Fleet Leasing

Daily rental industry learning value of ready-to-retail defleeting, says Meridian

Row of parked cars

The daily rental industry is learning the value of defleeting stock in ready-to-retail condition in order to maximise returns, says Meridian Vehicle Solutions.

Phil Jerome, managing director, at Meridian Vehicle Solutions, believes the sector is increasingly putting more effort into ensuring cars are sold in grade one or two condition.

He explained: “Daily rental cars have traditionally not been that highly sought after by the trade. Their condition was often variable and there was even a widespread stigma among used car buyers about ex-rental vehicles because of the imagined abuse they received.

“However, the image differs from the reality. The truth is that, for several years, major daily rental companies have been putting much more effort into their defleeting operations, especially when it comes to common issues such as minor bodywork and trim damage, but even over the last year, there have been noticeable advances in preparation.

“Additionally, smaller operators have started to catch up. Just 2-3 years ago, it used to be that if a batch of ex-rental cars from different companies came up for auction, they tended to be a pretty mixed bag. Now that is no longer the case. They will be of a good standard.”

Jerome says that Merdian, as a medium term rental business typically offering contracts of 1-6 months, was a good example of the trend in action.

He explained: “Most of our vehicles are sold to franchise dealers and, although they might typically have covered anywhere from 5,000 to 20,000 miles, we ensure that they are presented in a condition that is virtually indistinguishable from new.

“For this reason, we have a strong reputation among dealers for supplying stock that can be placed straight on to their web sites and forecourts. This is especially true among manufacturers in which we specialise, such as Volvo and Mercedes.

“While we differ in operational terms from a daily rental company, we are a good example of the kind of ready-to-retaildefleeting that is now common across the rental industry.”

A further element, says Jerome, is rental companies of all kinds have become much more professional at buying with a better understanding of likely disposal conditions.

“Few rental companies now buy dozens or hundreds of exactly the same car to park on their sites in a row,” he said. “They know that this will dilute their appeal at disposal time. They will instead use a strategy of varying trim, colour and equipment to provide a more appealing mix.

“This is something that we ourselves do at Merdian, ordering cars with different alloy wheel options, a range of colours, some with panoramic roofs and so on. We have found that it is an excellent way of stimulating buyer interest and maximising residual values.”
 

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