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Firms lacking disposal strategy face losing out

Date: 24 January 2007

More than half the businesses in the UK could be losing out financially because they lack a consistent strategy for business car acquisition and disposal.

That's the shock conclusion of a new report into the business car market by academic expert, Professor Peter Cooke of Nottingham Business School.

The report found 46% of companies only discussed vehicle acquisition and disposal at board level "intermittently" and a further 12% have never even had that discussion at board level.

Furthermore, many companies had no clear strategy on vehicle disposal or set incentives for achieving maximum value. Professor Cooke believes too many firms treat vehicle acquisition and disposal as separate tasks and so are losing out by not considering costs over the whole-life cycle.

The report, entitled Rethinking Used Business Vehicle Disposal Strategy, presents the results of a survey among finance directors of attitudes at board level towards used vehicle planning and disposal. It focuses on those organisations that manage their own fleets and also examines reputational and employee safety risks.

The report found that the used vehicle disposal route was decided by fleet management in 25% of cases and directors only took a lead in 34% of cases. The disposal price targeted was usually "best achievable" (59%) rather than any measurable value based on Glass's or CAP.

The method of disposal varies widely but only 21% of companies set objectives or offered incentives for achieving targeted used car values.