Where you sold a car used to be hugely important. The thinking often was that coupes and convertibles would do better in the south of the country, and estates and 4x4s could be shifted more easily up north. But then online selling came in and things changed.
A lot of remarketing experts are now of the opinion that regional price differences count for almost nothing any more because the auction halls have opened up to national and international buyers with their digital platforms. That begs the question as to whether it’s worth bearing location in mind when your vehicles are due for defleeting.
Simon Henstock, BCA’s operations director, believes regional peaks and troughs have all but disappeared since online selling came to the fore.
“The rise of internet remarketing channels means the issue of regional price differences has really been consigned to the history books,” he says. “The vehicles buyers look for every day are located online irrespective of where they may be physically. This means the factors of age, mileage, condition and specification are far more important.”
He admits that localised shifts in price still happen though, and that there is merit in defleeting vehicles locally to appease regular buyers.
“This does not mean that local price fluctuations never happen as variations in demand are always a feature in a competitive bidding environment, but the location is much less of factor than it was.
“Having said that, physical auction buyers still account for the vast majority of the volume sold and if it is possible to offer vehicles in the geographic location that has the most receptive marketplace, that would make sense. It means reduced logistics costs for the buyer and that may be reflected in an additional bid or two in the auction hall.”
Others in the remarketing community reckon there is more scope for regional variations, but that it’s confined to certain segments of the used car market. Vehicles that are the most susceptible to fluctuations in price and performance are those with alternative fuel drivetrains, according to Ogilvie Fleet’s operations director, Jim Hannah.
“In my opinion, there is only one specific group of vehicles that this applies to:’alternative fuel vehicles,'” he says. “They definitely perform better in the south and in areas where congestion charging and parking zones are either in operation or are being considered for the future.
“I think we will see a similar trend for fully electric vehicles in the future, but I don’t think this applies to any other types of vehicle throughout the country.”
Chairman of the Vehicle Remarketing Association, John Davies, says there are local changes for used vehicles of this type, but adds they are confined to very specific urban areas: “The used buyer is still not fully aware of hybrids and some of the environmental benefits they may bring, and so there are no real regional peaks in demand or prices, except in London where they [currently] help motorists save money on the congestion charge.”
Location, location
The old adage is that 4x4s are heavily affected by where they’re sold throughout the country and Davies confirms that this is very much still the case – to the point where the exact type of 4×4 will perform differently depending on where it is sold and what it will be used for:”There are two visible trends for 4x4s – one for working 4x4s and one for lifestyle SUVs. In those counties and regions such as the south-west, Wales and Scotland, 4x4s are seen as a working vehicle – hence vehicles such as the Discovery, Defender, Ssangyong etc are in demand.”
He continues: “In the south-east where the modern-day SUV is an integral part of family and SME business life, the higher-spec higher-value 4x4s are in high demand in the used market.”
Hannah doesn’t agree, though. He acknowledges the assumption that bigger cars do well outside of the city and smaller ones perform better in it, but suggests that even that may be something of an urban myth.
“There are no real historical trends here other than the standard: larger-engine 4×4 and estate cars will tend to sell better in the sticks, with the smaller, easy to park, more frugal cars doing better in the city. This may well be an urban myth as it is almost impossible for us to track where our cars end up.”
When not where
Remarketing experts are keen to point out that when a vehicle is defleeted has more impact on price and popularity than where. Hannah explains that the time of year and the weather conditions surrounding a sale can even have an effect on regional prices.
“What is still very relevant is seasonality, where convertibles or coupe convertibles do better in spring and early summer, with any form of four-wheel drive vehicle doing better in the winter. This has been even more obvious in the last few years with the more harsh winters we are getting in the south.”
Opinion is split as to whether or not it’s worth a fleet manager’s time investigating regional differences in used car price and performance. Hannah is well and truly against it, and reckons you’re better off pooling your resources elsewhere to get the best results.
“I don’t think there is any added value in this. you should look at the market in the month for the vehicle you are selling and make sure you achieve the best price in the market relating to that product. If it’s desirable it will do well anywhere.”
Davies, however, thinks it can be worth your while as long as you’re quick to relocate the cars, you pick your models, and you’ve a shrewd business head on your shoulders.
“The very rapidly changing dynamics of regional differences in value cannot be fully exploited unless ultra-rapid relocation of the cars can be achieved, so one needs to be no more than a good bookmaker if one wishes to attempt to exploit regional differences to a level of gain that would outweigh the transportation costs,” he says.
“Generally, some clever and knowledgeable traders can shift very specific car types and variants with some success, but only in small numbers and generally on slightly more exotic vehicles rather than the volume stock.”
The residual value expert’s view
In contrast to the fellow remarketing experts quoted here, Glass’s believes that there are more minute differences in the types of used vehicle that perform well in the north and the south of the country, and is even conducting research into it.
Rupert Pontin, chief car editor at Glass’s, told BusinessCar: “Glass’s has seen evidence at retail that prices for lower trim variants of a particular volume make or model will be higher in the south of England than in the north, or Scotland. However, it is not that simple as we have also seen higher trim variants priced highest in the north from time to time.
“We are currently undertaking an in-depth analysis of this. What we can say is that short-term localised supply-demand factors contribute enormously to retail pricing – and sometimes dwarf more structural regional differences – and that this is also reflected in trade prices.”
He also admits that vehicles with automatic transmissions are usually better sellers in urban areas: “Anecdotally yes, automatics appear to be more popular and easier to sell in cities. Equally, an automatic sold in London could make more money than one in the countryside. It will certainly sell quicker.”
Pontin’s advice to anyone defleeting stock with location in mind is, above all else, to strike up a relationship with a local auction house.
“For the best results they should look at developing a relationship with their local auction house or a remarketing specialist who will be able to give an accurate and professional guide to the best locations to sell. Online must be part of any remarketing programme these days, too,” he concludes.
