Maximising the value of a car at defleet time is an important skill, as there are plenty of ways for fleets to get tripped up
For all the skill of managing a vehicle while it’s serving on a fleet, it’s easy to forget that one of the most important financial aspects actually happens once you’re done with it. Get the disposal wrong and any discount achieved at the front end or clever in-life management is gone in an instant
“There are many different kinds of errors that can be made, ranging from failing to ensure that all the documentation and equipment that the vehicle requires is present, through to defleeting to the closest geographic centre with no consideration given to the model mix that may arrive there,” says Vehicle Remarketing Association chair Sam Watkins. He also points out that sales program frequency, refurbishment capabilities and lack of provision of images, model information and specification are also areas businesses can trip on.
Ensuring everything is in place is also key, according to auction giant BCA’s UK remarketing boss Stuart Pearson. “This means not just retail standard presentation and condition, but ensuring vehicles are offered for sale with V5, MoT certificate, service history, spare keys, locking wheelnuts, sat-nav disks and any other items that make the car complete,” he says. “And with increasing volumes of vehicles being sold digitally, presentation is also important for online buyers in combination with high-quality imaging, accurate appraisals and realistic grading.”
TO REFURB, OR NOT TO REFURB
Aston Barclay conducted some work last year on the average value of auction grade three and four vehicles, finding there was a £449 difference in sale value during September and October. The firm claimed that spending £185 on refurbishment would move the car from grade four to grade three condition, equating to a £264 reward.
With regard to other work, Aston Barclay’s group managing director, Martin Potter, said some things are more worthy of time and money than others. “Selling a car with an MoT will always work in a vendor’s favour because buyers know they do not have work to do on the car,” he says. “We would recommend against fitting new tyres however, because you tend not to get the money back.”
BCA agreed that it’s important to show cars in their best possible light. “Professional buyers gravitate towards the most attractive and best-presented vehicles because these represent the best profit opportunity on a retail forecourt,” says the auction firm’s Stuart Pearson.
DON’T BE TOO RESERVED
Cars not hitting expected or reserve prices is a disappointment, but holding out for a higher price next time isn’t always a wise move. “Anything that delays the sale tends to cost the most money,” says the VRA’s chair, Sam Watkins.
“It’s all about liquidising the assets as quickly and effectively as possible, giving consideration to the market conditions,” he says.
He also believes buyers are after quick decisions, rather than having to wait to see if a bid under reserve is accepted.
Aston Barclay boss Martin Potter agrees, and says remarketing cars without reserve can be beneficial.
“Placing a car on sale at auction can add an additional £50-£100 to prices because the buyer knows that they won’t have to go through a provisional bid exercise and risk not buying the specific car.”
BIG NEWS FROM A BIG YEAR
Stuart Pearson, BCA’s COO UK Remarketing gives his top five tips successful remarketing.
1. Precision and efficiency pay
To achieve the best possible return to the company bottom line, the critical factor when remarketing vehicles is to carry out the process as efficiently and accurately as possible. Any activity that prevents a vehicle being sold quickly and efficiently has the potential to impact the return to the seller. Over-valuing and under-preparing are the two factors most likely to affect the final sales value, alongside any missing items such as service history or equipment.”
2. Critical costs
From the vendor’s perspective, the critical elements are holding costs and depreciation. It is important to appraise and value vehicles sensibly and in line with market sentiment, presenting and preparing vehicles for sale in a professional manner and choosing the most effective route to market. Ensuring that reserves are set in line with vehicle condition is fundamental and will ensure that fleets avoid costly mistakes.
3. Fail to prepare, then be prepared to fail
Preparing vehicles to a minimum expected standard and using data to invest in additional reconditioning are all easy fixes to ensure maximum returns and first-time sales. Having all of the relevant information at time of sale – V5, service history and also full specification – will also ensure optimum values are achieved.
4. Valuable valuations
As BCA operates across the wholesale market, we can accurately value vehicles whatever the age and mileage profiles. Pricing a vehicle accurately will help to both maximise the value and speed of sale by generating buyer interest. We have developed tools that provide clear insight into the current market conditions and market trends.
5. Ready to go
There is a noticeable and appreciable improvement in sales performance when vehicles are presented in ‘ready to retail’ condition, for the professional buyer to take away and sell without delay. Conversion rates improve, meaning the average time to sale is reduced and holding costs are decreased.