Cookies on Businesscar

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive all cookies on the Business Car website. However, if you would like to, you can change your cookies at any time

BusinessCar magazine website email Awards mobile

The start point for the best source of fleet information

REMARKETING: Stop or start? How eco brands fare in the auction environment

Date: 23 December 2010

Are manufacturers' specific low-CO2 brands doing well in the remarketing arena, or are they just a ruse for new car buyers? Rachel Burgess investigates

It's misleading to think that all motorists are concerned with is buying smaller, more economical cars, according to BCA director Tony Gannon. "There is demand across the broadest selection of used cars - from small city cars to prestige sports cars that are anything but fuel efficient," he says.

"However, the last few years have seen a range of eco sub-brands launch from a variety of manufacturers, all using branded technologies to deliver low CO2 and impressive fuel consumption figures. These have proved particularly attractive to fleet buyers and user-choosers who have clearly shown a preference for smaller, more fuel-efficient models."

Indeed, top 10 BusinessCar BC50 leasing company Arval refreshed its company car choice list for its 315-strong fleet earlier this year, setting maximum CO2 limits for each entitlement band as well as pulling the most efficient vehicles into a special 'eco group' made up of sub-110g/km vehicles, with some emitting less than 99g/km.

Cars within this 'Eco group' include the BMW 320 Efficient Dynamics, VW Bluemotion and Ford Econetic models as well as efficient versions of the Mini Cooper and the Audi A3 1.6 with a CO2 of 99g/km. Hybrid models such as the Honda Insight and Toyota Prius also feature.

New choice list

Arval says it has seen strong demand for the cleanest and most efficient vehicles since the introduction of the new choice list: "We have seen significant uptake in the most efficient cars on our list, which is reflected in the average CO2 emissions. The average CO2 for the whole fleet has been improving for a number of years, but in particular in the last year we have seen a reduction of more than 10% to 134g/km, and we expect this to continue to fall to sub-130/km early in 2011," says Tracey Scarr, the company's fleet and road safety manager.

"Feedback from many of the drivers selecting these vehicles has been that they are an attractive option from a cost perspective as well as an environmental one. Choosing an efficient vehicle saves them money on company car tax and on an ongoing basis through reduced fuel consumption," she adds.

"Low-CO2 technology in its many formats is growing in terms of awareness and interest," says Gannon, "largely due to the focus the manufacturers are putting into this area, combined with a desire by motorists to curb their driving costs - low CO2 equates with reduced road fund licence, which is attention-grabbing in its own right."

However, there remains reservations about the success of eco labels in the remarketing arena.

Cap's operational development manager Mark Norman says that the general 'eco' label for an automotive brand is primarily a tool for selling new cars because the financial benefits are felt by corporate buyers, benefiting from the tax advantages they tend to offer. "When they reach the used market after three or four years these vehicles have generally been overtaken in terms of 'green' performance by the latest new product."

Norman adds: "Couple that with a general lack of awareness of these sub-brands among retail used-car buyers and there is no real special demand for second-hand examples.

"Economy brands are not a new phenomenon and you only have to recall - if you can - E-Drive, Formel E and Ecomatic for evidence that they do not tend to reach the kind of 'critical mass' in terms of awareness that the umbrella brand of the model itself enjoys."

He continues: "In the used market it is fuel consumption figures themselves that really matter to buyers, rather than any badge that may be present to advertise a car's green credentials, however sophisticated and up-to-date the name may seem."

Cap says that residual value performance echoes this fact, with used values demonstrating no particular advantage over their more traditionally badged counterparts. "To illustrate, since May 2008 the difference in used value between a 1.9 Bluemotion Golf S TDI and a standard TDI version has never been more than £200 and has fluctuated by only £50 over the entire period."

Rival RV predictor Glass's agrees: "There's not really much demand for the eco cars as second-hand vehicles, since there's no real advantage for the used-car buyer but some extra liabilities - particle filters for instance - in the servicing," says Glass's chief car editor Jeff Paterson. "The low fuel consumption on the smaller cars gives them a little edge, since you've no performance to lose, but the bigger stuff doesn't really offer anything.

"With Passat, it looks like they sell well because it's almost exclusively a fleet car anyway, so the lower CO2 shifts a lot of units into corporate sales and then back into the used market. But I've come across very few who say they have used buyers asking for it.

"Ecoflex, again, is nearly all fleet sales. Vauxhall cars are still selling on price, despite efforts to raise quality, and therefore price trumps green credentials every time. I don't think there's any real understanding of what an Ecoflex is with retail punters either."

However, Paterson says the most green awareness lies with the upmarket brands, for example, Volkswagen buyers, who "like the idea that they're doing some virtuous".

Post recession

BCA's Gannon also questions whether the latest crop of eco models will prove desirable to used car buyers in three years' time.

"What motivates UK motorists the most is value for money and getting a good deal on the used cars they buy. Research conducted for BCA for this year's Used Car Market Report reveals that when UK motorists were asked what car they might buy post-recession, the emphasis was very much on the cost of motoring - 31% said they would get a car with better fuel consumption, 20% will seek a car in a lower Road Fund Licence band and 15% thought they would buy a car with lower CO2 emissions," he says.

"The key issue for eco fuels is acceptability with the general motoring public, because they will drive the demand in the used market. So it is perhaps less a question of residual values, and more about future consumer perceptions."

Gannon continues: "Professional buyers just don't see high numbers of eco vehicles reaching the used market, which makes it difficult to gauge the long-term demand. However, there is a rarity value attached to the best examples, which can see values soar, particularly when they are offered in the right part of the country or to the right type of buyer."

Gannon says the major issue for anyone - dealer, business-user or motorist - wanting to buy used eco-vehicles is supply. BCA's online stock locator for 25 November 2010 found just 28 listed, which is "fairly typical of the low market penetration and compares with the 11,300-plus vehicles BCA had consigned for sale at that time".

"Generally residual values are relatively good on eco models - lack of supply combined with a good level of interest account for that," he says.

He concludes that the usual rules of remarketing apply - presentation and condition is vital and a good specification will help to attract the bidders. "Fleet managers should make sure their eco-vehicles are serviced at the correct intervals during their working lives by the supplying dealer and provide a complete service history at the time of sale."



Share


Subscribe