The financial investment made in fleet cars and vans could be significantly reduced at the end of a fleet vehicle’s life through better strategic planning, according to new research from remarketing company GRS.

It claims the industry could potentially save over £8m a month by adopting a multi-channel remarketing approach.

The research is in a new report which was commissioned to help benchmark remarketing best practice.

The research shows many fleets don’t have a strategic plan which includes controllable success measures or management information about the true cost of vehicle remarketing.

Theo Kortland, GRS business development director, said: “Our long fleet industry experience tells us that the same amount of energy and time which is spent on acquisition and service/maintenance/repair costs with sophisticated modelling isn’t always spent on remarketing.

“In these challenging economic times, we wanted to highlight an area where savings can be made.

“Without a strategic management approach to de-fleeting, companies are essentially just getting rid of their vehicles not remarketing them.”

The research reveals that two performance measures currently dominate the industry - percentage of book value achieved and turn around time.

However, the report queries the value of using measures which companies have no control over in preference to those they can both control and measure - such as refurbishment costs and time from de-fleet to actual sale of the vehicle.

John Lewis, BVRLA chief executive, said: “This report challenges the leasing industry to take other financial and performance factors into consideration when analysing disposal results and formulating a remarketing strategy.”

Theo Kortland concludes: “We were surprised that management doesn’t appear to have a consistent picture of the true costs of remarketing.

“By focussing on measurements you can control, better management of costs is achievable, as well as greater certainty and speed of sale.

“All of which means businesses – large and small – can capitalise on the value of their assets, as well as saving time and money.

"We hope that this report will stimulate the debate about the benefits of a multi-channel disposal strategy and encourage management to review their processes so that they can save money.” 

Key findings

  1. When it comes to disposal, one route dominates• 75% dispose of fleets using auction as the main channel with 30% of respondents using auctions more in the last five years.
  2. Percentage book value (55%) and stock turn days (35%) were popular measures of success, yet:
    • 25% wanted to reduce stock turn days
    • 25% wanted better management information
    • 50% said that success was dependent on what other cars were being sold at auction that day
    • 25% had no predefined measures of success
  3. True costs of remarketing not known
    • 65% were unable to estimate the cost of vehicle remarketing as a percentage of operating costs
    • 45% did not include funding in their remarketing costs
    • 35% did not include staff time or salaries,
    • 30% did not include refurbishment
    • 25% did not factor in the time on the books or depreciation
  4. Desire to change strong
    • 95% wanted greater speed of sale.
    • 90% wanted greater certainty of sale.
    • 65% wanted an alternative remarketing channel which offered cost savings.
    • 40% wanted an agent to underwrite residual values as the most important factor in considering an alternative remarketing solution.

Key conclusions

  • A more strategic approach needed using the adoption of a multi-channel remarketing strategy.
  • Additional channels to market can add value by offering a greater certainty of sale and reducing remarketing costs.
  • Adopting success measures based on analysis of all remarketing costs.
  • True costs of disposal of a vehicle taken into account as part of the remarketing strategy.
  • Industry would welcome better management information and process improvement.
  • Recognition of the substantial investment and resources associated with internal remarketing - greater outsourcing may be a solution.