Keep step with the auction market
27 June 2007
With the disposal market cooling down Rupert Saunders has some tips to get the best return on your fleet at auction
I have written before about how little attention many companies pay to business car disposal, so forgive me for returning to the subject but it is important.
Signs from the second-hand market suggest sale values are starting to come off the boil and demand for any car not absolutely ready-to-retail has eased back considerably. In these more difficult market conditions, many business car managers need to sharpen up their act to get best value from their fleet.
As with any fast-moving market it pays to have your finger on the pulse. For a start, why not pay a visit to the auction halls yourself, rather than rely on a disposal agent or the auction company. Only by seeing (and hearing) what is selling will you truly get a feel for prices. And now is not the time to be using an out-of-date guide value or a residual that was set three years ago when the vehicle first came on fleet. Demand may have eased but values for the right cars are close to record levels - so you could be selling yourself short.
At the very least make sure you subscribe to one of the excellent on-line auction value services provided by major players such as BCA and Manheim. That way you will be able to access a snapshot of the market at any one time.
The biggest problem in a market where demand is slowing is setting your reserve values too high, which is easy to do when values peaked in the first four months of the year. You need to be realistic unless you want a high percentage of your fleet to end up clogging up the auction hall while values fall around you.
“"The overvaluing of defleeted cars happens far too often when the market is in decline and could easily be avoided. Central to the problem is the way in which fleets fail to take proper account of whether their reserves are commensurate with each vehicle's condition, mileage and, crucially, specification."”
Adrian Rushmore, managing editor at EurotaxGlass's
Adrian Rushmore, managing editor at EurotaxGlass's, told me: "The overvaluing of defleeted cars happens far too often when the market is in decline and could easily be avoided. Central to the problem is the way in which fleets fail to take proper account of whether their reserves are commensurate with each vehicle's condition, mileage and, crucially, specification.
"It has become commonplace for fleets to put low-specification models into auction and then attach a reserve that ignores the reality that today's market demands higher specifications. This is especially true for premium brand cars. Vendors must be prepared to make the appropriate adjustments."
Rushmore reckons that, in the current market, a mainstream ex-fleet lower medium car in good condition, in an attractive metallic colour and with a mileage below 70,000, could make £750 more than a model of similar age and mileage, but of a modestly inferior condition and in a less popular colour. Of course, the market may recover by the time you want to sell but that is missing the fundamental point.
Running a business car fleet is not just about going out and sourcing some sexy cars at the right price. Unless you truly understand the factors that affect the whole-life cost of your fleet, you are in danger of not doing your job properly. That means keeping on top of sourcing, running and disposing of each car in your fleet and the market you operate in - but then I never did say the job was going to be easy.