Features
11 Oct 17

Top Tips: 20 Pieces of Remarketing Advice

A vehicle's Residual Value (RV) is the last chain in the Total Cost of Ownership (TCO), but – as prudent fleet managers know to their advantage – not the least. A successful strategy for the remarketing of fleet vehicles is a cornerstone of professional fleet management, at any scale, and from any angle.

If that reality is now more commonly recognised throughout the international fleet management community, it is thanks at least in part to the efforts of Fleet Europe, especially over the past few years.

We've established a separate Remarketing channel on our web platform, devoted special attention to the subject in our magazine and were instrumental in establishing the European Car Remarketing Association (CARA). And of course there is our own, highly-regarded Fleet Europe Remarketing Forum, which will have its 4th annual edition on 5 December in Estoril, Portugal.

So, to celebrate our 20th anniversary year, and our continued focus on remarketing as a crucial, vibrant and constantly changing part of TCO, here are 20 remarketing tips to take on board in your international fleet management practice.

1. Don't over-spec

The remarketing process doesn't start at the end of a vehicle's life cycle, but at its beginning, by choosing the right vehicle for the right job. Don't over-specify, i.e. procure vehicles that are costlier and more powerful than required. This will make it harder to achieve a good RV.

2. Pick popular options

A fleet's first concern is to have vehicles fit for purpose. But it doesn't hurt to consider which options will make your vehicles popular on the used-vehicle market, a few years down the line. These can be functional, such as navigation systems, or more geared towards comfort, such as sunroofs and entertainment systems. Always consider that the customer of a used fleet vehicle is likley to be a private buyer.

3. Order straight from the factory

If you have the volume and the contacts, order new vehicles straight from the manufacturer, in order to take full advantage of any volume, early-production or model-specific discount.

4. Know your market

When selecting vehicles, also keep an eye on which brands and models are popular in local consumer markets. This will make it easier to achieve a good RV.

5. Beware of model dumping

Watch out for model dumping: manufacturers using rental car companies to get rid of excess-produced models near the end of their life-cycle. This can depress RVs for those models.

6. Colours matter

It may seem trivial, but car colours are an important factor in determining their RV. As with everything, these colours are subject to fashion, so be on the safe side and avoid bright and unusual colours. Go for the conservative, stable option.

7. Beware of diesel

Yes, diesel remains the popular choice for (most) fleets, and for good reason, especially for vehicles with higher mileage requirements. But know that diesel RVs are on a downward trajectory, with implications on their TCO.

8. Consider alternatives

It would be a good idea to at least spread the diesel risk by looking into petrol, but also alternative powertrains as your choice of fleet vehicles.

9. Practice preventive maintenance

To make sure a vehicle is in the best possible condition at the end of its first life-cycle, make sure it is well maintained, via a process that includes regular inspections and preventive maintenance.

10. Engage your drivers

To ensure maximum RV, engage your drivers in the maintenance of their vehicles in optimal condition by having them submit regular reports on the condition of those vehicles.

11. Have a clear B2E path

Make sure that your employees are aware of the option to buy their company vehicle at the end of its lease, and that this path is clear, easy and attractive. Selling end-of-lease vehicles directly to the drivers who already know and drive those vehicles can be a profitable proposition, precisely because it is so straightforward (and even more so if the selling is done 'upstream', well before the end of lease is reached).

12. Prep your vehicles

Before starting the remarketing process, prepare your vehicles to make sure they are in optimal condition: shiny and washed, and with the necessary minor repairs effected. This relatively minor effort will generate a considerable return on investment.

13. Mind the tires

If tires have little tread life left, it may be a good idea to replace them with better ones, in order to increase the vehicle's overall attractiveness on the second-hand market.

14. Careful with major repairs

Some cars will require major repairs before they can achieve their optimal RV, for example in case of major damage to the bodywork due to a collision. Some repairs may be cost-effective, others may lead to an increased risk to the overall TCO (now also including the cost of the repair). In some cases, it may  be better to dispose of these vehicles via specialist dealers.

15. Time your used-vehicle sales

Winter and summer traditionally are slow seasons for used-vehicle sales; time the remarketing of your fleet vehicles with the most opportune periods in spring and autumn – taking into account local traditions and preferences. These can be counter-intuitive: in markets with colder climates, 4x4 sales may actually peak at the start of winter, for example.

16. Minimise turn time

The longer it takes to sell a used car, the greater the risk that it will sell for less than the target price. Plus, fees for storage and handling may increase. Minimise turn time by making an effort to speed up off-lease logistics. Upstream remarketing is a complex, but effective way to eliminate these costs.

17. Work on your sales channel mix

Used vehicles can be disposed of via a growing range of channels, including many online and/or cross-border and/or B2C options. Take some time to study the field and to work out which (additional) channels may work best for your fleet.

18. Monitor and manage the sales process

Even when your vehicles are in the hands of third-party auctioneers, your job is still not finished. Check whether your vehicles get the attention they deserve, and negotiate better conditions if they don't.

19. Track your performance

The final cornerstone of your remarketing strategy is finding out how well you are doing. Set up some key performance indicators to track how cost-effective your process is, and compare your results with those of other players, where possible.

20. Reduce process costs

Remarketing is a multi-faceted, multi-disciplinary process. This increases the risk that the process will be complex, and costly. Make sure that as much of the process as possible is streamlined and automated, in order to reduce costs.

Authored by: Frank Jacobs