If you’re concerned about the return you will get on vehicles come defleet time then chances are you’re well versed in the art of preparing a car for sale.
However, it’s still easy to drop the ball occasionally and make the odd mistake, particularly when there’s plenty of other things to do, while there are also a few tricks of the trade that are worth knowing.
BCA’s operations director, Simon Henstock, reckons you can’t beat precise appraisals and, if the vehicles need it, a dose of Smart repairs, too.
“Whatever the market conditions it is always vitally important to prepare vehicles well and appraise and value them accurately. The old adage is that ‘clean cars sell first time for more money’, and while very few fleet managers will sell cars without an appropriate level of valeting prior to sale, there are still plenty of vehicles that are sold that would benefit from some minor Smart preparation in advance.
“Scuffs to bumpers, stone chips and damage to alloy wheels can be repaired quickly and affordably using Smart, and the end result is a more attractive and saleable car. There is a trend for some volume buyers to focus exclusively on cars that are in ready-to-retail condition, and these are the cars that inevitably bring the biggest returns against guide prices.”
Henstock adds that fleet operators really should be getting the valuation and appraisal part right, as they simply won’t get their money’s worth or shift the vehicles if that part of the process is sloppy.
“Appraisal and valuation are vitally important skills in the remarketing sector. It is bad practice to value cars without appraising them accurately or to simply presume the fleet cars you are selling should be valued at Cap Clean. Overvalue a car and buyers simply will not be prepared to bid to that level and it will remain unsold, creating unnecessary delays and costs and potentially leading to further depreciation.”
John Davies, chairman of the Vehicle Remarketing Association, thinks that most fleets do a good job, but agrees that if anything needs to be done right, then it’s the appraisal process.
“Generally, most fleets approach remarketing quite professionally. However, sometimes the following areas can be problematic: pricing vehicles without first fully evaluating the condition reports and specification – this can lead to over-valued vehicles and ultimately lower values in the long run than would have been achieved had they been realistically priced in the first instance; not fully recognising the importance and value of full documentation to a trade buyer, particularly service records; not attending to damage where it is advised that a modest amount of refurbishment would see vehicles sell quicker and generate a healthy return on the investment.”
Davies also thinks that repairs prior to sale are worthwhile if you do them properly, and he even puts a rough number on what businesses can expect to get back by implementing pre-sale repairs in the right way: “There is plenty of evidence to suggest that investing in refurbishment, in order to present vehicles to a higher standard without the previous damage, will pay dividends.
“But, as all damage is different in terms of degree, severity and also whereabouts on a vehicle, there is no set formula that can decide whether or not to undertake refurbishment. Numerous studies over the years have shown that £100 spent of refurbishment will generally return £200 or more in increased value.”
The majority of VRA members seem to think it’s a worthwhile cause, too.
“A recent poll of VRA members concluded that 75% felt that pre-sale refurbishment was key to increasing used vehicle values,” says Davies.
Henstock is of the opinion that businesses often lose sight of the costs racked up by defleeted vehicles before they head into the auction hall, and is something that fleets need to keep an eye on.
“Holding costs for a vehicle may be ‘out of sight, out of mind’ but they can have a significant impact on the eventual real return to the company’s bottom line. Vehicles deteriorate with age and generally drop in value – and this only stops when the vehicle is sold.”
It’s been said before, but the remarketing community is keen to drum into operators that getting basic things right – such as selling vehicles with the right paperwork and similar elements buyers expect – can’t be underestimated.
Henstock continues: “History is very important to buyers, so ensure all the relevant paperwork – V5 document, MoT and service history – is present at the point of remarketing. Also make sure spare keys and any sundries such as satnav discs are present and correct. The impact in terms of value can be substantial if the history is missing – particularly on prestige and performance vehicles.”
Prevention is obviously better than cure, and Davies believes there’s a straightforward method of getting drivers – and fleet operators – more aware of acceptable levels of damage well in advance of defleet time.
“Fleets should ensure that all drivers are aware of [the industry-standard BVRLA] condition standards, preferably leaving a copy of them permanently in each vehicle. Fleets that own their vehicles outright should also apply these same conditions standards too and use them as guidance to their drivers who potentially could be held liable for damage incurred as a result of either misuse or just lack of care.”
If you’re not doing it already, then Henstock says it’s well worth instigating mid-life inspections to catch damage early doors. “More and more companies are using mid-life inspections – as well as end-of-life inspections – on their fleet vehicles, which can pick up on any unreported damage and take action before it deteriorates.”
Davies adds that it’s worth keeping in touch with drivers and reminding them that their contract is up for renewal well in advance, so they can see any damage charges coming and you can make the arrangements for defleeting early on.
“The first thing a fleet should do is make the driver aware that the vehicle is due for return and remind them that it will be professionally inspected and must be in a condition that conforms to the fair wear-and-tear guide.
“It is recommended that this contact should occur at least eight weeks before the contract end date. Drivers should be requested to notify any damage that, in their view, might fall outside the fair wear-and-tear guidelines.
“This will at least alert the fleet operator to a potential looming problem, and a decision on what to do can be taken in good time before the contract ends. It will also mean that when the vehicle is returned there should not be too many surprises highlighted. and the pre-sale refurbishment can be authorised if required.
“If practical, it may be possible to undertake minor refurbishment prior to the contract’s end, to bring the vehicle up to fair wear-and-tear standards and avoid any unnecessary and expensive damage penalties. This would also mean that the vehicle would be able to go immediately to market and thus be sold quicker.”
The residual value expert’s view
Rupert 
Pontin, chief car editor at Glass’s, claims auction houses won’t necessarily look to sell the first time around, which is something fleets should be aware of, and is all the more reason for prepping vehicles well, and being on-hand during the auction to make decisions on bids below the reserve price.
“There can be a reluctance to sell first time. Rostrum jockeys are paid on percentage of a valuation guide, so if they keep them back for a while they achieve better targets [if the car later sells for a better price or the valuation falls]. But not selling first time means these cars are costing money – to keep, to transport, to look after etc.”
He adds that it’s worth having a word with your remarketing company to work out whether or not you should invest in vehicles prior to selling them on.
“Preparing a vehicle for sale means it will be in better condition and therefore command a better price. Fleet operators should consult the remarketing partner, who can demonstrate what the return on investment will be.”
He continues: “One way to overcome the issue [of damage charges] and to prepare for sale is to have any repair work done in the final days or weeks before the car is de-fleeted, meaning it can go straight in to sale, is turned more quickly and is more cost-effective.”
