19th March 2018
The de-fleet process’ changing landscape and what today’s fleet managers need to balance
While contract hire, commonly referred to as leasing, remains the most widely utilised method for fleet vehicle acquisition, a healthy chunk of organisations still purchase their cars and vans outright. The document ‘UK Fleet Industry Review April 2017’ produced by experteye and the University of Buckingham puts the UK’s latest figures at 53% for contract hire and 19% for outright purchase.
‘De-fleeting’, the process fleets undertake to optimise their vehicles for resale or auction, is therefore an important factor that a fifth of UK fleets still need to consider the impact of when identifying which models to shortlist for their staff, when offering a cash allowance has been removed from the mix for whatever reason.
Just as residual values play a significant role in determining monthly contract hire rental prices, they are also intrinsic in the de-fleet equation. Residual values have traditionally been primarily influenced by servicing, repairs and general vehicle maintenance along with cleanliness, the upkeep of detailed documentation and timing, both in terms of vehicle age and seasonal trends.
The arrival of ‘connected cars’ has made this balancing act required by fleet managers even more delicate, with some industry voices encouraging drivers to wipe phone numbers, addresses and other data before they hand their vehicles back ahead of being de-fleeted. “Fleets will need to treat their vehicles in much the same way as they would any other piece of IT equipment”, the BVRLA concluded in its 2016 ‘Fleet Technology’ whitepaper.
Some fleets choose to remarket their vehicles internally, selling them to employees, while others will opt to use auction houses. Car manufactures have increasingly introduced a sometimes daunting array of entertainment, comfort, safety and aesthetic ‘packs’ for their models. Although the selecting of these will inflate a vehicle’s purchase price, it can reap dividends at the de-fleet stage, making such cars more attractive to buyers. Allowing employees to specify larger alloys and metallic paint while staying away from entry-level trim variants is advised in order to maximise residual values at de-fleet.
Fleet managers also now have an ever-expanding range of online retailers to advertise their ex-fleet cars and vans with, with the Vehicle Remarketing Association attributing 70% of manufacturer sales and up to 30% of fleet and leasing sales to internet platforms. Taking the more traditional route of remarketing ex-fleet vehicles at bricks and mortar auctions has its advantages, though, such as the ability of buyers to inspect vehicles more intimately and to more tangibly gauge appetite from other interested parties.
Another facet that is now part and parcel of life in fleet management is harnessing the wide-ranging benefits of telematics, from enhanced driver safety and improved fuel efficiency to reduced vehicle wear. Monitoring and simultaneously incentivising drivers to treat their company cars and vans with respect can help boost residual values at the de-fleet stage, cared-for vehicles often commanding higher sale prices.
Less than a decade ago, ‘crossover’ and ‘SUV’ weren’t on the tips of many people’s tongues, with saloons, hatchbacks and estate body-styles typically accounting for the bulk of ex-fleet car sales. Nowadays, however, private and company car drivers alike can’t get enough of SUVs, with segment growth rising 9.5% in 2017 according to SMMT figures.
Rupert Pontin, director of valuations at Cazana, believes that the number of small cars being de-fleeted in imminent years will also increase. Perhaps unsurprisingly, he identifies German brands as the ones to watch, while admitting: “The traditional C and D segments are now looking short of exciting product as focus has moved to mainstream SUV areas and it is worth a word of caution that the market may be approaching saturation point. Specifying cars for the used market three years in advance can be very difficult and it is more important to make sure the car is fit for first use.”
In the same Company Car Today interview, Jayson Whittington from the revered Glass’ Guide used price index echoes the importance of a fleet manager concurrently appreciating that it is “essential that the car is fit for purpose in the first place and meets the needs of the driver.”
Fuel choice is also now more important than ever in identifying suitable company vehicles, with private buyers likely to avoid ex-fleet diesel models in a few years’ time because of the negative messages from government and other sources. It’s not that simple, though, as the rush away from diesel in order to combat NOx and particulate matter has seen the first UK rise in vehicular CO2 after two decades of consistent reduction.
It’s clear that today’s fleet managers are required to remain alert to trends, environmental issues, technological advances and other ever-changing factors affecting the fleet lifecycle from vehicle acquisition through to the de-fleet process.
- April 2019 (2)
- March 2019 (1)
- February 2019 (2)
- January 2019 (6)
- December 2018 (5)
- November 2018 (3)
- October 2018 (1)
- September 2018 (2)
- July 2018 (1)
- June 2018 (1)
- May 2018 (4)
- April 2018 (5)
- Trak Global Group has acquired Intelligent Mechatronic Systems Inc (IMS), North America’s leading insurance telematics business
- Emerging last-mile delivery and mobility solutions – the benefits and challenges
- Amidst the plug-in obsession, do niche alternative fuels like CNG have a future?
- The mandating of more in-car safety tech is good news – but will it really help make our roads accident-free any time soon?
- Impressive car technology in the pipeline from OEMs and others
- Will SUVs become less popular due to WLTP and other factors?