hitachi Capital Vehicle Solutions.
Whereas options are considered a must in high-end vehicles, in lower-range models some options, such as leather seats, may add little to the resale price.
The looming spectre of increasing carbon-based taxation is also difficult to ignore.
Mike Pilkington, managing director of auctions and remarketing for Manheim Europe, believes fleet managers need to think about green taxes when deciding on vehicles – and the possible effect on values.
“At the moment, there’s pressure on large-engined vehicles and 4x4s.
Big cars are hard to value due to uncertainty over future taxes,” he says.
Once fleet managers have chosen their vehicles, they need to ensure drivers treat them so that minimal reconditioning is required at auction time.
“Imparting the right knowledge on vehicle maintenance and driver care will set a fleet manager in good stead,” says Mr Bowden.
“Alternatively, consider offering employees the opportunity to buy the car they are driving at the end of its lease life.
Even if they don’t ultimately decide to buy it, the chances are they will take better care of the vehicle while they think about it.”
If vehicles are damaged in any way during their life on the fleet, then managers should ensure that any repairs are done quickly and thoroughly.
“The absolute bugbear of the remarketing world, “ explains Mr Pilkington, “is vehicles with poor previous repair, when buyers don’t know what’s under the top paint.
“If you’re going to have a car repaired, make sure that it’s done properly.”
So, a batch of perfectly maintained stock turns up at auction, but has it got the correct information to go with it, and, more importantly, is it selling for the correct price?
“Managers need to understand how important it is to accurately describe their stock and make sure the vehicle history, MoT and V5 are always available,” says Mr Henstock.
In order to market vehicles accurately, managers should not purely rely on price guides but should get help from remarketing firms.
“Particularly when the vehicles are owned outright it’s very important that fleet managers take professional advice – they are not exposed to the used market all the time and it is a volatile market,” advises Mr Pilkington.
Knowing when to stop
Finally, fleet managers need to know when to sell. Today’s market is tough and prices are lowered to keep stock moving, which means that price expectations for a certain vehicle may not be met.
“It’s important not to get too carried away with what you believe is the correct value for your vehicle,” says Mr Henstock.
“If you’re advised it’s not worth what you think then don’t try in vain to go after that price.”
“All fleet managers need to know the remarketing basics,” adds Mr Pilkington, “but I think the hardest thing when it comes to disposing of vehicles is to be brave enough to get it sold.”
At a glance
- Think about resale during the procurement process – at some point vehicles will have to be defleeted.
- Consider whether they are going to depreciate quickly or be heavily taxed.
- Implement strict policies to ensure drivers look after their vehicles.
- Any damage incurred during a vehicle’s fleet life must be properly repaired.
- Buyers will want to see realistic prices and correct documentation.
- Get professional help, know the market and know when to sell.