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The start point for the best source of fleet information |
As with many remarketing dilemmas, determining which optional extras to fit to fleet cars revolves around specifying the kit that suits the vehicle best, states Simon Henstock, BCA's chief operating officer: "Buyers have a different level of expectation when they are buying a city car than when they are buying a performance saloon or executive estate."
Many optional extras boost vehicles' desirability and residual values when remarketing time comes; however, working out which offer benefits exceeding their initial cost is much more tricky. According to Martin Potter, remarketing director, south, for auction firm Aston Barclay: "Additional spec and extras will always help a car sell quicker, but sellers should consider that the original cost of this additional spec is not always realised when it is defleeted and sold."
Tick too many boxes on the options list and you can add thousands to the price of individual cars; according to car data service Jato, specifying air-conditioning - when not fitted as standard - costs on average £725.49. Meanwhile, optional paint finishes cost around £720 typically, with satnav bumping the price up by £721.38.
These options may be an extra expense, but they can make the difference between a car selling for a good price or not selling at all, states Neil Frost, UK operations director at online remarketing service Autorola: "A Vauxhall Corsa SRi, for instance, with no air-conditioning simply will not sell, even if it is relatively cheap."
"Aircon is close to essential for business drivers and is expected in the used car market on anything above an entry-level model," says Henstock. Fail to specify air-conditioning where it is not standard and you can expect to lose money at resale time, he continues.
Despite the hefty premium to specify aircon, it is of "massive importance" according to Alex Wright at Shoreham Vehicle Auctions, with fleets able to sell cars for around £500 to £1000 extra at three years old.
Digital radios are also becoming critical on vehicles across the market, Henstock muses: "It is desirable at the minute and will become close to essential when the analogue radio signal is turned off sometimes towards the end of this decade."
Jim Hannah, operations director at leasing company Ogilvie, stresses the importance of Bluetooth with buyers, allowing the safe use of mobile phones while driving, with Frost branding it "vital" for fleet models. Alloy wheels are also now a key fixture on all bar the cheapest cars, according to Frost.
Used executive car buyers are looking for "a good level of specification, attractive paint and trim, leather interior and alloys", claims Henstock, "because low-spec premium cars can be hard to remarket".
According to Glass's head of valuations Rupert Pontin, "UK buyers tend to pay for the larger and more obvious options such as top-spec satnav systems, alloy wheels, panoramic roofs, leather interiors, metallic paint and occasionally well-specced option packs" - features that are likely to add value to executive and other higher-value models.
Pontin refers to leather for premium large cars as "essential", while a panoramic roof can add up to £1500, with slick satnav systems adding a similar figure. Appealing alloy wheels on a premium upper medium model, meanwhile, can add £750 to the value. Supporting this, Jim McNally, vice-chairman of the British Vehicle Rental and Leasing Association's residual value and remarketing committee, attributes £200 to £1000 in value to panoramic sunroofs, with alloy wheels adding £200 to £600. Along with media systems, leather and metallic paint, climate control is also key, states Pontin.
Satnav may have rocketed in popularity in recent years, but it is less important now that smartphone navigation apps are available for free, claims Henstock. Similarly, Philip Nothard, retail specialist at RV experts Cap, says that satnav may be an important feature on new cars but doesn't necessarily add value to three-year old cars, especially when updating built-in systems can cost more than a standalone satnav device.
While adding several options to premium fleet cars may not pay off in higher residual values alone, being too stingy with the options list is likely to create greater remarketing headaches, according to Henstock: "Never scrimp on specification when putting premium and luxury models on fleet, but equally be aware that the investment at the front end is unlikely to be returned in full at remarketing time." However, well-specified premium models should be much easier to sell than more Spartan equivalents, he continues, and "will generally attract more buyers and better returns".
