Defleeting: 16 ways to better remarketing
1… Act quickly
Manheim Remarketing’s operations director Chris Cush reckons it makes sense to inspect the vehicle in advance of the end of the contract. For example, Manheim’s Inspection Services team inspects over 40,000 vehicles per year to BVRLA approved standards, checking for damage, missing keys, V5s or other documentation. A couple of weeks’ notice can mean that a fleet operator is able to recoup the costs of repair or fines from the driver and make any arrangements for damage to be repaired in good time before it is sent for remarketing.
2… Damage makes all the difference – or not?
Traditionally, market conditions have meant that buyers can be picky about their stock, choosing not to bid on models which have visible damage unless there is a clear profit margin in it. However, the stock shortages caused by the recession mean that high-quality vehicles are in shorter supply so some buyers are now filling the void by purchasing lower grade stock and spending the time and money repairing it.
3… Delete Data
The Vehicle Remarketing Association has a best practice guide for its members to help them address the growing issue of cars entering the remarketing process with a driver’s personal details still intact on a car’s internal hard drives. The technological evolution of satellite navigation, phone kits and entertainment systems means every day more personal driver information is stored on the car’s hard drives, from their entire phone book to personal addresses. Ensure that wording is included in customer contracts and master hire agreements informing their customer’s drivers of their obligations to delete data.
4… A full set of keys and documents
Replacing keys can cost hundreds of pounds, so make sure the vehicle leaves the fleet with as many as it came with. And of course, full service history and V5 are vital otherwise the car may take longer to sell, and when it does, be worth less money.
5… To repair or not to repair?
Simply, will the cost of repairing the damage be realised in the sale value of the stock? If it costs £500 to repair the damage and the repaired vehicle will only realise an extra £400 of revenue then it probably isn’t worth it. Conversely, if the repaired vehicle will make a significant profit, then it can be worth the time and finance invested.
6… sell to employees
BT employees, former employees and other eligible buyers are able to purchase high quality, ex-BT Fleet vehicles simply and in complete confidence using CD Auction Group's online sales platform. The affinity sales scheme operates through a specific website created by CD Auction Group where eligible buyers will be able to view pre-selected vehicles for sale. Without the need for extra movements, this type of defleeting can save time and money. However, it needs to be carefully managed and the amount of time selling the car must be weighed against the speed at which it could be defleeted though traditional methods.
7… Natural wear and tear can be minimised
In most cases, fleets are well looked after and there is no evidence to suggest that any particular vehicle model or marque suffers more damage than others. However, cosmetic damage such as stone chips, scuffs and scrapes, while an inevitable fact of life, can be minimised through regular inspection, maintenance and polishing of the vehicle. Educating drivers to look after the vehicle through its contracted life can pay dividends when it comes to remarketing.
8… Sell through the internet
Many remarketers offer internet sales, and they can work for some fleets, and for certain vehicles. Auction houses will ensure that the vehicles are put in front of potential buyers as quickly as possible, because every day the defleeted cars are sitting around they are costing money in holding costs and depreciation. Most auction houses now offer a vast suite of remarketing options beyond the hall, including internet sales and specialist targeted programmes aimed at specific buyers such as used car dealers, and will be happy to advise.
9… Grading matters
The National Association of Motor Auctions is introducing a standardised grading system for its members. Appraisals have long been a fact of life and Manheim’s own grading system has regularly been held as an example of good practice in this area, with Manheim inspectors working with the BVRLA to help train the entire industry.
10… Points score your cars
The new NAMA system will build on existing processes by introducing an objective point scoring approach which will provide a balanced and comprehensive review of the vehicle. As such, it will become even more important to consider reconditioning an ex-fleet vehicle in order to maximise returns.
11… Keep an eye on the market
Manheim’s latest Market Analysis figures show that the average age for company cars at auction is rising consistently, with mileage also increasing. But, because of the shortage of quality stock, values are also going up, with defleeted cars remaining in stock for significantly fewer days. There is a sense of seasonality to the used car market and it can pay dividends to release ex-fleet vehicles at the right time of year to realise best value.
12… Use live values
If you can move quickly to defleet vehicles, then perhaps you could study the market and sell when prices are at their height: CAP has Black Book Live, the first fully researched independent used car valuation system to publish trade price changes as soon as they are identified.
The firm claims Black Book Live solves the problem of uncertainty around changes in vehicle values between the publication dates of a “traditional” monthly price guide.
CAP believes this will enable Black Book Live users to be more confident in their trading decisions on a day to day basis and remove the “wait and see” caution that can emerge several days before publication of a monthly guide.
It will help fleet disposers to fine tune de-fleet activity to potentially maximise returns.
13… Think before you commit
The vehicles chosen for the fleet at the outset will impact on the value made when it comes to defleeting. Clearly, environmental legislation, fuel economy and market desirability all play a key role in the art (or science) of setting residual values. The relative values achieved at auction for specific car segments and variants needs to be carefully considered from the outset of a rental agreement.
14… Follow the demand
Don’t just put your vehicles into the nearest auction centre, Manheim Remarketing’s operations director, Chris Cush, says. Work with your remarketing partner to identify where the optimal demand is. Moving vehicles to the right branch or sales channel based on demand could lift sale values significantly.
15… Use Smart repair
Total Accident Management has reported a 29% improvement in its customer’s average vehicle off road (VOR) times between 2008 and 2011. Through the increased use of its mobile repair solutions, Total’s average customer VOR time including weekends has reduced from 11.24 days in 2008 to just 7.95 days in 2011. Improved VOR times means fleets also benefit from lower hire costs, as fleets are able to get their vehicles back on the road, or defleeted quicker.
16 Get drivers to pay for damage
Perhaps set up as part of the driver’s contract that they pay for all, or some of any reconditioning necessary at defleeting time. The standards of condition that leasing companies should accept as reasonable are set out thoroughly by the BVRLA in its Fair Wear and Tear Guide, and there’s no reason that drivers should not adhere to them, if they are laid out when they first pick the keys up. Then at the end of its fleet life, if there is damage they are aware that some or all of the charge for reconditioning is coming their way.