Dealers will need to sharpen up their preparation skills to maximise profits on four year old ex-fleet cars that are starting to enter the used car market, says motor industry consultancy Network Automotive.
During the last 12 months, fleet leasing companies have reported widespread extensions of three year leases into four as employers sought to delay decisions on renewing company car lease agreements because of the recession – but these cars are now starting to be defleeted in increasing numbers.
Network Automotive managing director Colin Bruder said: “It has been widely forecast that there will be a shortage of quality used cars in the second half of 2009 and already dealers are starting to suffer from a shortfall of good stock.
“At times like this, dealers often have to buy and sell whatever is available and four year old fleet cars are likely to be around in ever larger numbers as they finally make their way off fleets. These cars are older and have higher mileage than many dealers would ideally choose but they may simply have little option.”
Bruder said that ensuring that these vehicles were properly presented would be crucial to making a worthwhile profit and that extra effort should be rewarded.
He said: “Many of the four year old ex-company cars going through auctions do look quite a lot more tired than the three year old ex-fleet stock that has formed the backbone of many dealer forecourts for a number of years.
“To sell these cars successfully, dealers are going to ensure that a lot of effort goes into preparation – not just physically but by ensuring that the paperwork is watertight, that they are sold with a full NCT and service, and even perhaps by deciding that the warranty provided will be more comprehensive than usual.”
Bruder added that time spent preparing these vehicles correctly would pay dividends because effectively, customers could find themselves paying noticeably higher prices for noticeably older vehicles than would have been the case as recently as 12 months ago.
He said: “Customers may well be walking onto forecourts expecting to find themselves a recessionary bargain and instead find that stock shortages mean that, with the same amount of money as a year ago, they can only afford a car with an earlier plate and with a higher mileage than they may have thought likely.
“It is up to the dealer to make the stock that is available as attractive as possible, to show the customer that the deals on offer still represent good value.”
Network Automotive has widespread experience in the used car sector, having helped several manufacturers set up and manage approved used programmes.