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REMARKETING: Equipment levels continue to rise despite austere times

Date: 16 January 2012

Consumers might well be feeling the financial pressure, but that's not dampening second-hand buyers' expectations when it comes to the level of equipment they're prepared to pay for at auction, writes Jack Carfrae

As specification levels, and therefore prices, have continued to increase across the board, especially on small cars that were traditionally basic, used buyers have raised their expectations despite the prevailing economic climate and are now demanding more equipment from every corner of the market.

"The trend for specification and trim levels is always upwards," says BCA operations director Simon Henstock. "While motorists like to have as many bells and whistles as possible, they do not always appreciate that there might be a premium to pay for the extras.

"The general rule of thumb is that the better the specification at the front end, then the more desirable the car will be when the time comes to remarket it in three or four years' time."

Despite this, Henstock argues that fleet buyers are often inclined to specify cars very heavily from new, without thought for the future consequences or which trim levels work well with particular models:?"It is important not to go overboard when choosing options, and never lose sight of the fact that the company car is a working tool and should be specified for the job it has to do. Certain trim levels work better in particular car sectors, so spend the money wisely to get the best value. The used market does not divide itself into the neat segments beloved of marketing executives, and used buyers just see 'desirable' and 'less desirable' cars."

This tallies with the performance of less well-specced entry-level models, which tend to take a hammering when they're sold on as second-hand. There's still a market for such vehicles but they trade on their low cost rather than appeal, as David Scarborough, commercial director of Aston Barclay, says: "Medium-size vehicles with low levels of trim are sold on price and not desirability. The smaller vehicles or those that are not image-driven, which do not automatically come well specced, will always find a market."

Scarborough highlighted that the used market adapts to supply and demand of vehicles by virtue of their price and differentiation. He comments: "If [Ford] Titaniums, for example, are short in supply and highly regarded by the second-hand car buyer they will achieve a significant premium over a Zetec sister model, which might be available in higher numbers."

Trim factor

Trim level is arguably the most fundamental factor in determining a car's used value and is on a par with mileage, service history and condition and even, in some cases, more relevant.

Henstock says: "While mileage, condition and a full service history are the prime factors affecting price, specification can be the 'deal maker' when all things are equal. Buyers will gravitate towards the best-specified example, and with more competitive bidding, values are likely to rise. This becomes more important on executive and prestige models, where a high level of trim is expected and the lower trim example will be at a distinct disadvantage."

He adds that prestige and luxury cars should be as heavily specced as possible because high levels of equipment are simply what's required come resale time. Half measures such as air conditioning instead of climate control or half-leather seats instead of full leather will make such cars unattractive when they are defleeted and impact heavily on their value.

Henstock believes that economy features are likely to be the next big thing in terms of specification levels, as the market places increasing value on green special editions and fuel saving technology. "Given the increasing focus on the cost of motoring, it is quite likely that economy features are going to be the battleground for the motorists' attention over the next few years - so stop/start technology, low CO2, high mpg engines and eco-fuels all might grow in importance," he says.