Meanwhile, Nothard warns that option packs often don't offer much residual value benefit, as "in most cases they depreciate more than the base car itself" because they can consist of one popular option bundled with several less popular additions. On the other hand, luxury equipment on cheaper cars often carries only limited RV benefit, with Shoreham's Wright estimating that leather might add £200-£300 to the value of a mass-market model (typically much less than it cost in the first place), although it could add £1500 to the value of a three-year old executive car, making it easier to sell too.
Other options, meanwhile, can put buyers off, claims McNally. Replacing factory-fit equipment such as a 12V socket with a cigarette lighter can put off buyers, he states, as can fitting a tow bar onto some models or choosing a diesel engine and automatic gearbox combination for a small car.
Ogilvie's Hannah also raises reliability concerns over advanced driver assistance systems, which often feature cameras and sensors mounted beneath the windscreen - such as lane-departure warnings and automatic emergency braking kit - which could put off some used buyers. "If I was a fleet operator," he says, "I would probably guide against these items because these are the items that are giving us huge amounts of problems with vehicle downtime currently."
More important than most options, claims Potter from Aston Barclay, is the overall condition of the vehicle and the amount of service history retained, as well as the model itself. Make sure that your fleet looks after its vehicles well, however, and encourage drivers to select a few choice options - with luxury options for more upmarket machines and potentially sports trims for smaller models - and you shouldn't have to worry about having oddly specified vehicles that will be hard to sell.
Concluding, Henstock states that buyers are adept at finding the cars that best suit their needs: "Motorists will make decisions about desirability and value and will buy the best used cars they can for the money they can afford, avoiding cars that appear overly expensive, poorly specified or in unattractive colours".
While it is very challenging to determine which optional equipment "will result in an easy resale, as buyer preference can (and will) change over the duration over the contract", says McNally, "history has taught us that certain visually pleasing options such as alloy wheels and metallic paint are desirable no matter what class of vehicle it is".
Satnav and leather, meanwhile, are fast transitioning from "nice-to-have" to "necessary" options on larger models, making them well worth paying extra for to ensure easy remarketing.
Looking to the future, connected navigation services and safety kit are likely to become increasingly important, predicts Henstock, with an increasing number of driving aids - from hands-free parking kit to automatic emergency braking - and stop-start and other fuel-saving equipment now "very desirable at remarketing time and likely to continue to attract premium prices".
As a result, fleet managers looking to maximise resale values and ease of sale in three years' time would be wise to ensure that many of their vehicles are fitted with this kit - especially larger, more expensive models.
With 'Business Edition' models, entry-level 'SE' tags and premium 'M-sport' and 'S-line' specifications - among others - to choose from, the trims fleet managers pick can drastically affect residual values and desirability, says Neil Frost, UK operations director at online remarketers Autorola.
"If residual values are important, always specify a BMW with an M-sport pack or an Audi with an S-line pack," urges Frost. Not only do these resemble the brands' range-topping sports models but they also improve bids from the trade, he adds. On the other hand, Business Edition models may appeal to new buyers through low tax and high specifications, but "they can prove more difficult to shift in the used market when they come up against a more traditionally specced SE car", he continues.
Supporting this, Rupert Pontin, head of valuations at Glass's, claims higher specification levels are most popular with retail - and therefore trade - buyers. "SE and Business Edition models are less popular due to the volume in the market," he says, although base-spec models are often limited in number, meaning they sometimes find homes quickly, but this is usually down to comparatively low pricing.
Mid/sport trim levels are normally easiest to sell, according to Philip Nothard, retail specialist at Cap. Similarly, Jim Hannah, operations director at Ogilvie, claims that in the upper medium sector Sport models are probably the best-seller and Audi's S-line trim "will always do better" than base models. Happily for fleet managers, more affordable sporty trims - such as Audi's Sport as opposed to S-line - are equally desirable.
Aesthetic additions also play their part: the Ford Focus may typically trail the VW Golf in residual terms, but specifying an appearance pack, which adds tinted windows, larger alloy wheels and LED daytime running lights, "will always make more money than a standard-spec Focus - on par with the Golf", states Frost
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