Gerry Corcoran, National Director, Remarketing Services for Jim Pattison Lease shares remarketing best practices.
Depreciation is the largest cost when operating a fleet of vehicles and accounts for approximately 40% of overall fleet spend. In order to effectively operate a safe fleet and manage costs, implementing an effective remarketing program is the key to fleet efficiency.
After the completion of your lease term or when owned vehicles are due for replacement, the next step is to remarket your vehicle to ensure you are receiving the best return possible. Most all-encompassing fleet management companies will offer multiple resale channels at the end of the lease term to ensure the highest return. These options include selling the vehicle at auction, selling to a third party, selling to a driver or selling to the client directly.
Resale is often, an overlooked process in the fleet cycle but one of the utmost of importance in maintaining the overall cost of your fleet. An effective fleet management team will maximize resale values, quickly turn sales around which ultimately ensures an efficient and stress-free experience for you.
The main objectives of a fleet management remarketing department are as follows:
- Selecting the right vehicle at the beginning of the lease that meets your immediate needs and minimizes costs over the life of the lease.
- Ensure your fleet program offers comprehensive maintenance plans because a well-maintained vehicle will yield the best price. This includes working closely with internal account managers and maintenance management teams to evaluate options when vehicle cost decisions arise.
Maximize Resale Value
- An effective remarketing program will consider factors such as season and sale location to get you the best price at the auction.
- Every vehicle should be assessed and re-conditioned as necessary to provide the highest net return possible.
- Local, personal representation at the auction to ensure that you are receiving the highest dollar possible for your asset.
Provide Effective Sales Channels
- For most lease types, vehicles can be sold at auction, to a third party, or directly to the driver.
- An effective fleet management company should ensure that every vehicle sold through auction is represented by an experienced remarketing team.
A vehicle auction is used as a medium for remarketing teams with fleet management companies to resell their used vehicles. The auction also increases exposure due to the high number of buyers and product appetites. To add further value for the end customer, auctions have expanded their service and product offerings to provide enhanced flexibility, expanded customer reach, and exposure. A good example of this is the use of simulcast sales that reach thousands of buyers around the world. As an internationally recognized business, the auctions build buyer confidence by providing national visibility and customer service. Buyers are comfortable knowing that any issues or concerns that may arise with a vehicle purchased in Canada can be easily remedied at the auction site. Currently auctions in Canada are supporting US exports in excess of 23% of their sales .The auction facilitates and infrastructure to support this level of customer service. Auctions handle transportation, mechanical inspections and financing for US buyers.
Benefits of using an auction include:
- Transparency of sale
- Accountability for resale performance to lessor/lessee
- Large buying audience at each sale
- Multiple sales channels via live Simulcast sales, web sales, etc.
- Fleet vehicles are typically represented via lessor for all sales
- Simulcast sales can be represented remotely with direct communication to the auctioneer.
- Ability to move vehicles to alternative locations, if required
- Costs are flow-through to end customer
- Auctions are continually investing significant capital to attract new selling and buying customers
Auctions offer financing to dealers in Canada and the US. Helping to ensure liquidity in the marked regardless of volumes.
- Services offered to buyers are extensive as compared to independent Remarketing Centres, including vehicle clean up and minor mechanical and bodywork to have a vehicle ready for immediate sale to the buyer
- Pre-sale inspections and guarantees create buyer confidence and help in maximizing net return
Driver/Client Directed Third Party Sales
Effective fleet management remarketing programs should have the option to facilitate a vehicle sale directly to the driver or to a third party of the client’s choosing. The driver purchase option is sometimes exercised as an employee perk, where drivers have the ability to purchase their own vehicle or a vehicle in the fleet, at a reasonably set price. Another incentive to keep the vehicle well maintained. Fleet management companies can also help determine an appropriate sale price or fair market value to ensure consistency and fairness.
Direct Client Sales
Flexibility is extremely important when remarketing vehicles and as such, it is important that fleet management companies offer multiple avenues for sale at the end of lease term, including direct client sales. Client sales allow lessees to purchase leased vehicles directly from the lessor. Later, when the client is ready to sell that same vehicle, they should be able to simply contact their fleet management company, and they will arrange to have it remarketed.