How important are age, condition and correctly classifying your defleeted vehicles?
Getting best value for a defleeted vehicle is a delicate balancing trick between getting a top price as well as a quick sale.
Cap HPI senior valuations editor Jeremy Yea says: “There is no secret to setting an auction reserve. It’s just a case of correctly assessing the vehicle’s condition and NAMA grade applied (refurbished or non-refurbished), exterior and interior colour combination, optional extra content, service history and relevant provenance, including the V5, while pricing to market conditions.”
Fluctuating market conditions should be taken well into account, says Cox Automotive insight and strategy director Philip Nothard. “Sellers shouldn’t be too enthusiastic about the current trade values and maximise the activity and demand generated through online auctions,” he tells Company Car Today. “It is evident that poor-condition or mis-described vehicles are harder to sell.”
Cap HPI’s Yea says that both buyers and sellers understand the different grading levels, although vendors still price to Cap Clean levels when condition grading is low, and will “tend to use Cap Average”.
Nothard also says sellers are having to pay close attention to how they price low-mileage models.
“In some instances, a lower mileage for the vehicle’s age can be tough to sell as trade values give a premium for the mileage,” he says.
On the flip-side, higher-mileage vehicles, which Nothard put at 80,000 miles-plus, in top-level Grade 1 condition, can attract good money.
MILES FEWER MILES
Predictably, given the past 12 months, vehicles coming to market now are showing drops in average mileage.
According to Cap HPI, one-year-old cars were showing a 12% fall in mileage for 2020 compared to 2019, and early data for 2021 suggests they will be almost 30% down on 2020.
The effect is less severe for the traditional defleeted company car at three to four years old, as only one of those years was pandemic-affected.
However, Cap HPI’s Jeremy Yea says mileages were falling before Covid-19, with working from home or public transport taking the place of some journeys.
PREPARE TO REPAIR
Whether to repair damage or not is always a tricky question.
“This can depend on current market conditions and what levels of supply are like at the time,” explains Cap HPI’s senior valuations editor, Jeremy Yea.
“You also need to gauge the benefit of cost versus return, the wider credentials of the car and the total preparation time. If the car has a chequered service record then it may not be worth it, but if it has a good, solid service history and you can lift the condition to grade four to grade three with relative ease, and by not adding too many days in stock, this would be beneficial and should see a quicker speed of sale.”
But he says with heavier damage and vehicles on the lower end of the condition scale, pricing lower for a quick sale in line with Cap Average or Cap Below Average levels is the more sensible approach.
Stuart Pearson, BCA COO UK Remarketing, gives his key points on the issue of seasonality in used car values
1. Line up with the market.
It is critical to value your defleeted stock in line with market expectations. Real-time intelligence can give a granular view of supply, demand and pricing factors and can inform the best time and route to market.
2. Mileage staying stable.
Looking back over 2020 vs 2019, average mileage for corporate stock was more stable than could have been expected. Some of this is likely to reflect the rise in homeworking following the onset of the pandemic.
3. Pre-sale for a sale.
There continues to be an important role for pre-sale preparation and appropriate refurbishment to generate additional value as buyers continue to focus on stock that can be turned around quickly. While additional preparation may seem alien to the concept of reducing time, BCA’s data-driven approach to refurbishment has proven that speed of sale can be increased and additional value added, when an investment is made..
4. Sensible refurbs make sense.
Clearly, there is a balance to be struck to optimise the investment in refurbishment against the sale price and speed to market. Simple scuffs and damage to wheels and cosmetic damage to paint and trim are relatively quick and economical to repair, yet can provide a substantial uplift in any vehicle’s desirability.
5.Ready to go means business.
The best returns are seen from the shortest time from defleet to sale. This means ensuring vehicles are offered for sale with the V5, a valid MoT certificate, service history, spare keys, locking wheel nuts, sat-nav discs and any other items that make the car complete.