Insight: Specialist services help keep residual values high

Maximising residual values at defleeting time is more than a matter of refurbishment and a wash.

Depreciation is the largest component in the running cost of a vehicle, and companies specialising in disposal offer a range of services that in subtle and sometimes sophisticated ways help keep residual values high and reduce costs.

Remarketing organisations compete for business knowing their clients will be looking for the best return on their investment in their vehicles.

“Everything we do is geared towards maximising residual values for vendors of every shape and size while ensuring holding costs and depreciation are minimized,” says BCA communications director Tony Gannon.

“For some this will mean national selling programmes, with physical and online sales channels, fully branded and marketed with on-going consultancy and reporting.

"These are the sort of services that generate real value for the bigger sellers who are selling hundreds and sometimes thousands of vehicles a week.”

Anyone waiting until a vehicle is about to leave a fleet before giving the best means of disposal some thought may be leaving it a little late.

Fleets will have been well aware of the problems caused by disposing of vehicles with incomplete paper-work for several years, particularly if the vehicle registration document is missing.

Gannon adds: “Our role can start with the vehicle going on fleet. We hold details of more than 500,000 vehicles currently operating in the UK in our Docu-Safe service.

“We hold all relevant documents such as the V5 and service history and can produce them as required.

"It means we have all the data oven-ready when it is time for these vehicles to be remarketed.”

Online remarketing channels are also growing in popularity as buyers become more confident in the products which can help keep cut down holding costs.

Gannon says BCA’s buyers have access to details of more than 11,000 vehicles and the company can also set up alerts for when vehicles become available.

The growth of online remarketing giving buyers nationwide access has helped reduce regional differences in values.

Manheim’s Simulcast auctions, where buyers view and bid online against buyers at physical auctions, gives nationwide access to sales.

Many of Manheim’s buyers use both online and physical auctions. Even if they don’t use Simulcast to buy every time, they can keep up to date with the market without leaving their office.

According to Manheim group communications director Rob Barr, if there were any examples of regional variations, they would most likely be short-lived.

He says: ‘If there was a perception that some cars were selling for cheaper, for example, in Scotland, competition to buy those cars in Scotland would increase and eliminate any price advantage.”

Using online channels to remarket vehicles can also help prevent flooding the market with particular types of vehicles and driving down values.

Malcolm Fryer, commercial director of online remarketing specialist Paragon, is keen to point out the cost advantages to vendors of using online remarketing.

“In the traditional remarketing process, transportation to and from the auction could take up to a week – valuable time in which the vehicle is still being funded, depreciating in value and not creating income,” says Fryer.

“Online remarketing largely eradicates this and enables the vehicle to be available for auction almost instantly.”

Online remarketing also enables large volumes and entire fleets to be sold in a controlled manner, balancing supply and demand through a nationwide marketplace.

“This enables online remarketing companies to ensure that the site is not saturated with the same model and type of car at once, enabling the best possible price to be achieved,” says Fryer.