‘Unrealistic’ RVs for ex-lease cars
Research by data company CAP and auctioneers BCA has identified a
trend of underperformance by ex-fleet and lease cars in the resale
arena, as significant numbers of these vehicles fail to conform to
required condition standards for auctions. As a result, fleet
vendors are incurring additional costs because they are setting
unrealistically high reserve values.
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CAP compared the typical condition of cars sent for disposal at
auction with reserve prices set by fleet vendors, and found of the
300 vehicles on offer, 29 per cent were in CAP Clean condition
while a further 25 per cent were just below Clean, but above
average, condition.
Long-term data dating back to 2004 in BCA’s Pulse Report also
showed that each quarter, on average fleet and lease cars achieved
97 per cent of CAP Clean over a 42-month period. The lowest monthly
figures recorded were in January 2006 (93.9 per cent) and May 2007
(96.3 per cent).
CAP valuation relationship manager Craig Bridgman, who led the
research, said the data show there are clear lessons for those
disposing of end-of-contract vehicles in the open market: “Setting
CAP Clean reserves on vehicles which fail to meet the condition
criteria required is a policy likely to incur additional costs. In
a market that rarely sees vehicle values rise, every failed sale
extends the time exposed to ongoing depreciation.”
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By GlobalData
