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REMARKETING: Out with the old, in with the new?

Date: 16 September 2014   |   Author: Jack Carfrae

A new generation of bodystyles has made its way onto the used car market. Jack Carfrae asks whether the likes of crossovers, SUVs and mini-MPVs are worth investing in over traditional models

Anyone even remotely connected to the car business will probably know by now what a crossover is. Rewind six or seven years and the term had only just been invented, courtesy of the Nissan Qashqai, which was the fist car to strike the balance between a lower medium hatchback and a large 4x4. It struck it lucky too, and proved a massive hit, with exceptional residual values to boot.

Rival manufacturers were quick to catch on, and the amount of crossovers on the market is accelerating at an astonishing rate. The same goes for SUVs - particularly the smaller ones - and mini-MPVs, which are also on the rise. Basically, anything that doesn't fall into the usual supermini, lower medium or upper medium categories seems to be increasing in numbers at the moment and is popular with new customers.
That's fine for the new car market, but fads and trends have a way of fizzling out quite quickly - not what you want when you're looking for decent residual values. So is the new breed of bodystyles any good or should you avoid them if you want the best returns?

Simon Henstock, BCA's operations director, thinks the new crowd of cars is a sound bet.
"Crossovers and SUVs remain very popular with motorists because they offer something different from the more traditional saloons and hatchbacks in the marketplace.

"Ideally, these should come to market with a good level of specification and in a good 'retail' colour - something to consider if you are specifying fleet models at the front end."

New, fashionable bodystyles are, as you'd expect, in shorter supply than larger number of traditional models on the used market, which hasn't done their resale values any harm.

Henstock continues: "Although supplies are rising, volumes are still pretty thin on the ground and generally values hold up well. The critical factor is inevitably price. Some models can look expensive when compared to the traditional alternatives, which are available in large numbers at a variety of price points."

Glenn Sturley, vehicle remarketing director at Lex Autolease, agrees that the only thing standing in the way of the current crop of in-vogue used vehicles is the price, which can be too high: "Modern bodystyles are generally faring better than conventional vehicles on the used market, commanding a higher price and selling at a premium. However, as they are more expensive to buy new, to a certain degree the higher price tag is expected."

He adds that they are not likely to be a flash in the pan, either: "It's true that small crossovers are definitely doing well. I don't believe that their success is a fad, either; essentially, these are a new breed of car, which have arrived on the market and firmly established their place. Their popularity is here to stay."
Safe a bet as such models may seem, Henstock points out that mini-MPVs aren't quite as rock solid as crossovers and small SUVs.

"There is a slightly different picture with mini-MPVs," he says. "There is a lot of good product about, and supply and demand are more finely balanced. Diesel models typically outperform their petrol equivalents in terms of desirability, although there is increasing interest in the newer, frugal petrol models."

So if the new bodystyles are all the rage, where does that leave traditional models? Particularly upper medium cars, which, although core fleet fodder, have been tipped to be on the decline for years?
Not so, according to Sturley: "Upper medium cars historically perform very well, with good resale values. They do so because they are relatively scarce, making them very much in demand."

He adds that cars either side of that segment - lower medium and executive models - are not faring so well in terms of return on investment: "By contrast, we see a high volume of executive and lower medium cars returned from contract hire, so these are in much readier supply. Heavy discounting from manufacturers has also impacted the sheer numbers of executive and lower medium vehicles."

Henstock says the amount of cars available in the lower medium segment is its biggest problem: "This sector is fiercely competitive and can be surprisingly badge-sensitive. Because there is plenty of choice of good quality product in the marketplace, buyers are always looking for the best spec and colour combinations. Buyers don't like high mileage or damage, the latter being particularly off-putting."

He also reckons that superminis are a solid a bet as used cars come because second-hand buyers go in for small cars with low running costs.

"The supermini sector remains one of the most popular in the used market, representing good value motoring and delivering the fuel economy that many motorists want," he says.   

"It's a perennial favourite as the second family car and usually first choice for younger drivers who enjoy the cheaper insurance premiums. Buyers don't like high-mileage examples, however, and this can have a disproportionate effect on value. Specification is also important - small should not mean miserly when it comes to the extras."