Trying to pick fleet cars that will appeal to the used market in three or four years is tricky.
The most obvious example is the rise of the SUV, but the whims of used car buyers are changing as much as the new car market is shifting. But not always in the same way or at the same time to match the types and volumes of cars being defleeted through the auction hall.
“Key sectors that will see a boost in numbers will be small cars, crossovers, SUVs and specifically from the German premium badges,” predicts Rupert Pontin, director of valuations at Cazana.
These are the areas that have seen recent big new car sales growth. Pontin (picture right) says: “The traditional C and D segments are now looking short of exciting product as focus has moved to mainstream SUV areas and it is worth a word of caution that the market may be approaching saturation point.”
But there are nuances within that, says Jayson Whittington, chief editor for cars and leisure vehicles at Glass’s parent Autovista group. “While some fleet-spec German saloons are struggling to meet the expectations of vendors, anything that has enhanced specification such as larger wheels, privacy glass, in a good colour (white still being really popular) can be hard fought-over,” he comments. “SUVs have become very much the norm now and volumes have at times outstripped demand, with some high-volume models suffering downward price pressures as a consequence.”
FIT FOR PURPOSE
With market trends being so difficult to predict, experts agree that making sure the vehicle is the right one for the fleet user is key.
“Specifying cars for the used market three years in advance can be very difficult and it is more important to make sure the car is fit for first use,” says Cazana’s Rupert Pontin.
Glass’s Jayson Whittington (pictured right) says that it is “essential that the car is fit for purpose in the first place and meets the needs of the driver”.
Whittingham also encourages fleets to avoid base models if at all possible. He says they should encourage metallic paint and to look closely at newer safety features and connectivity, as awareness of these elements will be much higher come defleet time.
PETROL PAINS IN THE LONG TERM
The debate regarding diesel continues to rage, and new diesel sales plunged again last month. But Glass’s Jayson Whittington isn’t convinced about any long-term trend of petrol growth at the expense of diesel.
“The recent trend we have seen with the performance of petrol models could well be short-term,” he tells Company Car Today. “There is currently no financial penalty to owning a used diesel car and when that enhanced fuel economy is taken into account, the total cost of ownership can be significantly different.”
He predicts that the rise in petrol volumes in the new car sector will mean more being defleeted three years from now. “Should demand not keep up with supply then it is likely that values will soften” he concludes.
LINING UP ONLINE SALES
Five essential pieces of market insight from BCA Remarketing MD Stuart Pearson’s
1. Match point
The simple rule is that specification should match model. Buyers have a different level of expectation when they are buying a city car, small hatchback or family car than when they are buying a performance saloon or executive estate. If you have premium models on the fleet then they should have good level of specification – attractive paint and trim, leather interior, alloys, all the expected bells and whistles – because low-spec premium cars can be difficult to remarket.
2. No identity crisis
At remarketing time, it’s vital to properly identify and declare the specification, particularly if there are a lot of base-spec models around. Providing the service history is also important and can have a real tangible effect on the potential prices vehicles might achieve.
3. Options help sell, but don’t keep their value
Never scrimp on specification when putting premium and luxury models on fleet, but equally be aware that the investment at the front is unlikely to be returned in full at remarketing time. However, a well-specced premium model is much easier to sell than the lower-specced example and will generally attract more buyers and better returns.
4. Insight means better results
As data evaluation improves, predictive analytics is developing into a powerful tool allowing for an enormous boost in pricing accuracy, for example. We are constantly testing and refining our pricing models to offer greater accuracy. The insight offers customers information on the benefits of vehicle preparation, mechanical checks and other remarketing activities.
5. Knowledge is power
BCA models data on inspection costs, appraisal images and grades, the number of days in stock, Auction View interest and performance/market data of similar vehicles. It all helps sellers make the right remarketing decision.