Fleets with nearly-new vehicles on their books can make a significant profit if they sell them on now, experts are advising.

A fleet selling an average eight-month-old car that has covered under 8,000-miles can expect to realise an extra £2,200 compared to this time last year.

“This is a much better time for fleet disposals than the industry has seen for many years and this looks set to continue for at least another two months and possibly further into the future,” said CAP spokesman Mike Hind.

Even for fleets with cars older than the highly attractive sub-one-year-old cars, the news is still good.

CAP’s measure of auction conversion rates for ex-fleet cars revealed July to be the third strongest month this year, with 87.5% of cars selling first time.

But the best gains are to be had in the nearly new sector, where the shortage of cars under 12 months old coming to auction has been exacerbated by manufacturer reluctance to put cars into short-term hire, fewer dealer demonstrator registrations, a fall in new car sales to fleets and the move to longer lease contracts.

According to Glass’s, there are now not enough cars to meet trade demand with prices being pushed further upwards.

“Prices for the limited number of late-plate used cars for sale have climbed by up to 25% so far this year,” said Adrian Rushmore, Glass’s managing editor.

According to the latest BCA figures, there was another “substantial increase” in nearly-new values last month, with the average price rising by £1,690 against May to reach £16,382 – the highest recorded in a year.

Much of this was down to model mix, with premium models selling in greater relative numbers. Nevertheless year-on-year values are now ahead by £2,220 having been behind by a similar amount last month.

Restrictions in the number of these highly desirable cars coming to auction is nothing new, but the prices now being paid for those that are available is attracting attention.

“The simple equation of demand versus supply has resulted in strong values being recorded in the nearly-new sector for most of 2009,” said BCA communications director Tony Gannon.

“Any fleets with cars or vans to sell in the current climate will find an exceptionally receptive market.”

He said there is likely to be a ‘shortage’ of nearly-new cars while new car sales remain depressed.
However, fleet managers still have to do their sums.

“The resale value of the fleet car is not the only factor to consider as vehicle replacement, written down value, whole-life costs and a myriad other factors come into play,” warns Gannon.

“Any gain would probably be outweighed by other costs that would have to be met on the replacement side.”

There is disagreement over whether supply of nearly new vehicles is falling, with CAP suggesting supply is actually rising.

Its figures show that the proportion of cars up to one-year-old going into auction was 9.4% of the total up to the end of June this year. During the same period last year it was 7.6%.

“Therefore there has been a significant increase in supply of one-year-old cars at auction this year,” explained CAP spokesman Mike Hind.

Therefore there has been a significant increase in supply of one year old cars at auction this year,” explained Hind.

He agreed that values of one-year-old cars with 20,000 miles on the clock have risen by 13.7% - nothing like the 25% suggested by Glass’s.

When the plate effect is removed - known as the ‘underlying’ figure - the percentage increase is 6.4%.”

Indeed, this is not the only area where the country’s two leading residual value guides disagree.

“The figures for supply of cars going through auction show that this year’s frequent reports of stock shortages at auction are misleading,” said Hind.

“In truth there has actually been a surge in demand, rather than a shortage of stock.”

However, he said CAP’s research suggests that the supply of stock into the open market is due to reduce further in the next few weeks.

“This means there is no sign of the dynamic changing any time soon, unless retail demand undergoes a sudden and severe reduction.”

This story is an extended version of the article in Fleet News, August 13, 2009