So, what are your options worth? (continued)
30 May 2007
John Mahoney delves into the art of RVs and the potential pitfalls of picking the wrong options
Spending on the up
Recent trends identified by leasing giant Lex point towards an incredible 20% increase in the amount company car drivers are spending since 2000. Today, the average driver spends almost £1000 on toys, in-car entertainment and styling kits.
But is it all a complete waste of your money? Not if you believe Manheim.
"If you meet the used market's demand, boosting a spec with the right wheels and satnav will differentiate the car and boost the appeal come sale time. But the cost must be balanced and some of these options can be hugely expensive on top-end cars."
Leasing companies and many big businesses are wide-awake to managing the complexity of residuals, but there are still a number of players who are not getting specification right, particularly in the user-chooser market.
Jeff Knight from RV experts Cap agrees: "Cars ordered by user-choosers in the main are the ones that can have some very strange specification, but luckily many businesses and manufacturers place restrictions to prevent anyone from ordering things like bad colours, such as doom blue.
"Manufacturers, too, have caught onto [the problem of] ordering bulk colours. Historically, carmakers would order a huge numbers of cars in the same 'launch' colour to make a visual impact on the road, but RVs suffered."
According to Knight, the days of low-spec same colour cars flooding the market are over thanks in part to the rise of the user-chooser helping the mix of cars come to market. The industry, too, has wised up to improving mixes.
"We have seen the mix on drive-hire fleets improve dramatically with different and sensible spec making up many daily rental fleets. The used departments of both leasing firms and carmakers are now involved in buying with a view to maximising values come disposal."
Companies such as Renault have in the past admitted to artificially mixing specs even if it means allowing high spec vehicles through at lower pricing.
What's worth what?
Cast an eye over our tables (right) to help find out what are the essential options your business should think of selecting in your next vehicles, and then consider the monumental task facing valuers calculating residuals.
Cap's forecast boss Knight explains: "We consider items like iPod connections 'nice to haves' as they boost desirability come resale, but they do little to increase a car's value.
"The problem is, aftermarket iPod radio transmitters that do the same job start from £50, it's difficult to apply a value to the equivalent option. Used car buyers also take time to catch up to new technology, or at least the idea of paying for new technology."
Emmox RV guru John Williams agrees the difficulty of attributing a value to original equipment.
"Pricing on satnav is quite ridiculous, but nevertheless essential on executive cars because the interiors look better."
Williams shares an RV industry agreed secret to technology that reaps an RV reward and those that drag values down.
"Options need to be seen for people to pay more money on the second-hand market. If they are not visual the option will have little or no RV value."
Cap's Jeff Knight: "Most of it is simply common sense, but the difficulty always comes with applying common sense to the business model."