It’s easy to forget that, along with strict policies regarding vehicle maintenance and care, a good defleet strategy is vitally important for achieving best returns, potentially saving the company a huge chunk of money once the vehicle has finished its service.
“Vehicles that have everything they need for sale demonstrate an appreciable improvement in sales performance,” explains BCA’s COO UK Remarketing, Stuart Pearson. “Conversion rates improve, meaning the average time to sale is reduced and holding costs are decreased.”
That point is backed up by residual value expert Cap HPI. “It’s important to ensure that a vehicle is fully ready for sale,” says the company’s senior valuations editor, Jeremy Yea. “Rushing a vehicle through the defleet and refurbishment process and entering it into the earliest possible sale without receiving any of the missing items and documentation may impede the sales process and could have a detrimental effect on resale value.”
Vehicle Remarketing Association chair Sam Watkins says following some basic rules can help a vehicle to sell first time.
“It’s a question of realistic pricing, the right conditions and the most appropriate sales channel,” he tells Company Car Today. “This sounds very simple but, of course, there is an entire remarketing sector devoted to making this happen and even with their massed knowledge and resources, sometimes vehicles don’t sell. That’s why working with the right remarketing partners for your needs is essential for fleets.”
Ensuring price expectations are reasonable is also vital, because turning down a sale in hope of better bids next time is seldom a financially worthy strategy.
“A re-entry will add another seven to 14 days to the vehicle’s days in stock, which is now a high-priority KPI for most leasing and contract businesses, as the holding costs are estimated at around £5 per day per vehicle,” says Cap HPI’s Yea. “Reserves should be aligned to the market to support a quick sale, it’s important to remember that not all cars are desirable.”
“There’s a saying in the trade that ‘the first bid is the best bid’, and this is very much true because you have actually made the sale,” concludes the VRA’s Watkins.
WHAT NOT TO FORGET
- MoT certificate
- Service history
- Spare keys
- Locking wheel nuts
- Sat-nav discs
- Any other items that make the car complete
HEADING OFF THE LESS OBVIOUS
Even by doing all the basics, there are still some issues that can catch out the unwary.
BCA warns that with electronic service records, evidence of servicing needs to be available at the time of defleet.
“It’s also important to remember that additional specification and paint choice added to a vehicle when new can add significant value when the vehicle changes ownership and becomes a used vehicle,” adds BCA’s Stuart Pearson. “On many modern vehicles, identifying the correct manufacturer colour along with the additional equipment is not always an obvious process and therefore providing this information becomes crucial at remarketing.”
And Cap HPI’s Jeremy Yea points out that fleets need to ensure any recall work is carried out during the vehicle’s service, because it will show up on checks and affect values if not completed. And if vendors wait until the end of the vehicle’s tenure, delays could be caused by the unavailability of parts or limited service capacity.
HINTS FROM THE HALLS
Auction giant BCA’s COO UK Remarketing Stuart Pearson, COO UK Remarketing, reveals the best ways to achieve the best values
1. Speed is of the essence
The priority must be around optimising the defleet and remarketing process by utilising all of the available resources (both physical and digital) to achieve the maximum value for the vehicle in the current market. Speed of service delivery, along with data-driven insight into appropriate refurbishment for the vehicle, will ensure maximum value.
2. Don’t forget the basics
We talk about the remarketing basics a lot and these haven’t changed in many years. Ensuring every vehicle has the appropriate documentation, from V5 to service history, describing the vehicle with all of the add-value specification and also providing equipment such as locking wheel nut keys and parcel shelves are must-haves, not nice-to-haves.
3. Realistic reserves required
A vehicle must be appraised and valued in line with market sentiment and prepared for sale in a professional manner to optimise its performance at point of sale. Ensuring reserves are set in line with vehicle condition is fundamental. BCA Valuations provides the most comprehensive source of real-time auction sale prices in the UK and is designed to ensure vendors have access to the information they need.
4. If not, why not
In the event that a vehicle is unsold, the advice is to review all of the information for accuracy, revalue the vehicle where appropriate, invest in any appropriate refurbishment that may have been declined at point of original sale, and push the vehicle into the most appropriate channel as quickly as possible.
5. Be ready to go
Vehicles that have everything they need for sale demonstrate an appreciable improvement in sales performance. Conversion rates improve, meaning the average time to sale is reduced and holding costs are decreased.