REMARKETING: Look before you leap
07 January 2014
Author: Jack Carfrae
What action fleets should be taking before they defleet and sell on their vehicles? Jack Carfrae asks industry experts.
If you're concerned about the return you will get on vehicles come defleet time then chances are you're well versed in the art of preparing a car for sale.
However, it's still easy to drop the ball occasionally and make the odd mistake, particularly when there's plenty of other things to do, while there are also a few tricks of the trade that are worth knowing.
BCA's operations director, Simon Henstock, reckons you can't beat precise appraisals and, if the vehicles need it, a dose of Smart repairs, too.
"Whatever the market conditions it is always vitally important to prepare vehicles well and appraise and value them accurately. The old adage is that 'clean cars sell first time for more money', and while very few fleet managers will sell cars without an appropriate level of valeting prior to sale, there are still plenty of vehicles that are sold that would benefit from some minor Smart preparation in advance.
"Scuffs to bumpers, stone chips and damage to alloy wheels can be repaired quickly and affordably using Smart, and the end result is a more attractive and saleable car. There is a trend for some volume buyers to focus exclusively on cars that are in ready-to-retail condition, and these are the cars that inevitably bring the biggest returns against guide prices."
Henstock adds that fleet operators really should be getting the valuation and appraisal part right, as they simply won't get their money's worth or shift the vehicles if that part of the process is sloppy.
"Appraisal and valuation are vitally important skills in the remarketing sector. It is bad practice to value cars without appraising them accurately or to simply presume the fleet cars you are selling should be valued at Cap Clean. Overvalue a car and buyers simply will not be prepared to bid to that level and it will remain unsold, creating unnecessary delays and costs and potentially leading to further depreciation."
John Davies, chairman of the Vehicle Remarketing Association, thinks that most fleets do a good job, but agrees that if anything needs to be done right, then it's the appraisal process.
"Generally, most fleets approach remarketing quite professionally. However, sometimes the following areas can be problematic: pricing vehicles without first fully evaluating the condition reports and specification - this can lead to over-valued vehicles and ultimately lower values in the long run than would have been achieved had they been realistically priced in the first instance; not fully recognising the importance and value of full documentation to a trade buyer, particularly service records; not attending to damage where it is advised that a modest amount of refurbishment would see vehicles sell quicker and generate a healthy return on the investment."
Davies also thinks that repairs prior to sale are worthwhile if you do them properly, and he even puts a rough number on what businesses can expect to get back by implementing pre-sale repairs in the right way: "There is plenty of evidence to suggest that investing in refurbishment, in order to present vehicles to a higher standard without the previous damage, will pay dividends.
"But, as all damage is different in terms of degree, severity and also whereabouts on a vehicle, there is no set formula that can decide whether or not to undertake refurbishment. Numerous studies over the years have shown that £100 spent of refurbishment will generally return £200 or more in increased value."