REMARKETING: Steady as she goes
12 February 2013
The residual value expert's view
Editor of Cap's Black Book Live, Mark Bulmer, believes that car manufacturers are so keen to control their residual values that they are likely to keep their vehicles as close as possible. "We anticipate some manufacturers owning more of the risk on short-term lease vehicles and perhaps even actively buying late-plated vehicles from third parties and then offering them out through their own dealer networks," he says. "This may well mitigate the accelerated depreciation that larger volumes of pre-registered and short-cycle business can create. Fleets will benefit from a healthier credit situation in the retail used car arena."
Despite keeping things tight on RVs, Bulmer reckons that prices for ex-fleet vehicles aren't likely to remain as rock-solid as they were in 2012, and that businesses shouldn't rest on their laurels: "Used car values for fleet operators were very strong in 2012. Although it is tempting to expect more of the same, such a view is a little naïve. Over recent months, more and more very late-plated vehicles have been seen in the market and, as we all know, this has been driven by manufacturers redirecting vehicles away from the beleaguered markets of indebted Europe.
"We also know that this is only made possible by a positive sterling/euro exchange rate, so that is something fleets should watch if they want to understand how supply will affect the values they achieve on disposal. If this flow of nearly new vehicles continues, values of three-year-old ex-fleet vehicles will inevitably be pushed down. In recent months CAP has seen prices of late plate and three-year-old vehicles moving closer together, but eventually the latter will move back if this pressure continues."
He also warned of the dangers of cutbacks by Motability, as reported by BusinessCar in December, and the adverse affect that defleeting large numbers of cars could have on the used market: "With welfare reform leading to pressure on Motability drivers, there is potentially a chance of some additional cars returning before the three-year lease is up, although it is fair to say the impact of this particular Government policy cannot be precisely measured at the moment."