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DISPOSAL: Speculative specification

Date: 06 November 2009

What with RVs having taken a hit and contract lengths extending, Tom Webster looks at how best to spec your cars to ensure they sell in the years to come

Regular reports from auction giants BCA and Manheim have shown that the price of used vehicles has been rising over the past six months, yet the residual value plunge the industry witnessed last year, when many companies selling vehicles took a big hit on values, is still fresh in the memories of many business car managers.

If this happened to you, you'll want to find ways to reduce the impact that any future falls in RVs has on your business, and make sure that your cars sell for the best price and as quickly as possible when the contract you may have extended to four or even five years ends.

A key way to do this is to specify equipment buyers will deem desirable in years to come.

While, as a spokesman for RV expert Cap, says, "the used car buyer five or more years from now will not be a radically different beast than that of today", they will have a different level of expectation. This is being demonstrated today, as BCA's UK operations director Simon Henstock points out when he says that buyers of smaller cars now expect specification that would only have been available on luxury or prestige cars 10 or 15 years ago. "Increasingly, buyers are expecting MP3 compatibility and Bluetooth, not to mention lifestyle accessories," he states.

Jason King, head of market intelligence at Glass's Guide, agrees and feels it is "comfort and convenience kit" that will be of interest to used buyers in the future. He also lists high-technology kit such as Bluetooth phone connectivity and MP3 audio compatibility as the options that will come to be expected.

So surely raiding the options list is the guaranteed way to boost your car's future selling price? Cap believes it is not as simple as that.

"A common fallacy is that used car buyers will actively seek the latest features and equipment," says the firm's spokesman. "Instead, the buyer becomes accustomed to the latest developments and quickly comes to expect them almost as standard."

This means that toys that would once have been the preserve of large saloons are now being demanded for even the smallest of superminis. So what will be expected in the larger saloons? Even though used-car buyers do not actively look for the latest gadgets, Henstock feels that "this sector [upper medium] is often sold on the extras".

Safe money

Despite some gadgets helping to sell second-hand cars, it seems the extras that focus on safety will not be top of many used-buyers' lists, despite safety issues dominating fleet agendas. Laws will come in by 2012 that makes it compulsory for all new cars to offer ESP anti-skid technology, and the system is a must for anyone conscious of their duty of care obligations.

King feels this is not something second-hand buyers will look for. "Used-car buyers are not willing to pay much of a premium for safety equipment and this is unlikely to change, particularly once legislation forces all new cars to be fitted with ESP as standard," he says.

However, rather than suggesting that ESP is something that should remain an optional extra, this means that it should be the first option box that is ticked, because come disposal time the cars your defleeted model will be competing with in the auction hall could all have ESP fitted as standard. Cap back up this thought by saying: "Safety enhancements in particular tend to be expected as the 'norm' and innovations such as ABS, when that was introduced, were rarely actively sought."

If these features are considered to be the norm, then a car without them is going to stand out when surrounded by safer examples on the auction lot.