Look at the graph below and you could be forgiven for thinking that things haven’t changed much as far as used car buyers’ tastes are concerned, as you’re more likely to find a hatchback or a saloon rolling through an auction hall than anything else.
The split has changed enormously though, as four-doors in particular account for a much smaller slice of the market than they have done previously. Many of the 31% of cars that don’t fall into the clearly defined bracket of saloon or hatchback didn’t exist a few years ago, and they’re gaining traction.
According to BCA’s operations director, Simon Henstock, used car buyers are gravitating towards less-conventional models from what were once considered bread and butter vehicles. The popular ones are SUVs and crossovers: “Used car buyers continue to move away from the traditional mix of body shapes in favour of vehicles that more suit their lifestyle. Last year’s BCA 2012 Used Car Market Report showed a rise in off-road and MPV cars for example, while there is also a general move towards smaller and more economical motoring, and city cars are becoming more popular.
“An early look at 2013 figures suggests this trend towards smaller cars is set to continue – 10 years ago, a third of the used car market was represented by saloons; today it is around a fifth,” says Henstock.
It isn’t just a car’s body style that dictates whether used buyers go in for it or not, though. Popular ex-fleet cars hitting the used market now – i.e. those between three and five years old – are often the ones where demand outstripped supply from new.
Alex Wright, managing director of Shoreham Vehicle Auctions, explains that scarce models have a habit of going down a storm when they’re sold on.
“We often see popularity in the three- to four-year old models where the manufacturer can’t manage that demand,” he says. “For example, the early Volkswagen Polo mk5 models are doing extremely well, as are the Nissan Qashqai, Volvo XC90 and V70s plus Peugeot’s RCZ and 5008. All of these models are seeing good demand as shown by a good depth of buyer, i.e. five bidders or more on a vehicle.”
Rupert Pontin, chief car editor at Glass’s Guide, names even more specific models that are performing well on the used car market at the moment, some of which are conventional hatchbacks and saloons, while others follow the crossover trend.
He cites diesel versions of the Ford Focus and Vauxhall Astra, along with the Audi A1, BMW 3-series, Kia Sportage, Volkswagen Golf, Vauxhall Corsa and the Hyundai iX35.
He thinks the Korean crossovers are the revelations of the list: “I believe the market as a whole is surprised by the success of the Kia Sportage and the Hyundai iX35. These are from what were previously considered budget manufacturers and have proven to be well built, reliable and desirable.
“The Nissan Juke has also been a bit of a surprise as it has retained its desirability in the new market for a longer period than many expected and its residual values support this.”
A second-hand car’s popularity will hinge just as much on its equipment levels as anything else. Flogging the wrong car with the wrong spec won’t wash when buyers have got the kind of choice available to them, even in a strong remarketing arena, so it pays to specify vehicles in mind of how they’ll perform come defleet time.
Wright maintains that core fleet model equipment is vital: “Air-conditioning is now an absolute must for vehicles looking to quickly defleet. Bluetooth is another important modern consideration.”
He adds that the colour of a vehicle plays even more of a part in determining what’s popular and what isn’t.
“Colours are subjective and manufacturers are very tuned into this, which is why they offer a range of individual and bright colours to suit individual needs. The big thing now is predicting the next big colour, which in my opinion, is the darker metallic browns as they are suddenly becoming very popular across the range,” he says.
Henstock says that used buyers are savvy when it comes to picking the right spec level, and there is a danger that business drivers with more liberal choice lists can render a car less than popular when it’s sold on if they don’t spec it properly in the first place.
“The simple rule of thumb is that the specification should match the model. If you have premium and executive models on the fleet then they should have a good level of specification – attractive paint and trim, leather interior, alloys, all the expected bells and whistles – because low-spec premium cars can be difficult to remarket. The used buyer expects to see a decent specification on these models.
“With this in mind, user-chooser fleets should beware of badge snobbery amongst their drivers, where an allowance is stretched to breaking point just to get the ‘right’ badge on the bonnet.
“It’s also worth remembering that while a higher-specification car may be more saleable and attractive to buyers, this has to be balanced against the additional cost at the front end.”
Following the herd
It’s all very well following the current trend and picking models that are currently all the rage with used car buyers, but that won’t necessarily remain the status quo, and it’s worth remembering that you’re likely to be defleeting the cars three or more years down the road.
The advice from the remarketing fraternity is to deck out your fleet with as broad a spectrum of models as possible, as Henstock explains: “Depending on the size of the fleet concerned, it may well make sense to operate a broad range of vehicles, including the most popular vehicles alongside a selection of lifestyle models, premium cars, budget cars and whatever else fits the fleet’s needs. This means you can offer the used market a range of vehicles at a number of price points.”
Shoreham’s Wright adds that it’s worth throwing a few leftfield vehicles into the mix, but that needs to be balanced with a healthy amount of tried-and-tested models: “I would say the best approach is to mix it up and have a variety of vehicles. Don’t go too safe and as long as you don’t have all of your eggs in one basket, don’t be frightened to have some vehicles do well and others not so well.”
He also claims that if fleet operators are employing a lot of different vehicles they should be mindful of alternative-fuel models – even established hybrids – as they won’t necessarily be considered as safe a bet by people buying them after a few years of use.
“Whilst a sub-two-year-old hybrid may well sell easily when it has some remaining manufacturer warranty to cover unexpected costs, you have to consider, how will it sell at four or five years when the vehicle is outside of its warranty and the onus is on the new owner to cover unexpected expenses?
“The cost of maintenance is an unknown for these non-proven vehicles, so at present, fleets may be safer with a standard vehicle.”
Pontin surmises that a mixed bag of vehicles is the best bet for return on investment and that unconventional models should not be avoided, but he foresees a tail off in the residual values enjoyed by crossovers in future.
“At present there is no harm in a fleet operator looking at some of the new niche markets. The caveat here is not to overestimate return on defleet and to take care when forecasting residuals. These are young and vibrant sectors and, as such, create good residuals.
“However, as these sectors grow and more cars defleet to the market then residuals will start to suffer. The Nissan Qashqai is a perfect example of this,” he says.
The residual value expert’s view
Rupert 
, chief car editor at Glass’s, says moves are afoot within the remarketing industry to implement a series of direct-to-sale platforms: “There are indications that some remarketing and valuation providers are looking at provision of systems that will take vehicles from defleet. straight through to the remarketing channel, whether wholesale- or retail-based. These are likely to be done using just one handheld device and will link with selected remarketing partners.
“These platforms will become available later in the year subject to adoption by appropriate partner businesses to ensure they are relevant and effective.”
He also believes that online used car sales will continue to grow for the foreseeable future, but they will eventually reach a plateau and level out against physical sales.
“At some point the growth in online sales will slow and a plateau will be reached since physical auction will always have a place for certain types of cars, but we are some way from this point.”
Pontin adds that tablets will be the way forward for sellers and buyers, and that fleets would be wise to keep an eye on the way the technology that underpins the remarketing industry develops because it can actually help them generate more money from their vehicles.
“The future will be tablet-based for both buyers and vendors,” he says. “Ease of use and simplified operating platforms will mean these are likely to become industry standard as older equipment requires replacing.
“The business sector would be wise to keep abreast of the changes in technology and platforms in what is a constantly evolving arena. Use of multi-function tablets to handle stock management, appraisal, purchasing and remarketing will reduce costs and change current often desk-tied tasks to enable greater flexibility. Knowledge and use of different sales channels is essential to ensure the best return on their inventory.”
